When I was consulting with western companies I always advised my clients to be cautious about dealing with Chinese State Owned Enterprises (SOE).  In fact, I generally urged them to steer clear because SOEs are well known to make decisions for political reasons that may be contrary to the best interests of the business.  Further, SOEs rarely have any particular motivation to “play ball” with their western partners.

With that context in mind, I’ve watched the U.S. nationalize broad swaths of the financial industry, and now the government is taking over automobile manufacturing.  This story was all over the media today, but I like the WSJ, so I’ll quote from their report:

“… plan that would give the U.S. government a 72.5% stake and keep the auto maker closely held for as many as 18 months.

The government is set to boost its support for GM by as much as $50 billion through a bankruptcy filing that could come Monday.”

The only U.S. made cars that I’ve owned since 1980 were Fords (and that was some time ago – gotta love the F-250 4x4), so I guess that I can take some comfort in that.  Anyway, we’re now in a position where major chunks of our financial system, and our “too critical to fail” manufacturing infrastructure are, effectively, SOE’s.  Maybe, in the 21st century, our government is taking its lead from China.  Given the relative performance of our two economies, maybe it’s not such a bad thing, but it’s tough to accept for a guy like me, who learned about business way back in the 20th century.

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Technorati Tags:  China, Nationalization