In 2004, IBM (all-American “Big Blue”) sold its PC division to Lenovo, a company in China. According to an article by Clyde Prestowitz in the The American Prospect, “The announcement came as a surprise in Washington but was old news in Beijing,” which had been engineering the sale for more than a year, unknown to U.S. officials.
IBM, says the article, “wanted to support China’s industrial strategy (including the upgrading of its technological capacities and know-how).” The article quotes IBM chair Sam Palmisano: “If you become ingrained in their agenda and become truly local and help them advance, then your opportunities are enlarged… You become part of their strategy.”
Okay, so what? If you want to do business in the belly of the dragon you’ve got to play by the dragon’s rules, right? Well, yes. But there’s more to it, writes Peskowitz:
The CEOs of global companies often prefer to do business with authoritarian regimes; they can get faster decisions than they can in democracies. But these CEOs also find that they must be more responsive to the desires of the authoritarian regimes than to those of the democracies. Where there are conflicting national interests, the global CEOs are likely to line up on the side of the authoritarians and even to become lobbyists for them within the democracies.
The key problem is the asymmetry of governmental power over corporations in democratic and authoritarian regimes. In Washington, a CEO of a major corporation is an important political player who makes big PAC donations, maintains legions of lawyers and lobbyists, files lawsuits against the government, writes legislation, and influences regulatory decisions. In Beijing, Riyadh, or Moscow, however, the same CEO is a supplicant. He doesn’t file lawsuits against these governments; indeed, he needs to maintain favor and keep the bureaucrats and party operatives happy.
Peskowitz’s suggestion is clear: Some American (and by implication, Western) execs are in essence acting as double agents, helping fulfill the economic strategies of authoritarian powers whose humans rights ethos and strategic interests are antithetical to our own.
So, where’s the line? By playing both sides and promoting the interests of potential strategic rivals, are execs doing business with less-than-democratic powers committing a kind of treason? Are they merely protecting their own companies’ interests and, by proxy, supporting our own economy? Or is this just another case of xenophobia?
(Image courtesy Gregory Johnson via Flickr, CC 2.0)
