Don't politicize business By Li Shi (China Daily) Updated: 2005-01-29 10:47
Change is always a source of nervousness. The IBM-Lenovo PC deal is a case in
point.
Right after the news came that the US-based IBM proposed to sell its personal
computer unit for $1.75 billion to Lenovo, China's top PC maker, market
suspicion ran high.
Looking at it in a commercial sense, people were questioning whether Lenovo
could turn the IBM PC arm into a profitable business.
The IBM unit, which supplies computers to US Government departments, was the
third largest PC maker in the world last year.
On Thursday morning, Lenovo shareholders approved the deal at a conference in
Hong Kong.
But things were more than a little different in the United States, where some
House of Representatives members politicized the deal.
On Wednesday, three US House committee chairmen urged a government panel to
probe into the deal's implications for national security.
They said it "may result in certain US Government contracts with or involving
personal computers being fulfilled or participated in by the Chinese
Government."
"National security" is a big concern that a nation cannot ignore.
A decision whether to undertake the month-long review or not will be made
this weekend.
And given the political weight of the three figures - all chairmen of house
committees - analysts generally agree the review will happen and the deal will
go ahead.
The United States has laws relating to national security, as does every
country, which requires reviews of potentially risky business transactions.
We respect their laws which focus on the sale of high-tech products.
But the question here is: Is the humble computer actually a high-tech
product?
In name, they are still unanimously categorized as high-tech.
But they are not exclusively made in the United States. They are common
around the globe and Chinese manufacturers have the technology to make them.
Most US PCs are already made overseas with standard parts. IBM products are
the same.
Its flagship ThinkPad laptop is also made in China. There is no magic
technology inside them.
In this sense, making PCs can be looked at as a low-tech operation.
The commercial consideration of Lenovo wanting to purchase IBM's PC unit is
evident.
It is aiming to reach out further in a era of globalization with the help of
IBM's worldwide marketing network and sophisticated R&D capacity.
The Chinese PC giant has been feeling growing pressure from domestic rivals.
For a public company, making a profit and becoming increasingly sustainable
is the top consideration of any move.
Otherwise, the capital market would punish it. It is laughable that Lenovo
would risk losses in an elaborate plot against "US national security."
Admittedly, the Lenovo Group is an important shareholder of Lenovo. The group
was established in 1984 nominally by the Chinese Academy of Sciences, a public
institution.
But we cannot ignore the fact that in the 1980s, individuals were not allowed
to make investments.
After two decades of development, the group has largely shaken off the
influence of government, mirroring China's market-oriented reform.
For a long time, the US Government has been claiming its huge trade deficit
has been caused by Chinese manipulation.
The truth is, the US Government has imposed a slew of restrictions on exports
of some so-called high-tech equipment to China, which has the manufacturing
know-how to make the same products.
The current call for a review is in the same vein. Behind both are a deep, or
even visceral, suspicion toward China.
It is ironic that a country where "money talks" cannot let business be
business.
