From exporting labour to exporting standards?

October 20, 2012

In the discussion of China’s export of high-speed railways in the Chinese media, there has been mention of the importance of building railways and trains to Chinese standards and specifications, as opposed to supplying them to European or American standards. In the context of the Pan-Asian Railway and the so-called Asia-Europe land bridge, a railway network designed to Chinese standards was seen as giving China control over the network itself, which could be a means of controlling, for example, flows of oil.

In a recent article, 中国商报 raised the same point from a trade perspective and linked it to what it deemed the unsustainable nature of Chinese labour exports. In Egypt, for example, the basic wage of a Chinese construction worker is over 5,000 yuan a month plus overtime. Increasingly, the wage differential compared to local labour (though, presumably, this does not hold for the higher-wage countries in Southern Africa) is so great that it that outweighs the benefits of the greater productivity of Chinese workers. Another problem, as the deputy general manager of the overseas department of China Communications Construction Company told the paper, is the “malicious and excessive rights activism” (额以威权、过度维权) of Chinese workers overseas demanding more pay — an intriguing comment considering that little of that activism gets reported not only in Western but also in Chinese media, presumably because the news do not travel outside the overseas corporate compounds.
The article notes that, currently, few overseas projects are designed by Chinese companies (which may be true in communications, but not in hydropower), and that Chinese contractors are ultimately vulnerable to the Western companies that oversee design. “Controlling the technical standards means having leadership rights in the international competition. Whoever controls the standards decides the rules.” The way forward is thus not just to get overseas EPC contracts but to be planners and designers at the level of a regional communication network. Foreign-language translations of 12 Chinese “communications construction standards” have already been published.
The nature of the telecom industry is indeed such that the whoever controls the planning of regional networks holds the trump cards for years to come, both in terms of negotiating with suppliers and strategic control. As in the case of railways, there may indeed be both commercial and — on the part of the Chinese state — geostrategic reasons for striving for such positions.

ZTE, Huawei executives sentenced in Algeria

July 4, 2012

According to a report on the CCTIME website that has since been removed but has been reposted on World-Story, two executives of ZTE and one of Huawei have been sentenced to ten years in prison for bribery that took place in 2003-06 and involved the Algerian telecom authority. The report says that an international arrest warrant has been issued against the three, indicating they were sentenced in absentia.

This is the first case I have come across of Chinese executives being actually sentenced for corruption by a “developing-country” court.