By PEDRO NUENO (China Daily)
Updated: 2007-10-19 07:43

Countless anti-Chinese business articles have been published around the world this summer. For readers, it looked like a contest to see which writer could use the most aggressive headline.

According to the reports, it appears that Chinese companies cannot control quality, and do not care about the raw materials they use.

On top of that, China appeared responsible for many other problems as well: rising wheat and milk prices, for example. This price hike is affecting many products manufactured with these raw materials, and the popularly touted reason seems to be that the Chinese are consuming more milk and more wheat than before.

Chinese competition across a range of industries was also blamed for hurting industries across a wide spectrum. "Unfair competition from Chinese textiles is killing us," said some European textile manufacturer's associations.

All this is unfair. I will not give company names but a recent article in Automotive News indicated that a leading Western car manufacturer spent more than $6 billion last year in warranty costs. This can only be the result of a somewhat careless manufacturing system with a tremendous capacity to destroy shareholder value.

The "subprime mortgage" crisis shows a careless financial system with leading banks, rating agencies, investment banks and hedge funds involved, operating in a frivolous way.

We know that some European countries, for example, the United Kingdom, are not self-sufficient in food, but we do not criticize them for importing what they need. Many suppliers would like them to import even more.

And we know that there are cases of American and European companies in pharmaceutical, medical devices, food and beverages, meat and poultry, and many other sectors that had to withdraw certain products, or stop sales temporarily, due to quality, design, contamination or other problems.

Moreover, some of the Chinese products recently showing quality control problems came from foreign companies established in China.

The goal is not to demonstrate that we all have problems around the world. The question is: How can we make China and Chinese companies better accepted and more attractive in Europe and in America? And the answer is simple. Chinese companies should create jobs there.

At present, China is seen as a threat; it has destroyed millions of manufacturing jobs, the argument goes, and now will destroy higher quality jobs. If the world's economy slows down, many countries will launch unfair anti-China protectionist measures.

But Toyota, a Japanese company, is eating market share in America from the three troubled American car manufacturers and the Americans look at Toyota with interest and see it as a model in the way it deals with workers and suppliers.

Opel, the European brand of General Motors, is seen as a German company and its success will be seen by Germans as good for Germany. Spain is the sixth largest carmaker in the world, with only foreign companies operating within its territory (Ford, GM, Volkswagen, Renault, Peugeot-Citroen, Mercedes Benz), directly creating 1,000,000 jobs and generating 300,000 more through the supply chain.

Media, employers, business leaders, government officials all strongly support the industry even though it is made up of only foreign companies. One of the most prosperous countries of Europe is now Ireland, and the Irish are proud to work for many American pharmaceutical companies. In the same way, Bostonians in America are proud to work for Novartis, a leading European pharmaceutical company.

If one day Chinese car manufacturers decide to establish in Europe, for example, there would be a competition to attract them to many potential locations. In addition, many key groups would support them there afterwards: the media, government, unions, suppliers, etc.

In short, Europeans would be proud to work for Chinese companies operating in Europe. We need Chinese companies to invest in Europe and the US in industries such as chemicals, machinery, automotive, pharmaceuticals, and other more sophisticated sectors.

There are many small- and medium-sized companies in these sectors that may not have a future, making them easy acquisition targets and the basis for future international growth.

The day Chinese companies from their global bases play shoulder-to-shoulder with their European and American competitors, they will be seen as a critical part of the economic system, will be respected, well received and supported.

But this is not an aesthetic recommendation. There is no future without this global deployment. It is not feasible to secure the future of the Chinese economic system in an open market economy with Chinese companies only exporting from China.

We are not proposing something easy to do. When American companies were deployed in Europe, Europe was destroyed by World War II and welcomed them. When European companies entered America, America was growing fast. When the Japanese deployed internationally, in the 1980s, they had an important manufacturing and technology advantages.

The world is more saturated today, competition is tougher, technology is widespread, and we have slower growth. To deploy internationally can be more difficult today than it was in the past. But the success formula continues to be the same: management. And for Chinese companies, now is the time to go.

The author is executive president, China-Europe International Business School

(China Daily 10/19/2007 page11)