Get used to this headline, because the Chinese will

NYT story by the always impressive Simon Romero.

Gist:

In its worldwide quest for commodities, China has scoured South America for everything from Brazilian soybeans to Guyanese timber and Venezuelan oil. But long before it made any of those forays, China put down stakes in this desolate mining town in Peru’s southern desert.

The year was 1992. Chinese companies had begun to look abroad. One steelmaker, the Shougang Corporation of Beijing, set its sights on an iron ore mine here and bought it in a move that seemed particularly bold. At the time, Peru was still plagued by attacks by the Maoist guerrillas of the Shining Path.

But the hero’s welcome for Shougang soon faded. Workers at the mine, which was founded by Americans in the 1950s and nationalized by leftist generals in the 1970s, began fomenting the unexpected: a revolt that has endured to this day, marked by repeated strikes, clashes with the police and even arson attacks against their nominally Communist bosses from China.

“We quickly realized that we were being exploited to help build the new China, but without seeing any of the rewards for doing so,” said Honorato Quispe, 63, a longtime union official at the mine, where workers have held three strikes this year alone, including an 11-day stoppage last month.

The long-festering conflict with Shougang over wages, environmental pollution and Shougang’s treatment of residents of this company town does not square well with China’s celebratory vision of its rising profile in Latin America, in which everyone benefits and a “win-win” is “the consensus.” Latin America, as this idea of so-called South-South cooperation goes, sells China raw materials like copper, oil or iron; in return, the region buys goods like cellphones, cars and cheap plastic toys.

The tension in Marcona, one of the most conflict-ridden towns in a country increasingly prone to conflict over mining and energy projects, suggests that China’s engagement in the region — like that of the United States, Britain and other powers that preceded it in Latin America — is not without pitfalls.

While not the dominant theme in the region’s relations with China, a wariness is crystallizing in some countries over the booming trade with China.

Reactions to this surge largely focus on cheap Chinese imports or on China’s assertive efforts to win access to energy reserves. In both Brazil and Argentina, for instance, manufacturers accused Chinese companies of unfairly dumping Chinese products in their markets, prompting new tariffs against some Chinese imports.

The backlash on China's penetration of the Gap is just beginning, and it'll be led by fellow New Core pillars ike Argentina and Brazil, who will have the guts to push back.

Having spent some time talking with China's extractive industry execs, I know that they know that their model isn't what it should be WRT to the win-win notion.  But the truth is, it'll take a build-up of experience and the accompanying backlash to force Chinese companies--and the government that stands behind them--to improve their approach.  Plenty of Western multinationals learned this the hard way, like Honda and Toyota here in the States years ago:  if you want to sell globally, you have to source and manufacturer and R&D locally too.  You become, in Sam Palmisano's terminology, a globally integrated enterprise.

This is the key evolution for Chinese national companies, and it will stress them out considerably--especially in their diverging (in terms of goals) relationship with the Chinese government/single-party state.  But the only way to get from here to there is more connectivity leading to more tension leading to more change.

So I say to Chinese business, bring [the connectivity] on!"

And I also say to the locals, "Don't give up anything without a fierce fight."

Comments

[TEJ]

What is the photo? It looks like a gnome launching an RC helicopter ove a shanty town, as photographed by a Jesuit Priest using an old Kodak brownie.

[Tom Barnett]

I have to admit, it was excessively artsy even for CSM. It ran with the piece, but even as I put it up, I thought to myself, "What the hell was this photog going for here with the crucifix and what not?" I thought I was tripping from some recent Robert Rodriguez flic.