The globalizer: Romano Prodi on the Chinese welfare state: Editors’ Journal, March 10
Romani Prodi, former Prime Minister of Italy and frequent Eurocrat, took a moment to speak to a room of reporters at China Europe International Business School’s (CEIBS) Lujiazui Finance Research Centre. If Prodi’s comments had a recurrent theme, it was the advocation of the Continental model to China. When Chinese state media asked him about the Greek debt crisis, he pooh-poohed its gravity ("This country only constitutes 2% of the EU’s GDP"); when asked whether the decision under his EU Commission leadership to expand the union from 15 to 25 states might have been premature, he said that the EU had no choice. I posed a question related to the decoupling thesis: What policies does Prodi believe are necessary to make Europe and China less reliant on exports to the US consumer? He answered indirectly, noting that Europeans and Asians participated in the US economic crisis by buying bundled mortgage products, without explaining why foreign investors would prefer such products to investing in their own economies. And then he argued that the crisis called for a greater level of global financial regulation: "You cannot have a globalized economic system with local control," he said. But we do have such a system, albeit with increasingly powerful international regulatory institutions. And one might argue that another way of describing local control is "checks and balances."
Negotiating lessons we can learn from Google: Andrew Hupert, March 19
The fact that Google (GOOG.NASDAQ) analyzed its BATNA – Best Alternative To No Agreement – and had other businesses to fall back on meant that it could keep its head and negotiate with China as an equal. Had Google caved in early, its gains in China would have been marginal, but its ability to operate around the world would have been severely compromised. If you bet everything on your China presence, then you are undercutting your position at the bargaining table … Chinese negotiators can be masters of the "wear down" – alternating between promises and threats to keep you at the table so long that sheer exhaustion turns the tide against you. Good negotiators know that you have to develop an internal timetable and bottom line – and stick to them. Ignore the promises, the 1.3 billion customer fantasy math and the bleating of the herd – and be ready to walk away when your own deadlines expire. Once a Chinese counter-party gets you to shift from "no" to "probably not," you have lost everything … Remember – the censorship issue was probably a face-saving cover for hacking and security issues. China is doing much the same – treating Google’s exit as a purely business decision. Don’t be too surprised if Google maintains some kind of presence in China and eventually returns with an online product. That’s still possible because the Google people haven’t burned any bridges – so far.
