In the 1990s, I represented a number of international fishing and timber and mining companies that did business with Russia. This was not so long after the fall of the Soviet Union and there were a bunch of large Russian companies — many of them formerly state-owned — looking to do deals with my clients, mostly American and Western European companies. My clients would set up long term deals with these Russian companies which nearly always went bad quickly because the Russian company would grab whatever money there was and walk away.
This would leave my clients dumbfounded at how the Russian company would so “irrationally” sacrifice so much money in the long term to grab a relatively small amount of money in the short term. I would find myself explaining the following to them:
You have to understand that for most Russian companies there is no long term. They are used to the Soviet Union where the rules and the laws constantly and unpredictably changed to their detriment. They do not believe they will be able to operate freely five years or even one year from now. So though you see them as having irrationally sacrificed massive long term gains for much smaller short term rewards, they see themselves as having quite rationally grabbed what they could while it was still there.
I am writing about this now because China today is feeling a lot like Russia in the 1990s. I am getting the sense that many Chinese companies are pessimistic about their futures and they are acting accordingly. Our China lawyers are seeing evidence of this everywhere.
“You have to understand that for most Russian companies there is no long term. They are used to the Soviet Union where the rules and the laws constantly and unpredictably changed to their detriment. They do not believe they will be able to operate freely five years or even one year from now. So though you see them as having irrationally sacrificed massive long term gains for much smaller short term rewards, they see themselves as having quite rationally grabbed what they could while it was still there.”
True Dough’s Lieberal business plan for Canada.
Easier to implement widespread, large-scale graft and corruption.
Hey Dan Harris. You can very easily drop the “China” from that statement and replace it with “Alberta”. That same pessimism about even the near term future exists RIGHT HERE. Laws and rules of business are getting changed to our detriment all the time. Kenney and Moe are the only bright spots but their fighting against a stacked deck in the Supreme Court where pandering to perceived victimhood status of progressive groups regularly outweighs the value of confederation. Calgary even still has the same arsehole lying mayor. Nobody but the undertaker dares invest here now.
So acting like the CSA then. It’s here in Canada already.
Read the whole thing.
China’s economy is hurting because Trump is putting pressure on it to behave and strike real deals. More and more companies are moving production out of China (back to the US and to our countries in Asia that are US allies). Something you will never hear the experts on the MSM talk about)
Not to worry, China is admired by out Prime Minister for being able to turn their economy around on a dime.
We must observe and see just how that is done, it might come in handy when there’s no equalization money flooding into our coffers from Alberta and Saskatchewan.
The article is part of a series, introduced by this:
Despite the increasing difficulies [sic] with doing business in China
(or perhaps because of those difficulties),
our China corporate lawyers are seeing an increase in foreign companies looking to do joint ventures in China.
List of countries by real GDP growth rate 2018 %
China Increase 6.5
United States Increase 2.8
Canada Increase 1.8
United Kingdom Increase 1.3
Bearing in mind that any number coming out of China is tailored to meet whatever objective they deem necessary. Chinese financial numbers are all phony.
thanks scar, I was going to point that out to dizzy lizzy, who appears to be unDorking today
As a small business-person, you suffer a much-higher chance of being shafted in China than if you’re a large multi-national. I’ve heard a few stories. There are really only two ways to do business in China as a foreigner, unless you have an honest and supportive Chinese business partner (and even then, his honesty is likely to be “flexible”): from a position of strength, or through sufficient bribery. If you have neither of these, you should go into any business venture in China with the expectation of 100% loss of your financial input at a minimum. They can and will come after you for much more than your initial investment. If you’re unlucky enough to be within China’s borders when this happens, you may actually be prevented from leaving until your debt is discharged. Unless you can afford to lose everything, don’t do business in/with China.
And it was always like this. Whether their economy is hurting right now or not is irrelevant to their predatory business practices.
Many Chinese companies that announce start-ups over here are nothing but scams that use promises of “investment” by Canadian governments as a lure to attract hard cash from victims back home.
Ex-pat similar theme.
Here in Toronto land it was recently reported to me, quietly mind you, that TARION, the government backed new home warranty program has ceased issuing TARION certification (A pre-requisite to selling new homes) to Chinese Nationals or their development interests as in the aggregate their performance has been so bad, meaning they built shite product that require massive numbers of warranty claims. Now of course no human would ever admit to this but it warms my heart to see an organization ostensibly designed to protect homeowners actually doing its job by barring scofflaws, crooks and fly by night specialists from polluting the market with crap product. That kind of behavior does indeed ruin the market for all by destroying baseline levels of trust in major transactions.
Likewise I have had it relayed to me very directly by a ChiNat what the reigning philosophy is with people from that part of the world. “If you’re not hosing (Replace with appropriate copulative verb as required) someone in the deal, then you’re probably getting hosed”. He explained that this is the basic operating philosophy of that particular nationality and that to pretend or imagine you’re not dealing in that way is naïve bordering on moronic.
Yup. For the average Chinese–businessperson or not–it’s all about looking out for Number 1. If you do something shady and get caught, that’s the cost of doing business. It’s very much a culture of “screw unto others”, and it’s part of everyday life…part of why lining up in a queue for almost anything requires strong enforcement: it doesn’t happen naturally in China. Watching people bargain in an open marketplace can be instructive. I even had one vendor threaten to beat the crap out of my not-yet-wife if she ever saw her again for undercutting the deal she thought she made with me, a matter of $2 largely because she sided with the foreigner (the remainder being lost face, I think).
We in the West have always had this idea the WE have the mor superior overall “system”…and while that may well be true, it sure as heck isnt the longest lasting one.
The Chinese are in it for guess who.? The CHINESE…and the Chinese ONLY.
Regardless of the fact that TODAY its Communism…they have in reality been practising CHINA first policy for at least 3000 years to the Exclusion of all others. Then it was this Dynasty or that Dynasty. But they have never embraced or practised open Capitalism or Democracy for that matter and likely never will. They will buy, take or STEAL what they can – when they can and “to hell with you Round eyes”. All for Mother CHINA.
As for the Donald..?? Carry on Mr President…carry on.
China is still a centrally planned economy. Banking does not follow the rules of the marketplace and bad loans are repeatedly made to entities that have no intention of repaying knowing that the state will bail them out. Contract law is worthless. There is not enough cash to facilitate normal transactions and payments are averaging 90 to 120 days to never. The whole economy is totally gummed up and in a slow spiral with no chance of improvement
There is no fix. It will get worse. It will end up with a collapse and revolution and new government by new thugs.
lol !!!
thus the WORST of the chirese version of capitalism, glomed onto their version of communism.
Ive been saying this for roughly 5 years now.
the really bad news, if the collapse of the Thai currency ‘bhat’ caused the SE Asia currency crisis (dominoes anyone?)
just think what the fallout will be when the chirese take their turn at financial wreckage on a global scale.
aaaaaaaand like the way they introduced us to SARS, they gonna be all tight lipped about it all.
Chinese companies are pessimistic about nothing because they own nothing. You all do know just what Communist China is? My goodness, is everyone devoid of critical thinking?
Old White Guy nails it.
Everything we have been told about the Chinese Economy is Bull.
Same applies to the state of the “world” economy.
Bankrupt as in borrowed/printed so much money that it can never be paid back nor the interest serviced…
Negative interest rates?
Way too funny.
We seem to be repeating 1929.
Guess we never learn from history.
spot on JR.
I have opined and gotten 100% agreement that the world economy is a ginormous PONZI SCHEME.
as such, it will collapse under its own weight at some point. the tipping point is related to how heavy the pyramid is and thus how much weight needs to accumulate for it to cave in.
it will happen. I believe it will happen in my lifetime.
unDork, paging unDork
Orange man bad.
You’re not the real UnMe. That wasn’t deranged and self-righteous enough.