[jorblumesea]

I mean, the game they play is really hard to fight against. It usually goes something like this:

* Attract western businesses to make investments based on various capital incentives. You are a free market, after all.

* Once they are established and comfortable, start imposing restrictions, stealing IP and undercutting foreign companies. Make life increasingly difficult, except for those companies which you really need to stay in the country (Apple etc).

* Eventually drive out foreign business because some domestic company has stolen the tech, gotten the market share and is willing to play back with the govt

Why play that game? You can't win. Why anyone invests anything other than manufacturing in China is beyond me.

If your entire product can be stolen via a USB drive (source code, proprietary manufacturing processes, IP in general) stay far, far away from Chinese businesses or China. They are playing to win in a very serious way.

[brianwawok]

> Why play that game? You can't win.

1 billion people to buy your stuff is pretty tempting!!! If you are a CEO with 10 million shares of stock in BigCo.. and profits are going up like 1% a year.. why not roll the dice with China? If it works for a year, you make a bunch of money and cash out. If not, you don't "lose" anything.

[wahern]

Yeah, the CEOs who enter the Chinese market are long gone when the company pulls back.

I remember a conversation I had in the late 1990s with the owner of an Indian textiles company (father of a friend). He said Western companies investing in China were idiotic. He was upset because Chinese mills were selling textiles for cheaper than the raw inputs. His point was that anybody who thinks they can "compete" in such a market is stupid. The Chinese government (buoyed by dumb Western money) can support their producers for longer than any non-Chinese company can stay solvent. That will remain true for the foreseeable future.

The only winning strategy is to use this state of affairs to your advantage, which mostly means exploiting Chinese labour and investments to bolster your position in foreign markets. But trying to compete directly in the Chinese market is just dumb. The government isn't stupid. Long-term they know that they'll need every penny of their consumer market to prevent the financial collapse of their producers. And even if the collapse comes, that makes it all the more important to capture that value.

Better to wait it out until the Chinese market matures. You'll end up no worse than someone who entered prematurely, and probably better off.