2012/01/27

China's reality lost in translation, Davos told

DAVOS, January 26, 2012 (AFP) - The West has a skewed view of China which Beijing has to fix if it wants a better reception when it goes shopping abroad, business and political leaders said at the Davos forum Thursday.

"The problem in non-Chinese public opinion is that there's a Chinese official behind every Chinese business person," said World Trade Organization director-general Pascal Lamy.

"That's the perception -- that China is grabbing resources, that's what they are trying to do in new colonial something, that they're after technology, stealing.

"All these extremely negative views which overall translates into: this is a country that doesn't play by the rules," he added.

In addition, China is sending images of its rockets, brand-new high speed trains and its well-oiled organisation of the Olympic games to the world, giving the impression that it was fast becoming, if it is not already, as advanced as any other developed nation.

As a result, the country is getting a cool reception when it attempts to spend some of massive savings abroad on companies as local populations find it hard to believe that job losses at home are not somewhat linked to the Chinese raiders.

Chinese moves to acquire overseas assets have not always been welcomed. US automaker General Motors blocked the sale of Saab to two Chinese firms, leading to the Swedish marque's demise.

But the reality of China is far from its commonly held image, panelists at the Davos forum said.

John Zhao, chief executive officer of the private equity firm Hony Capital, noted that vast swathes of China still live below the poverty line.

In addition, Beijing is "not an active investor for the purpose of grabbing resources."

"They're simply saying 'let's make sure that those hard-earned monies don't depreciate," he said.

If Chinese companies are buying up their foreign counterparts, it is to produce goods to satisfy domestic demand that could help in rebalancing the country's current export-led economy, he said.

Zhao also pointed out that many Chinese companies were learning the rules as they go along, as "many are coming abroad for the first time to do business."

"There is a large percentage of Chinese companies, with their best efforts they just don't produce the best reports because they are still learning the rules," he said.

Robert Greifeld, Nasdaq chief executive officer, also noted that contrary to the United States, where the introduction of Sarbannes and Oxley rules were "met with general derision by the corporate class... in China, they seem to have an insatiable appetite to learn good governance standard."

However, "when you have 9 percent unemployment in the US and the goods are coming in 'made in China,' there's a common reaction we have to deal with," he said.

China needs to improve its communications with the rest of the world urgently as its ventures abroad will only grow in coming years, said Lamy.

"What remains true is that the flow of Chinese money to the rest of the world will increase whether it's private or public money or semi-public money.

"This will happen with the sort of political turbulences it will create.

"I anticipate this problem, in my view it's going to come and it's still time to try and frame in such a way that it does not degenerate," he said.

At the same time, China is not the only one with a communication problem.

"For the rest of the world, political leaders have to stop ceding to these denigrating stereotypes that are antagonising people, instead showing benefits of cooperation, this is all the more necessary in the times of tough, hard economic crisis," Lamy said.