A market whose bite is as bad as its bark

A market whose bite is as bad as its bark

Tom Plate considers what would happen if China were a corporation

By Tom Plate
Pacific Perspectives Columnist

Tuesday, May 8, 2007

Los Angeles --- Let's look at the billion-plus peopled Leviathan known as China in an entirely different way. Instead of thinking of it as one exceptionally large country, let's look at it as one exceptionally large multinational corporation, with headquarters in Beijing.

China Inc. offers virtually every market on the face of the earth products of all kinds at very competitive prices. It keeps labor costs down through a variety of measures (not all of them taken from the Be Nice Manual of Management). Its sales staff -- from Premier Wen Jiabao on down to the lowliest ambassador -- constantly travels. They travel to Africa to reassure customer countries that they are only concerned about selling and buying, not indigenous human-rights or labor standards. They travel to Southeast Asia to reassure customers that its growing size should not be a source of concern or anxiety.

Viewed entirely as but a thriving and ambitious business, China can then be analyzed in a nonpolitical way that might make more sense to its top management team than if it is lectured on political or religious grounds. After all, businesses are supposed to have no politics other than religious fealty to the bottom line. However, one question that can always be asked of any business is whether it is following best business practices.

These days, China Inc. has to be asked this very question with urgency. Alarming reports from the mainland are raising serious questions about the quality of China Inc.'s exports. Proper quality control is the hallmark of any successful business.

Please don't laugh, but I think the recent pet food scandal is anything but marginal fodder for the Western news media on a slow news day. The bad news is that as many as 4,000 cats and dogs have recently died in the U.S. This epidemic is attributed to serious irregularities in wheat gluten, a common pet-food ingredient, shipped out from China's mainland. It seems that residue from the manufacture of a chemical used in plastics production had been quietly slipped into exported wheat gluten to embellish the product.

Let's leave aside the arguably incompetent U.S. pet companies that took forever to discover this poisoning of the pet food-chain by the Chinese export. Let's stay on message and point out to the Chinese that they have raised eyebrows and doubts in a monster market. Figures show that no less than 63 percent of all U.S. households harbor at least one pet close to their bosoms. China Inc. has now in effect said to that market that it is so hell-bent on making money that it would even put the health of Fido and Felix at risk.

China's top management may have taken on more than it can chew. With the possible exception of the American gun lobby, probably no other sector of the U.S. market possesses more anger and upset potential than pet owners. It may not be armed like the National Rifle Association but their collective rage can be lethal.

I'm personally a pet owner of a quartet of fabulous felines. All seem in good health right now, as none consumed any of the U.S. pet food brands associated with the China wheat gluten scandal. But if they had been unlucky, and had gone to their deaths as have thousands of their pet comrades, you could count on me to campaign as follows: (1) to block all imports from China (2) to make globalization illegal and (3) to support immediate formal independence for Taiwan!

That is said only partly in jest. Domestic pets are utterly dependent on the due diligence of human adults for their survival. China Inc. may not care about our pets one way or the other, but I can tell you that the average pet owner here cares at least as much about Fido or Felix than about China and all its hopes and problems.

Other nasty reports are seeping out from the mainland: China's chickens may be polluted with the same toxic chemical as some pet food, and, for a different reason, pigs on the mainland suddenly are dying off in droves. We rarely find out these worrisome developments from the Chinese news media, of course. That's because China Inc. generally regards the country's news media as one big public relations department. But eventually the truth does manage to come out. It always does.

The consequence for China Inc. could be serious. There are relatively few elections on the mainland and thus relatively few "voters" in the Western sense there. So in order to underscore my point to China Inc.'s CEO Wen and his corporate comrades in Beijing, let them understand that in the West, consumers vote: They vote in the supermarkets, the discount emporia and the shopping malls of America every time they buy something that's "made in China." If the idea that the mainland's products are all too frequently "mis-made in China," they will stop buying them. They will vote with their pocketbooks. If he is as smart as many think he is, CEO Wen is probably worried. This China Inc. misstep has cut deep into the heart and hearths of America.

The views expressed above are those of the author and are not necessarily those of AsiaMedia or the UCLA Asia Institute.

Date Posted: 5/8/2007