China Is Indeed Home to Many Deceitful, Corrupt Companies. No, Really?

Last Updated Jun 13, 2011 2:51 PM EDT

Western companies continue to be shocked that China is filled with deceitful, corrupt businesses. That's like being surprised to find gambling in Las Vegas -- and about as believable.

It's difficult to know which is more irritating, the feigned innocence or the righteous indignation of these companies. For example, Google (GOOG) has been complaining about Chinese business practices practically since it started playing footsie with the repressive police state. Intellectual property theft! Hacking! Censorship! All these take place in China? Who knew? Apparently company executives forgot to Google the words China business problem.

Here's another great one: Maurice "Hank" Greenberg, former chief of American International Group (AIG), is suing the Chinese company MediaExpress in U.S. court. He claims MediaExpress repeatedly overstated its income and the size of its operations in order to make its stock more attractive. Get this: Hank Greenberg lost money because of assets that weren't worth the price he paid for them. Apparently there's a reason his nickname is Hank and not "Due Diligence."

Now the shoe's on the other foot
The reason these companies are outraged isn't because they are being screwed by a developing nation. It's because this is the exact opposite of what they are used to. Even though the U.S. is a relative newcomer its companies have been exploiting foreign economies since the 19th century, usually with the assistance of the U.S. government. Nicaragua, Guatemala, Iran, Chile, Vietnam, Japan and, yes, China are just a few of the nations where we have covertly or overtly used military force on behalf of business interests.

Marine Corps Major Gen. Smedley Butler, two-time winner of the Congressional Medal of Honor, put it this way in his book, War Is A Racket:
I spent 33 years and four months in active military service and during that period I spent most of my time as a high class muscle man for Big Business, for Wall Street and the bankers. In short, I was a racketeer, a gangster for capitalism. ... I helped in the raping of half a dozen Central American republics for the benefit of Wall Street. ... In China in 1927 I helped see to it that Standard Oil went on its way unmolested. Looking back on it, I might have given Al Capone a few hints. The best he could do was to operate his racket in three districts. I operated on three continents.
The Chinese have a deservedly large chip on their shoulders when it comes to this issue. The incursion Butler refers to is only one of many done over the centuries in the name of exploiting tapping into the nation's markets. England fought not one but two wars with China for the right to sell opium to the Chinese. And don't forget The Boxer Rebellion. That's when the Germans got the nickname "Huns" after Kaiser Wilhelm II said this to the troops he sent to China:
Once, a thousand years ago, the Huns under their King Attila made a name for themselves, one still potent in legend and tradition. May you in this way make the name German remembered in China for a thousand years so that no Chinaman will ever again dare to even squint at a German!
This all changed when Mao and the Communists took power. Now Mao was a pretty horrible person. He was the worst mass-murderer during a century without equal in that particular endeavor. Be that as it may, he gave China back to the Chinese and they do appreciate him for it.

China's civilization is thousands of years old. It had cities when most of Europe was still in mud huts. That kind of history has given China a very long memory and now it is in the driver's seat when it comes to business. Is it really surprising the Chinese aren't overly sympathetic about the rights of foreign companies?

Those who do not learn from history ... are doomed to be irritated at those of us who do.

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    Constantine von Hoffman is a freelance writer and writing coach. His work has appeared in outlets such as Harvard Business Review, NPR, Sierra magazine, Brandweek, CIO, The Boston Herald, TheStreet.com, CSO, and Boston Magazine.

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