DiligenceChina

‘Running Dog’ and ‘Yellow Peril’ exemplified the jargon of last generation’s style of international conflict. The coming round of tension – to be played out on the battlefields of trade and commerce – is likely to use language like, “public health” and “safety standards”. You can see samples today in the op-ed controlled territories of the People’s Daily, “More than 80 pct of China’s products up to standard” and the pithier NY Times, “Origins of our food”.

From the People’s Daily
http://english.people.com.cn/90001/90778/6207568.html

More than 80 pct of China’s products up to standard: sample survey shows
China’s quality watchdog said on Tuesday that a sample survey shows 80.9 percent of products made in China for domestic consumption were up to quality and safety standards in the first half of 2007.

Meanwhile, “99 percent of food exported to the United States was up to safety standards over the past two years, which is a very high percentage,” said Li Yuanping, a senior official in charge of imported and exported food safety in the GAQSIQ (General Administration of Quality Supervision, Inspection and Quarantine), in June.

And from the NYTimes:

Origins of Our Food

With imports of agricultural products rising sharply and sporadic scares about their safety, Americans surely have a right to know what country their food has come from. Unfortunately, they have little chance of finding out, due to the intransigence of meat importers and grocery retailers.

With the recent questions about Chinese seafood, those labels mean that consumers can make informed choices at the seafood counter — something they should be able to do with all of their food purchases.
…there should be no compromise of the basic principle that consumers have a right to know where their food comes from before popping it into their mouths.

Yes, it seems that a bit of international tension is in the air. Bad science and American flags made in Chinese sweatshops are funny at first – but the sophisticated irony wears thin in a hurry. International business people with China factories or supply chains are going to have to define themselves before politicians and bureaucrats to it for them.

Tips for the coming trade war:

1) Have a Plan B. What will you do when “Made in China” becomes a warning label? When your China production gets taxed or regulated out of competitive range? Yes, I know it took you 5 years to finally get your China sources squared away. So what? Do you have an alternative source? If you don’t have a Plan B, you might want to put one together in a hurry.

2) Choose a side. This is a little tricky, because it may not be as simple as Us vs. Them. There may be a lot of people claiming to be Us. That’s the problem – you have to choose the Us and then try to define the Them. The Us keeps changing – and they may try to paint you as a Them. The worst possible situation is waffling early and being forced to over-compensate later. Stake out your own territory early and stick to your guns.

3) Monitor the environment. This means reading the OTHER guy’s blog and news releases. In China this is easy (for now) because the Chinese government has an official media. You have to get used to reading it though. When the People’s Daily runs 6 articles in 2 days talking about how safe Chinese products are, it means they’re worried and/or are staking out their ground. It doesn’t mean that the products are safe.

4) Don’t be anyone’s patsy. If you say that your imports from China are safe because the label says they’re safe – that’s your take on the issue. It will be hard to climb down from later. If you do get caught on the wrong side of a conflict (i.e.: you honestly believed someone who lied to you), you should reverse your earlier claim quickly, transparently, and define your new viewpoint. None of this –‘when I said the toys were safe what I really meant was that they only started fires 65% of the time so they were safe 35% of the time which is almost half so that technically my statements were not untruthful….’ Be careful whose assurances and advice you are relying on. Do your own homework, and maintain a healthy skepticism.

5) If you’re gonna drink the kool-aid, you should know what’s in it. More than a few importers are going to see price levels moving against them and be tempted to suddenly get religion about trade restrictions and protectionism. Be careful. Isolationists tend to have a lot of ugly, heavy baggage. Once you start down that road, it’s hard to find the off-ramp.