Caterpillar Inc uncovered “deliberate, multi-year, coordinated accounting misconduct” at a subsidiary of a Chinese company it acquired last summer, leading it to write off most of the value of the deal and wiping out more than half its expected earnings for the fourth quarter of 2012.
To the Chi-coms,there is no such thing as “misconduct” when it comes to fleecing the West out of anything. Usual business dealings with these guys.
We’ll be seeing lots more of this. We’ve already got the Chinese knock-off parts in Air Force Hercs.
I’d agree; corruption is a basic way of life in China.
Is it caused by the political system of communism, which effectively removes all control over legislation from the people? This sets up a system where the laws are abstract and unrelated to you (you have no role in their origin)..and so, your REAL life, the life over which you have some control, becomes outside of the law.
This moves interactions with others into the ‘bully world’. Whoever can theaten, bribe, cajole, force, someone else to do something..wins in this life.
And that’s China. Every interaction with another person is outside of that official law. To get a visa, you must bribe an official. To get an official document to open a business, you must bribe an official.
Marketing, purchasing, manufacturing, are all done outside of the law and within your control. This means, bribes. It also means no overseeing of products for you bribe the official who does regulate quality.
The agenda of most Chinese is to make money. Lots of money. Since the rules are abstract and outside of your control, then, a vast, massive set of ‘made in China’ rules emerges..all local, all personal, all corrupt. All enable both sides to Make Money.
The individual who bribes; the official who is bribed. Both Make Money.
Then, they purchase Brand Name products from the West; it’s a sign of honour, of success, to have the Western BMW, the Coach Bag, the Louis Vuitton luggage, the big screen TV. All must be Brand Names from the West. Heh, no cheap Chinese stuff for them.
That’s what communism has done.
“deliberate, multi-year, coordinated accounting misconduct”
What a clever way to avoid saying “fraud”.
No worries, they’ll be compensated in gold ingots that are 80% tungsten!
How does one write ‘caveat emptor’ in pinyin characters, anyway?
Remember this next time someone floats a deal like the Nexen takeover.
(On a related note)
MOSCOW/TORONTO, Jan 14 (Reuters) – Russia’s state uranium company has agreed to pay C$1.3 billion (US$1.32 billion) to take Canada’s Uranium One Inc private, as the successor to the Soviet Union’s nuclear industry seeks to strengthen its grip on supplies.
Atomredmetzoloto and its Effective Energy N.V. affiliate – together known as ARMZ – said on Monday they would buy the shares of Uranium One they do not already own in a deal valuing Canada’s No.2 uranium producer at C$2.74 billion ($2.8 billion).
http://www.reuters.com/article/2013/01/14/uranium-one-private-idUSL6N0AJ0BA20130114
Best never to trust a Chinaman except for doing your laundry or running a restaurant.
Now we know why, in the 18th & 19th century they were known as The Yellow Peril.
Ever since I saw Kate’s post a while ago about the ghost cities that are built solely for real estate speculation, I’ve been thinking China is the original paper tiger.
When the bubble bursts, it will be like the fall of the Soviet Union. We’ll discover the whole Eastern Colossus thing is a big paper mache construction held up with sticks, standing in front of a mud hut.
I understand from people I know who travel to China that every house and apartment building has a solar still on the roof, to distill clean-ish water from the hopelessly fouled city delivered sludge.
I’m told that the biggest selling items are North American and European import foodstuffs and cosmetics. Your Revlon lipstick, Betty Crocker Hamburger Helper, Toblerone chocolate, Bayer aspirin, McDonald’s restaurants, Gerber baby food, Kellogg’s corn flakes, Chinese women know and appreciate the fact that these things were made in factories where people get fired for spitting in the vat, and where officials really will go to jail for taking a bribe to look the other way when melamine gets added to the cereal mix.
Canadian whiskey is also hugely popular. Reason being that the local manufacture liquor is absolutely HIDEOUS. I’ve sampled it. Some of the “good stuff” too, in the fancy bottle that costs more. It didn’t have a bouquet, nor even an odor, it had -fumes-. Fumes that did not smell like ethanol. Its so bad I’d be afraid to run it through a lawnmower engine in case it ate the intake valves. Kentucky moonshine looks like Islay single malt next to this stuff. I poured mine out in the ditch across the street where there’s a bog, hoping the dilution would make it less deadly. So yeah, your Canadian Club and your Newfoundland Screech are pretty well received over there.
I’m told the corruption is so pervasive that if you have an “angel” in the local Communist Party, anything is possible for you. I mean, -anything-. You need women, you need somebody killed, you need to dump a supertanker full of heavy-metal infested slurry, no problem. If you don’t have an angel, you can’t open a popsicle stand.
You can buy an Android-based tablet on the street for $45 US, and it will even work. For a while.
“Try before you buy”, “cash on delivery” and “count your change before you leave the wicket” are the way of things in China, apparently. Out in the less civilized parts of the country away from the coast I’m told, the rule is one hand on your wallet and the other on your gun butt.
Geeze, Caterpillar got reamed on a takeover deal? How unexpected.
reverse take overs in Canada here can be filled with fraud just as this one in China was, I know that from first hand experience. Often reverse take overs happen because them company doing the take over wants to fly under the scrutiny radar!!!
What ET doesn’t understand about Chinese culture would fill a book.
The agenda of most Chinese is to make money.
Er, and that’s different from 99% of other races how?
Marketing, purchasing, manufacturing, are all done outside of the law and within your control. This means, bribes.
Er, and that’s different from doing business in Nigeria, Russia, India, Brazil, etc. how?
While it’s fashionable for the usual gang of idiots to dismiss Northern European values, it’s quite illuminating to see how the Nordic countries and white former British colonies are faring in the global economy. In those places, the rule of law is still mostly observed (with exceptions, of course: Quebec construction, ORNGE, etc.), and so commerce continues to grow. Meanwhile, all through Asia, Africa, and South America, bribery and connections are the simplest way to make money. To suggest this is something endemic to the Chinese, or that it’s caused by communism, is laughable. It’s the lack of institutions that are respected and enforced that causes these problems.
Does anyone seriously doubt that if the Brits and Germans had kept their African colonies past the 60’s that Africa would be a richer, better place today? But they got kicked out by people who were scarcely two generations removed from mud huts. It takes longer than that to build institutions that have the people’s faith. Same thing with Canada’s “16th century Nations”; they want to use ruling structures that are outmoded and unworkable in a modern society, and they get outmoded and unworkable lives as a result.
If I had the time and money, I’d love to do a study on the correlation between economic growth and the enforceability of private contracts. I suspect it’s quite high.
Phantom – exactly right.
KevinB, I’d suggest that you are the one who has no knowledge of China, either its past (I read the documents in the original) or its present morass within communism.
Chinese corruption is not the same as that found in the West, because in China, it has become a necessary mode of life not for some but for all – read what Phantom wrote.
Communism in China most certainly has set up institutions which are unworkable. I’d suggest an interesting study of the type of society that might emerge if the laws are outside the control of the population. Did you ever think of what kind of lifestyle would emerge in such a system? Hmmm?
To paint an entire country and culture as fraudulent and dishonest, because of the actions of some is below the standards I would expect of the SDA gang.
It reminds me of the standard “Ontarian’s are all socialist’s and stupid” that tends to percolate below the surface here.
There’s good and bad in all things. Hopefully the usually sane and circumspect commenters here
can strive to avoid the regional biases that are best left to our simpler leftist friends.
If the guys at Caterpillar didn’t know what they were getting into when they got in it they shouldn’t have gotten into it. Anyone who has done business in China knows the deal.
Lay down with swine…
ET’s almost as lame as the Quebec Booboisie or phil when it comes to argument.
Notice that she didn’t respond to any of my substantive points: how is the culture of bribery in China different than the one that exists in Nigeria/India/Brazil?, and what are the cultures (other than a few nearly extinct tribes in Papua-New Guineau) that aren’t “99%” concerned with making money?
Chinese corruption is not the same as that found in the West, because in China, it has become a necessary mode of life not for some but for all
Assertion, and as proof – another assertion. Genius.
. I’d suggest an interesting study of the type of society that might emerge if the laws are outside the control of the population. Er, like a dictatorship? An absolute monarchy? Plenty of examples of these from history, if by “the population” (nicely ambiguous term there) you mean the common folk.
Phantom admits he hasn’t visited China. I have. And I married a Chinese woman whose 6 brothers did business all across SE Asia. They told me stories that I found hilarious, because none of them were involved in the scams/defaults/broken promises, and they didn’t just include China – India, Pakistan, Vietnam and the Philippines. And one thing they told me stuck with me: “If you’re doing business with one Chinese, be worried. If you’re doing business with two different Chinese, relax; they’ll be so busy trying to screw each other, you’ll be fine”.
One constant of Chinese history is corruption and fraud of a scale unknown in the west. Chinese emperors number one concern was building a bureaucracy that harnessed official corruption to the task of protecting the reign of the emperor.
Not everyone (Billionaires ) thinks China is better’n sex…
http://www.bloomberg.com/video/81455126-chanos-says-china-bank-system-extremely-fragile-nov-23.html
KevinB – with your last paragraph, you’ve proven my point; that China, as it is now, is operating within a corrupt political and economic system.
The fact that corruption is found elsewhere is utterly irrelevant; this thread isn’t talking about that nor does it justify what is going on in China. I also happen to disagree that they are a ‘race’. We are talking about the results of the current Chinese political and economic system not Chinese as a people.
To declare that other peoples are ‘99% concerned with making money’ is an empty statement unless it is also linked to HOW you are making money. In other societies, particularly in the West, this ‘how’ is tightly regulated and infractions are punished. In China, which is the only nation we are talking about on this thread, the ‘how’ is not tightly regulated and infractions are dealt with ..by bribes.
You mention a dictatorship, and you’ll find that the same results will occur as in communism – corruption on a massive scale as the powerless people move to their ‘own laws’, and a local political and economic lifestyle ruled by the local thugs. Same as in China.
So, apart from your frothing dislike of me, what’s your point?
We have had compliance business laws in effect for well over 100 years. China has been playing catch up since 1976 when Mao died and with a population of over 1.4 billion people, I doubt if they will ever shake the dog-eat-dog mentality required to achieve even minimal success in life. Like every other country on the planet you will have the good, bad and ugly. Who is really at fault when the Air Force or ? uses substandard parts ?
http://www.telegraph.co.uk/news/worldnews/northamerica/usa/8876656/US-weapons-full-of-fake-Chinese-parts.html
The contractor that is breaking the law by outsourcing to third world countries ? Or the manufacturer of said parts that sees a opportunity to build it. Even legally, we accept the fact that anything made in China or India etc. could be substandard. I really don’t blame China for seizing any opportunity to make a buck. It’s up to the recipient company to do their homework and lay down the law regarding quality as glenn @ 12:38 said. We have a uneasy and probably temporary alliance with these people based on mutual benefit. Trust is not part of the equation.
In other societies, particularly in the West, this ‘how’ is tightly regulated…
More so every year. I wonder why that necessity? Have people changed, become less moral?
I guess the proof of the pudding is in the eating.
Laws and regulations are aimed at those who do not have the moral fortitude to do the right thing on their own. We can certainly expect to see more of the same as we import the culture of bribery.
Compliance with regulations adds cost, guess what that does to our competitive position. So, why are we importing a culture of bribery? So we can make more regulations and add more cost?
My grandmother left Ukraine for Alberta when she was 19 or 20, and didn’t go back for a visit until glasnost and perestroika and what have you in the ’80s. She was a fundamentalist Baptist convert who didn’t countenance make-up, booze, cigarettes, the Rocky Mountains (can’t farm them), did not consider Catholics “Christians”… you get the idea. Not a worldly woman, by most standards. When she did finally visit the USSR at an advanced age she smuggled in a bunch of (illegal) bibles. According to my mother, she just casually slipped the luggage inspector some Rusky $$$ (I suspect yank currency, actually), and no problemo. Didn’t blink. It’s just how things work in most of the world. That sort of nasty reality check is one of the reasons that the destruction (God between us and evil) of Northern-European-Anglo-American culture is not going to be nearly as much fun as the dumber sort of over-“educated” leftists have been led to believe. A relative lack of corruption is like monogamy; it is the hugely preferable historical exception, and far from the norm.
Oh, and FYI, don’t buy a little flat in Kiev to rent out. Seriously.
For hundreds [perhaps thousands] of years it’s been common Chinese business practice to get the contract with the best quality, then reduce the quality after that to increase profit. Too many westerners make the big mistake of thinking everyone else is sharing their values.
KevinB said: “Phantom admits he hasn’t visited China.”
Nope. Never been. Relatives visited and do business there. They say its very nice and very civilized etc. But I notice they don’t take their kids.
I also have acquaintances from India. India has corruption out the wazoo, but unlike China there are some things that can’t be swept under the carpet with just money.
The real difference is in India the corruption keeps anything from happening. The number of palms that need greasing prevents almost any project from going through, no matter how much cash they have. Businesses grow organically through Old Boy networks, they don’t just appear like in China.
The Chicoms are well known for sweeping aside whole towns to make way for roads, factories etc. You just buy a Communist Party official far enough up the ladder, and he makes it so. That doesn’t happen in India, because no one official can make the others do what he says.
Personally the most corrupt place I ever lived myself was New York. For a lot of seemingly stupid little things you have to have “connections”. Friend of mine had a gun store. He couldn’t sell gun books and magazines (the kind you read) in his store because he couldn’t get a distributor. You’d think an out-of-state outfit would be happy to ship to him, but apparently if you do that you get a visit from Guido. Book/magazine distribution is a Mob thing in NYNY. Same deal with garbage.
Arizona by contrast seems to have less corruption than Ontario, at my level of the food chain anyway. I think the prevalence of guns and that cowboy mentality has a sobering influence on corrupt individuals.
Oh, wow…the Chinese apparently don’t believe in a regulated marketplace. Boo fricken hoo. Right whingers are always going on about how we need fewer government regulations so that free market capitalism can allow miracles to happen. Well, here you go…it’s a miracle! Obviously the Chinese are much better at this game than westerners. As for Caterpillar, serves them right for what they did to the locomotive plant in London.
Actually the Chinese seem to have committed outright theft in this instance. To conflate theft with mere lack of regulation is dishonest.
And while we on the Right want less government, one of the few reasons we contenance government is that government legitimately exists to enforce contracts, otherwise there would be blood in the streets just as there was in the U.S. when competeing ‘businessmen’ shot it out over who would distribute alcohol where during the early years of Prohibition.
Iberia, the corruption occurs because bureaucrats run everything. They’re the ones you have to bribe.
Iberia said: “As for Caterpillar, serves them right for what they did to the locomotive plant in London.”
What? Caterpillar the bad guy here? BWAHAHAHAHA!!!! You mean Caterpillar bought the factory from a hedge fund, who bought it from GM, who presumably sold it because it wasn’t making a decent return on investment, most likely because of the gold-plated UNION contracts and endless CORRUPTION of working in an NDPee town in Ontario.
And then Caterpillar discovered they couldn’t make a deal with the stone-hard stupid unionist NDPee voters either, so they cut their losses, SHUT IT DOWN and moved the operation to Indiana. Where it -does- make a buck.
Dear Iberia, the Chicoms -suck- at capitalism. That’s the point of this thread, in case your reading skills aren’t up to the job here. Capitalism requires -honesty- and fair dealing as a base to work from. There has to be some surety that the horse you are trading isn’t a goat, or a pretend horse.
The Chicoms aren’t big on that. Their big claim to fame is they’ll do anything for a buck. Creative accounting appears to be a specialty.
I’m looking forward to the next Ontario election, where Right To Work will be a big issue and thousands of trade unionists like your purulent self will get the toasting you so richly deserve. Because old son, cops are the only thing that keep you picketers safe from us citizens. When the cops go on strike…
Yeah, the cops go on strike there’s gonna be more of this, http://www.sunnewsnetwork.ca/sunnews/canada/archives/2013/01/20130116-170014.html
Only, full throttle…
Dear Phatom,
Yes, the Chi-coms suck at capitalism. Perhaps they can learn something from American banks.
Looking forward to seeing how brave you are when you step away from the keyboard.
Love,
lberia
Iberia said: “Looking forward to seeing how brave you are when you step away from the keyboard.”
Internet threats. Awesome. Just confirming my decision to remain The Phantom, because you boys are all violent imbeciles.
Just have a look at that little piece of film stradivarious posted of the woman driving her truck through the IDIOTS blocking the highway. Then multiply that by everybody in Canada. That’s what you’re going to get when the cops aren’t having your back. Everybody’s going to just drive over your @ss.
You won’t see me at any of these freak shows. I’ve got better things to do than let the likes of you have a crack at me, Iberia. You’ll have to content yourself with beating up women and old guys.
Enjoy watching your union pension get cut. I’m going to enjoy it enormously.
Yep, internet threats…from you, not me: “cops are the only thing that keep you picketers safe from us citizens.” But…there’s more: “I’ve got better things to do than let the likes of you have a crack at me.” Haha. I hear your mommy calling you.
Dear Iberia, why on earth would I give you a free shot when I get everything I want by just staying home and doing nothing? Much more satisfying to observe one’s opponents getting their @sses beat on TV from the comfort of my own easy chair.
Have fun freezing on the barricades as you strike for more free stuff paid for by other people. I’ll be watching YouTube of some random chick running you down with her truck. I won’t know its you of course, seeing as how you’re just another anonymous union weenie, but I’ll cheer just the same.
Still, I have to advise you that getting run over demonstrating is not going to save your publicly funded pension. Kiss that freebee goodby, big boy.