To what extent are companies willing to bend over backwards and twist themselves into pretzels to sell their products in China? This depressing article makes it quite clear: they will do anything and everything, even if China’s demands are in clear violation of the WTO. The China market is simply too big and you have to play by China’s rules. Which means your domestic competitors will always gain the upper hand. The government guarantees it.

TIANJIN, China — Judging by the din at its factory here one recent day, the Spanish company Gamesa might seem to be a thriving player in the Chinese wind energy industry it helped create.

But Gamesa has learned the hard way, as other foreign manufacturers have, that competing for China’s lucrative business means playing by strict house rules that are often stacked in Beijing’s favor.

Nearly all the components that Gamesa assembles into million-dollar turbines here, for example, are made by local suppliers — companies Gamesa trained to meet onerous local content requirements. And these same suppliers undermine Gamesa by selling parts to its Chinese competitors — wind turbine makers that barely existed in 2005, when Gamesa controlled more than a third of the Chinese market.

But in the five years since, the upstarts have grabbed more than 85 percent of the wind turbine market, aided by low-interest loans and cheap land from the government, as well as preferential contracts from the state-owned power companies that are the main buyers of the equipment. Gamesa’s market share now is only 3 percent.

With their government-bestowed blessings, Chinese companies have flourished and now control almost half of the $45 billion global market for wind turbines. The biggest of those players are now taking aim at foreign markets, particularly the United States, where General Electric has long been the leader.

The story of Gamesa in China follows an industrial arc traced in other businesses, like desktop computers and solar panels. Chinese companies acquire the latest Western technology by various means and then take advantage of government policies to become the world’s dominant, low-cost suppliers. It is a pattern that many economists say could be repeated in other fields, like high-speed trains and nuclear reactors, unless China changes the way it plays the technology development game — or is forced to by its global trading partners.

Everyone who works with foreign companies trying to sell into the China market is well aware of this phenomenon. What I think is not so well known outside of China is just how much grief these companies have to go through, the concessions they are forced to make, and the rage they feel even as they continue making speeches and putting out press releases about how committed they are to doing business with China and how delighted they are with their Chinese partners.

This exhaustive article makes the point you’ll never get from the press releases or speeches: that these companies will bow and scrape and kiss ass ad infinitum because they are scared shitless of rocking the boat. Even as their piece of the pie is sliced thinner and thinner, the China market is so immense they simply can’t afford not to be there.

The government’s bullying may be illegal and unfair, but for these companies, lured by the sheer size of the market, there really is no other choice but to submit and bite the bullet. Complain or show even a hint of ingratitude and you’ll risk losing all that precious guanxi you’ve spent so many millions building up. But as this article shows, the joke is really on them. All that guanxi was essentially worthless. There was no two-way street, no mutual scratching of backs. The foreigners are forced to give everything, only to get back less and less. And through it all, they remain “committed to China” and “deeply appreciative of our Chinese partners” and full of praise “for the Chinese government officials who helped make our prosperous partnership possible.”

What a Kabuki dance. What two-facedness. But then, what else can they do?

Anyone interested in learning more about the hoops China’s partners are forced to jump through have to read this book.

My former employer The Global Times wants to know.

Is there a “plot” among the Western countries against China? In answer to this, few Chinese people would give a definitive answer. However, actions taken by the West have forced Chinese citizens to speculate about this matter.

Tomorrow will see the ceremony for this year’s Nobel Peace Prize, which has been awarded to Chinese dissident Liu Xiaobo, who has devoted himself to subverting the government. Furthermore, at the invitation of the Nobel committee, several dissidents who are hostile toward the Chinese government, will converge in Oslo from around the world.

The modern world is much like a sports arena, in which China has passed the first round and qualified for the final. As a newcomer, China may not be well prepared, with sloppy technique, lacking audience support and seeming like a stranger to the surroundings. China has no other choice but to fight on in the competition, strictly following the rules set by others.

Suddenly, boos and catcalls resound from the stands, from the Westerners in the pricey seats. Worse than this, the referee blows the whistle against China, amid jeers from cheerleaders and media, relishing exposing China’s “scandals.” What can the Chinese team do?

…The West has shown great creativity in conspiring against China. With its ideology remaining dominant at present, the West has not ceased harassing China with all kinds of tricks like the Nobel Peace Prize.

It might be advisable for China not to buy the conspiracy theory, for communication would be much smoother if given the benefit of the doubt. However, China has to maintain its independence in thinking and ensure its discerning ability is not swayed by outside powers. As long as China can keep its independent judgment, its security will be ensured even when faced with a conspiracy.

Love the sports metaphor.

This is one kooky editorial. It’s loaded with gems that are typical of the angrier commenters here: the West is intentionally and strategically seeking to hobble China; the West is self-righteous and hypocritical and sanctimonious, going after a benevolent, peace-loving China while engulfing the world in chaos; China must gird its loins and fight against those powers that seek to harm it. These powers wish only bad for China. These powers hate China.

Despite a series of spats and misunderstandings between China and the West, globalization is forcing the country to adapt to co-existing with the “noble countries” in the West. China has to act discreetly, obeying rules set by the West and trying not to disturb their interests when seeking to safeguard its own welfare. Meanwhile, these “noble countries” launch broadsides at China’s actions, even where no wrongdoing exists.

Do they really not get that in the eyes of civilized nations the idea of jailing a dissident for 11 years for seeking democratic reforms is unpleasant? That the civilized nations react the same way to political repression in Myanmar and Zimbabwe and other nations?

One thing I liked about Global Times was their tendency to balance the more hysterical editorials and columns with more sensible voices. I remember editing a particularly vitriolic column by a former general that all but advocated war over the South China Sea. This was tempered by a far less psychotic response that noted the weakness of China’s navy and its utter unpreparedness for war. It urged a more moderate approach, like negotiating. I mention this because I’m hoping they’ll follow this pattern now. Editorials like this, with no balancing voice, will make China appear kukoo for Cocoa Puffs.

Via Shanghaiist, which has its own excellent response to the insanity.

These guys are geniuses.

From Evan Osnos at The New Yorker – just go there. This list is excellent.

Wikileaks is the gift that keeps on giving. The latest revelation is about how Chinese diplomats reacted when the US expressed its displeasure over China’s treatment of Liu.

It was just before Christmas 2009, and Ding Xiaowen was not happy.

The United States ambassador had just written China’s foreign minister expressing concern for Liu Xiaobo, the Beijing intellectual imprisoned a year earlier for drafting a pro-democracy manifesto. Now Mr. Ding, a deputy in the ministry’s American section, was reading the riot act to an American attaché.

Mr. Ding said he would try to avoid “becoming emotional,” according to a readout on the meeting that was among thousands of leaked State Department cables released this month. Then he said that a “strongly dissatisfied” China firmly opposed the views of the American ambassador, Jon Huntsman, and that Washington must “cease using human rights as an excuse to ‘meddle’ in China’s internal affairs.”

On Friday, exactly one year after Mr. Huntsman wrote his protest, Mr. Liu, now serving an 11-year prison sentence for subversion, will receive the Nobel Peace Prize in a ceremony that he is unable to attend. And if anything is clear, it is that China no longer resists becoming emotional.

In the two months since the Nobel committee honored Mr. Liu, China has waged an extraordinary and unprecedented campaign, domestically and internationally, to discredit the award and to dissuade other governments from endorsing it.

According to the cables, one of Ding’s arguments was that “the most fundamental human rights were to food and shelter,” an area in which China has made “huge progress.” I don’t disagree with him, but also don’t believe that one necessarily precludes the other, i.e., food needn’t come at the expense of human rights. However, Ding’s comment squarely represents the attitude of most Chinese people, one that I fully understand.

I never blogged a lot about Liu or Charter 8 because I thought it was a story of relatively little consequence for China, and the reaction to the petition in China seemed tepid at best. It was the CCP’s handling of his arrest and prickly response to his winning the Nobel prize that got me blogging. I still see it as a PR blunder that damages a government thirsting for soft power.

The following is a guest post that doesn’t necessarily represent the opinion of The Peking Duck

Sub-rationalists in Communist China cannot face reality of Liu Xiaobo winning the Nobel Peace Prize for 2010…..

by Biko Lang
Taipei

It would have been nice if Taiwan could have sent a small bipartisan delegation of politicians and academics from both the DPP and the KMT to attend the Nobel Peace Prize ceremony in Oslo this week. With China putting its head in the sand once again and refusing to face reality, the world is left wondering: just what makes Beijing tick?

As some of the WikiLeaks cables have confirmed what many old China hands always knew, many of Chinese Communist Party’s leaders act in a “sub-rational” manner when confronted with thorny issues like Taiwan’s sovereignty or Liu Xiabo’s Nobel Peace Prize.

In a move that rattled Beijing sub-rationalists again, the U.S. House of Representatives stood up for the values of freedom and democracy last week with a bipartisan resolution honoring imprisoned Chinese activist Liu, Nobel laureate.

Earlier in the year, in February, a group of American lawmakers nominated Liu and two other Chinese activists for Nobel Peace Prize consideration, noting in a public letter that “few governments have the courage to brave the Chinese government’s displeasure and honor them.”

The Nobel committee did honor Liu, and what an honor it is!

While China’s new Nobel laureate remains behinds bars and cannot attend the Nobel ceremony in Oslo this weekend, with his wife under house arrest and forbidden to fly to Norway to accept the prestigious award for him, a large part of the world will be celebrating his award. Not present in Oslo, Liu was nevertheless there as a potent symbol. Invisible outside his prison cell, he was very visible in the halls of freedom.

Freedom is borderless, and someday it will come to China, too, That’s exactly what the rulers in Beijing are afraid of.

The announcement earlier in the fall that Liu had bagged a Nobel this year sparked ominous warnings from China that countries who recognized his achievement would have to “take responsibility for the consequences.” Apparently, this was a stern warning from Uncle Hu to the U.S,, France, Germany, Britain, Australia, Japan and, yes, Taiwan.

But the U.S. House resolution pressed forward and lauded Liu for his human-rights activism, honoring him for his “promotion of democratic reform in China, and the courage with which he has bore repeated imprisonment by the government of China.”

Former U.S. Speaker Nancy Pelosi, who was to attend the Oslo shindig on behalf of her nation, had previously written to Hu Jintao in May 2009 asking for the release of “prisoners of conscience” including Liu Xiaobo.

Pelosi has always had heart. In 1991, a much-younger but always-idealistic Nancy Pelosi had secretly unfurled a banner in Tiananmen Square dedicated “To those who died for democracy [in 1989] in China.”

Liu, it seems, is a hero everywhere but in China.

The U.S. effort to honor Liu and call out China attracted support from both sides of the political aisle in Washington, with both Democrats and Republicans getting behind the bill.

One supporter of the bill said that the bipartisan support reflected the fact that “there’s been a growing understanding among members on both sides of the aisle that this dictatorship is a growing threat to local stability but also to the world. We can’t give the Chinese dictatorship a pass any longer on human-rights abuse,”

So wouldn’t it be nice if Taiwan could have sent a bipartisan delegation of both DPP and KMT leaders to Oslo to honor Liu? Maybe next time.

This is a guest post, and is not your typical opinionated Peking Duck fare. But I found it quite moving, even if it will likely not ignite a lot of discussion.

Zhang Hua Mei

By Edward Stern, a guest blogger for An Apple a Day and a writer on becoming a phlebotomist for the Guide to Health Education.

China is currently a driving force in the world economy, a rapidly developing country that appears to be on the brink of dominating on a global scale. This is in large part due to the communist country’s relaxing of formerly rigid business regulations to allow for entrepreneurship and innovation. Private companies may now exist and run business under the watchful eye of the government. With a population of over a billion people, the potential for economic gain through entrepreneurship is truly unprecedented in the history of the world.

Such optimism and freedom was not always the case. Before de-regulation, private business owners were decried as “speculators” and “profiteers,” working against the government and looked upon in disdain. That all changed in 1979, when Zhang Hua Mei received the first legal business license in the People’s Republic of China’s history, becoming the first entrepreneur in China.

After graduating from junior middle school in the city of Wenzhou, Zhang had no job prospects. Her family badly needed her financial support. So at 19 years old, she decided to venture into business on her own. Seeing an opportunity, she carefully invested in buttons and other accessories. At the time, state-run stores were the only ones in business, but their goods were often outdated and overly expensive.

Her self-named business sold these fashionable and relatively inexpensive items with great success. She was making two yen a day in profit, or three times more than she could have made as a government worker.

However, what she was doing was illegal and cause for concern. Setting up shop on a small table outside her front door, she put her freedom and reputation in danger. Classmates would walk by and turn their backs on her. The government could come calling at any time to shut her down and take her profits and wares.

The government did come calling, but instead to offer her a legal way to maintain her business. Wenzhou had been chosen by the government to trial China’s new policies on economic reform. The city’s branch of Administrative Office for Industry and Commerce was giving out business permits to the self-employed. A representative approached Zhang at her house about the new policy. She struggled with whether to accept or not. She was worried that if policies changed she would face greater hardships.

She eventually caved, applied for, and received her permit. Still hanging in her store, it is hand-written in calligraphy and includes the monumental license number 10101. 1,844 business licenses were given in Wenzhou in 1980, and Zhang Hua Mei received the very first one.

Since then, Zhang has continued in the entrepreneurial spirit of her first venture with financial highs and lows. She once lost almost all her money in a failed shoe business, recovered, and then switched back to a business focusing on buttons. Last year, she opened up her company, the Huamei Garment Accessories Limited, being a wholesaler of hundreds of types of buttons and the exclusive agent for a top Chinese button brand called ‘Weixing’.

She competes nationally with other businesses started by entrepreneurs following in her footsteps. By 1987, the number of licenses given to small business owners grew to ten million. Today, there are over 27 million self-employed people in China.

Zhang Hua Mei was the first, an unwitting entrepreneur with no ideas of grandeur, only aspirations to make enough to take care of her family. Little did she know, but her button business would help bring about an economic change in China that is transforming the rest of the world today.

I never would have believed a Chinese blogger would be this outspoken about his freedom-of-speech battles with the Chinese government. This video is must-see.

(Did I mention it’s a parody?)

Via this blogger, of all people.

Update: Do not miss James Fallows’ new post on the significance of the Google-China-Wikileaks revelations. Google, he concludes, comes out of this looking pretty good, its complaints of government-orchestrated harassment appearing to be confirmed.

The Wikileaks controversy isn’t going away, and the latest memos to fall under media scrutiny reveal that the US government had plenty of evidence about China’s obsession with Google, whose search engine was making them look bad. This obsession led to some very dirty tricks.

As China ratcheted up the pressure on Google to censor its Internet searches last year, the American Embassy sent a secret cable to Washington detailing why top Chinese leaders had become so obsessed with the Internet search company: they were Googling themselves.

The May 18, 2009, cable, titled “Google China Paying Price for Resisting Censorship,” quoted a well-placed source as saying that Li Changchun, a member of China’s top ruling body, the Politburo Standing Committee, and the country’s senior propaganda official, was taken aback to discover that he could conduct Chinese-language searches on Google’s main international Web site. When Mr. Li typed his name into the search engine at google.com, he found “results critical of him.”

That cable from American diplomats was one of many made public by WikiLeaks that portray China’s leadership as nearly obsessed with the threat posed by the Internet to their grip on power — and, the reverse, by the opportunities it offered them, through hacking, to obtain secrets stored in computers of its rivals, especially the United States.

Extensive Chinese hacking operations, including one leveled at Google, are a central theme in the cables. The hacking operations began earlier and were aimed at a wider array of American government and military data than generally known, including attacks on computers of American diplomats preparing positions on a climate change treaty.

One cable, dated early this year, quoted a Chinese person with family connections to the elite as saying that Mr. Li himself directed an attack on Google’s servers in the United States, though that claim has been called into question. In an interview with The New York Times, the person cited in the cable said that Mr. Li personally led a campaign against Google’s operations in China but that to his knowledge had no role in the hacking attack.

…Precisely how these hacking attacks are coordinated is not clear. Many appear to rely on Chinese freelancers and an irregular army of “patriotic hackers” who operate with the support of civilian or military authorities, but not directly under their day-to-day control, the cables and interviews suggest.

But the cables also appear to contain some suppositions by Chinese and Americans passed along by diplomats. For example, the cable dated earlier this year referring to the hacking attack on Google said: “A well-placed contact claims that the Chinese government coordinated the recent intrusions of Google systems. According to our contact, the closely held operations were directed at the Politburo Standing Committee level.”

…[T]he cables provide a patchwork of detail about cyberattacks that State Department and embassy officials believe originated in China with either the assistance or knowledge of the Chinese military.

Sorry for the long clip; be sure to read the entire article. It leaves no doubt about China’s top-down encouragement of and direct involvement in major hacking initiatives and cyber-terrorism.

Again, this should show the Chinese that the US is not determined to make China look bad. The government had this information and kept it secret. Wikileaks is an equal-opportunity whistle-blower and is leaking bombshells like this about the State Department’s dealings with everybody (Pakistan, Saudi Arabia, Yemen, Israel, etc.), and China is just one of many. The interesting thing is how quiet the diplomats were about what they knew and what they heard second-hand. If the US was out to demolish China’s reputation we’d have heard more about this long ago.

It raises the question of why the US went so far out of its way to keep the Chinese government’s involvement in the attacks a secret. It belies the arguments from the naysayers and idiots that Google fabricated or exaggerated the charges of cyber-terrorism because it needed an excuse to exit from China without looking defeated.

Update: Please see the comment from the blogger below. This is a non-story based on a false premise. Sorry for posting about it.
Update 2: The blogger who’s post started this story says it is not a non-issue. See the comments.

According to this somewhat flippant but interesting article by a reporter based in Taiwan, “Facebook seems to have dropped China-rival Taiwan from its alphabetical drop-down menu of member countries for FB support problems….”

I don’t know if this is true, and if it is I’d like to know whether it was always this way or if the change was recent. The author seems to believe this was done because Mark Zuckerberg is about to depart for a long trip to China, where he hopes to make his case for greater openness. (For context about Zuckerberg’s trip, go here.) Facebook, of course, is blocked in China.

Back to the disappearance of Taiwan from the drop-down menu:

While Facebook is banned inside Communist China, it does have free reign in democratic Taiwan, where internet censors do not control the net and thousands of happy Facebook fans are busy updating their walls and playing Farmville. In fact, Facebook pages are wildly popular on Isla Formosa with both local residents and expat residents.

But the other day, when a Yankee expat with a regular Facebook account tried to log on, he was notified by an automatic FB message that he needed to send his cellphone number by a secure route to Facebook HQ, where a four digit code would be sent to him by text message.

The gentleman was asked to go to a drop-down list of countries on Facebook to find the country he was in, and then send his international cellphone number to FB HQ. He had run into similar security issues in the past with Google and his Gmail accounts, and never had any trouble finding “Taiwan” on the list that Google sent him.

On scrolling through the drop-down list that FB had supplied, our friendly expat couldn’t find “Taiwan” anywhere. He looked again. Of course, there was no ”China” since China is not part of the FB Empire. But there was no ‘Taiwan” either.

How could that be? He looked again, from A to Z. Nada. No “Taiwan”.

Under the “T” section, there was one nation listed: ”Thailand”. But no ”Taiwan”.

He searched again, but no ”Taiwan”, no UN-sanctioned “Chinese Taipei” and no China-sanctioned “Taiwan, China” or “Taiwan, Province of China.” Taiwan simply did not appear at all.

Stumped, he emailed the folks at Facebook. There has been no reply as of press. He also emailed Mark Zuckerberg’s personal email account. No reply….

Surely, not listing “Taiwan” on the drop-down listings on Facebook’s help and support pages is a mere sloppy oversight, and was not done to slight Taiwan, where millions of fans are FB members, chatting away in English, Chinese and Japanese, among other languages.

Mark? You there? Ever heard of Taiwan? Nice country just south of Japan, east of China, north of the Philippines? You might want to add its name to your drop-down support list of countries.

Again, I can’t verify this, but it doesn’t sound impossible. I remember the controversy when Google Maps listed Taiwan not as a country but as a province of China.

Zuckerberg’s is married to a woman girlfriend is of Chinese descent and has been studying Mandarin in preparation for the trip, according to the reporter. Exactly what he hopes to accomplish there remains to be seen.

Businesses come here for a billion customers, but Zuckerberg says he’s offering openness. The authorities aren’t totally sold on that, obviously. So, he’s already tweaked the channels a bit by saying in recent interviews that countries have different values and Facebook respects this, such as banning content about Nazis in Germany and pictures of Muhammad in Pakistan. He says China is “extremely complex” and he will humbly come here to listen and learn. This should appeal to Confucians.

It will be interesting to see what Zuckerberg gets out of this trip, if anything.