Is It Time to Stop Doing Business with China?
I almost fell off the chair when I saw Lawrence Van Gelder’s little squib (reprinted in full nearby) in The New York Times, reporting that the Chinese have edited “Pirates of the Caribbean” because one of the characters “vilifies and humiliates the Chinese.”
Imagine! The premier pirates of American films and other intellectual property not only have pirated yet another blockbuster, but also have edited out a Chinese character because it was “in line with Hollywood’s old tradition of demonizing the Chinese.”
Is it time to rethink doing business with China? I am not talking human rights and animal abuses such as:
• Gendercide—the aborting of female fetuses and abandoning of baby girls—sometimes still alive—on garbage heaps, which resulted in a 1997 estimate by the World Health Organization that “more than 50 million women were estimated to be ‘missing’ in China because of the institutionalized killing and neglect of girls due to Beijing’s population control program that limits parents to one child”;
• The condoning of all forms of prisoner torture, with the exception of “kuxing,” which creates lasting scars and disability;
• The routine jailing of writers and journalists whose reporting the government disagrees with;
• The destruction of millions of sharks, skates and rays every year for “finning”—cutting off the fins for shark fin soup and discarding the rest of the body—not only causing the animal to bleed to death or drown because it cannot swim without fins, but also threatening the very survival of species that many in Southeast Asia depend upon for protein.
I am talking about greedy buccaneer Chinese businesses and groups that plunder the world’s intellectual property, flout public safety in its myriad exports and threaten your very health and life—and those of your family, your children and your pets. It’s a given that the term “Chinese business ethics” is an oxymoron. Let me count a few of the ways.
Chinese Theft of Intellectual Property
China is notorious for stealing the designs and manufacturing hundreds of patented and copyright products and selling them all over the world, including in this country. Among them: Callaway Big Bertha golf clubs, Ikea furniture, Chivas Regal and Johnnie Walker Scotch whiskey, Italian and French wine, luggage, designer clothes, Honda motorcycles, Sony PlayStation games, Cisco Systems router interface cards, even Mitsubishi elevators! Target stores here have been accused of selling bogus Coach bags and two weeks ago, Wal-Mart settled with Fendi for selling counterfeit handbags for up to $525 each.
What’s more, these thieves get off lightly. In March 2005, a Chinese factory was raided and 32,980 counterfeit Zippo lighters were discovered. The factory manager, Zheng Shengfen, was taken to court and the judge fined him $12,500 with no jail sentence.
Quite simply, if you create any kind of desirable product here or abroad, expect to be ripped off by the Chinese. A sampling from my files:
• Films: It is estimated that 90% or more of Hollywood blockbuster movies on DVDs available throughout China and Southeast Asia on city street corners and shops are illegal copies. In 2005 the Motion Picture Association of America estimated that losses to the American film industry amount to $2,689,000,000 annually. For example, on a Thursday in 2005, “Star Wars: Episode III—Revenge of the Sith” opened all across China; pirated disks were being offered everywhere by the following Sunday.
• CDs: According to Tim Phillips, author of “Knockoff: The Deadly Trade in Counterfeit Goods,” one out of every three CDs and DVDs sold in the world is a counterfeit and the hub of this thievery is China.
• Books: In 2007, the Association of American Publishers estimated that Chinese piracy of books cost American publishers $52 million. “An unauthorized Chinese version of ‘Harry Potter and the Half-Blood Prince’ was on sale Sunday in Beijing,” wrote Howard W. French in The New York Times, “just two weeks after the book appeared in English and almost three months ahead of the planned October launch of the official Chinese-language edition.”
• Software: According to the Business Software Alliance, a Washington, D.C.-based lobby group, over 90% of the software used in China is unlicensed.
• Pay TV: “China has become the hotbed of a new technology that distributes live television signals over the Internet, exposing the world’s pay-TV operators to the kind of online piracy that has plagued the music and movie businesses,” write Geoffrey A. Fowler and Sarah McBride in The Wall Street Journal. “The technology, called peer-to-peer, or P2P, streaming TV, enables viewers anywhere in the world to watch cable, satellite or broadcast TV on the Web free of charge. Pirate services offer the programs to anyone equipped with a high-speed Internet connection who downloads some simple software.”
• Automobiles and Auto Parts: Over the 10 years that GM partnered with Shanghai Automotive Industry Corp. to make Buicks, the Chinese stole the know-how and used the money earned to create the Roewe, a direct competitor. GM is suing Chery Automotive for stealing the design of its Spark minicar about which U.S Commerce Secretary Donald Evans said the resemblance between the two “defies innocent explanation.” The Chery Tiggo is a virtual carbon copy of Toyota’s RAV4. And Hanns Glatz of DaimlerChrysler estimates Chinese counterfeit Daimler parts represent 30% of the market in China, Taiwan and Korea.
• iPods: Both Hitachi Global Storage Technologies and a little-known subsidiary of a Chinese automobile maker, GS MagicStor, were selling Apple a tiny electronic storage device for its smallest iPod model. Trouble is that Hitachi claims GS MagicStor stole its technology and is selling it not only to Apple, but all over the Far East. A suit has been filed in Northern California Federal District Court.
“Let’s be practical here,” said an American pharmaceutical executive. “It won’t get much better until China has its own intellectual property to protect.”
Plundering Natural Resources and the Environment
• Furniture: Chinese manufacturers are importing illegally-logged hardwood from some of the world’s most fragile ecosystems, including Brazil, Indonesia and West Africa. According to the Environmental Investigation Agency and the Jakarta-based Telapak, China is “the largest buyer of stolen timber in the world.” Up to 44% of its imports are smuggled.
• Coal: “One of China’s lesser-known exports is a dangerous brew of soot, toxic chemicals and climate-changing gasses from the smokestacks of coal-burning power plants,” write Keith Bradsher and David Barboza in The New York Times. Apart from causing an estimated 400,000 premature Chinese deaths a year, clouds of sulfur and carbons have drifted across Asia and reached the West Coast of the United States, with microscopic particles contaminating the lungs of unsuspecting Americans.
Poisoning and Endangering Americans
• Toys: This week, a small Oak Brook, Ill. toy company, RC2, was forced to recall 1.5 million Thomas & Friends wooden trains and components made in China, because they were coated with lead paint that can cause brain damage to young children. Last month, fake eyeball toys from China were found filled with kerosene. Toy drums and a toy bear were recalled because of the use of lead paint. Wal-Mart issued a nationwide recall of baby’s bibs made in China, because of lead contamination. In all, the number of dangerous products made in China that were recalled last year at the behest of the U.S. Consumer Product Safety Commission totaled 467.
• ATVs: Two weeks ago, the Consumer Product Safety Commission said that the Kazuma Meerkat 50, a youth-oriented, all-terrain vehicle imported from China, caused children to be at “risk of injury or death due to multiple safety defects.” Among them: No front breaks, no parking brake and it can be started in gear.
• Pet Food: This past April 5, the title of this cranky little e-zine was “Two Horrific Business Stories: Is It Smart to Outsource Your Reputation?” I explored the appalling sequence of events where the FDA received more than 10,000 complaints from terrified pet owners whose beloved cats and dogs were sick and dying of kidney failure. The culprit: A greedy Canadian entrepreneur that sold 100 brands of contaminated pet foods to Kroger, Safeway, Wal-Mart and many others; the stuff was laced with the industrial chemical melarmine used to make glue, fire retardant and plastics as well as used as fertilizer in China. The original supplier was a greedy entrepreneur from Jiangsu province, China. Even though he knew pets were dying, the greedy Canadian compounded his crime by waiting weeks to notify pet owners, resulting in dozens of pet deaths.
• Human Food: “The volume of food imports from overseas is approaching 10 million per year,” said retired Food and Drug Administration Associate Commissioner William Hubbard in Senate testimony. “And the number that FDA inspectors physically examine is in the single digit thousands—making it virtually certain that any given food shipment will enter the United States with no FDA inspection.”
Combine this with last fall’s report from the U.S. Department of Agriculture that “China has one of the world’s highest rates of chemical fertilizer use per hectare, and Chinese farmers use many highly toxic pesticides, including some that are banned in the United States” and a serious problem exists.
Major American food manufacturers such as Kraft, Sara Lee, General Foods and General Mills import dozens of ingredients for their processed cheeses, snacks and cereals, and Kraft, among others, is lobbying the U.S. government to press China to improve its food safety.
The idea that these huge conglomerates are putting the onus on the federal government to protect them from imported Chinese poison is laughable. As a consumer, I expect Kraft et al., to protect me, my loved ones, my dog Auggie and my cat Sci-Fi, from contaminated imported ingredients from China that—in addition to melarmine—can include:
• Formaldehyde, used to prolong the shelf life of noodles and tofu;
• Borax, found in detergents and Fiberglass that is used also to preserve fish and meats in Asia;
• Diethylene glycol, a sweet, thickening poison that turned up last week in counterfeit Colgate toothpaste and others marketed under the labels Cooldent Fluoride, Cooldent Spearmint, Cooldent ICE, Dr. Cool, Superdent, Clean Rite, Oralmax Extreme, Oral Bright, Bright Max and ShiR Fresh Mint;
• Produce sprayed with banned pesticides such as DDT; and
• Chinese honey containing the antibiotic chloramphenicol, peppers with pesticides and seafood contaminated with veterinary drugs, to name just a few.
After reading what I have just written, I am scared. I don’t want to buy anything from China—not food, not pet food, not electronics, not clothes, not anything.
American companies that don’t do any business with China would be smart to say so, using a technique articulated by West Coast “Marketing Wizard” Jay Abraham—pre-emptive advertising. An example of pre-emptive advertising is found in Tuesday’s New York Times—a full-page open letter from the president and CEO of Tyson Foods, Richard L. Bond, announcing: “Tyson Fresh Chicken Now Raised Without Antibiotics.”
This implies that Perdue and everybody else in the business is lacing their chickens with potentially harmful antibiotics. How can Perdue reply? It can say, “Uh … gee, we don’t use antibiotics either.” This is brilliant ploy by Tyson, especially at a time when the Chinese are negotiating with the United States and EU to allow the import of poultry products.
Last fall, Chinese authorities discovered farmers in the Hebei province were adding the cancer-causing red dye, Sudan B, to duck feed so that their eggs would have reddish yolks and bring higher prices.
And in the province of Liaoning, a chicken farmer bought 28 bottles of condensed vaccine and inoculated his 10,000 birds from Asian flu. They all died, because the vaccine was of poor quality from an unlicensed factory.
Given the choice of Chinese chickens or Tyson’s, which would I opt for?
[BACKGROUND MUSIC] “Jeopardy” theme
Below is a logo I designed for companies that care about the safety and well-being of their customers by guaranteeing that they do absolutely, positively no business with China. If I saw this logo on my Doritos, cereal, Bisquick, chicken, cake mix, Jell-O, frozen dinners, peanuts, child’s teddy bear and hundreds more products, I would feel good about buying these products. What’s more, I would be more likely to buy products with this logo than those without it.
“Never compete with China on costs or Wal-Mart on price,” said business guru Tom Peters. Maybe it’s time to stop doing business with China. My files on Wal-Mart overfloweth. Maybe Wal-Mart deserves an analysis in a future column.
BREAKING NEWS ABOUT CHINA
Fast-Growing China Says Little of Child Slavery’s Role
From the densely packed factory zones of Guangdong Province to the street markets, kitchens and brothels of major cities, to the primitive factories of China’s relatively poor western provinces, child labor is a daily fact of life, experts here say, and one that the government, preoccupied with economic growth, has traditionally turned a blind eye to.
“In order to achieve modernization, people will go to any ends to earn money, to advance their interests, leaving behind morality, humanity and even a little bit of compassion, let alone the law or regulations, which are poorly implemented,” said Hu Jindou, a professor of economics at the University of Technology in Beijing. “Everything is about the economy now, just like everything was about politics in the Mao era, and forced labor or child labor is far from an isolated phenomenon. It is rooted deeply in today’s reality, a combination of capitalism, socialism, feudalism and slavery.”
—Howard W. French, The New York Times, June 21, 2007
China tops U.S. in carbon dioxide output
Heavy coal consumption and increased cement production are cited by the report’s researchers.
BEIJING—China has overtaken the United States as the world’s top producer of carbon dioxide emissions—the biggest man-made contributor to global warming—based on the latest widely accepted energy-consumption data, Dutch researchers said.
According to a report released Tuesday by the Netherlands Environmental Assessment Agency, China actually overtook the United States in emissions of CO2 by 8 percent in 2006. While China was 2 percent below the U.S. in 2005, voracious coal consumption and increased cement production caused the numbers to rise rapidly, the group said.
—Audra Ang, Associated Press, June 21, 2007