China Embraces Teddy Roosevelt

What does it mean when China—The People’s Republic—acts more quickly and decisively in a defining anti-trust case against Alibaba, than the supposed free trade West acted on Amazon?

A recent statement about the decision, published in the People’s Daily (the official Communist Party Newspaper), reads: “Monopoly is the great enemy of the market economy. There is no contradiction between regulating under the law and supporting development. Rather, they complement each other and are mutually reinforcing.”

To be fair, the fine imposed on them, $2.8 billion (supposedly 4 percent of Alibaba’s domestic sales in 2019), is a drop in a bucket and not likely to cause them too much reflection, given the $12 billion in profits they reported in the last quarter of 2020 alone. Yet, it is a statement and a message that they are being watched.

The issue at hand was their strong-arming of vendors not to sell elsewhere as they fiercely competed with Tencent and others, thus actually limiting innovation and harming consumer choice…sound familiar?

Clearly, China was walking a fine line between control, both political and economic, and consumer demand. People love the platform. Why foment “revolution” when you could make a statement, effect change and still make people happy by keeping them employed (many highly educated young people work for Alibaba) and shopping as they do?

Jack Ma, the brilliant founder of Alibaba, was caught off guard by the investigation, as he was often propped up as the icon of Chinese entrepreneurial spirit and success. Interestingly, Ma often credits his huge success to simply what he learned by observing American companies.

Tencent, an obvious future target of the Communist Government, has at least paid lip service in anticipation, as evidenced by a statement from their President Martin Lau in a recent analyst call:

“As companies become large, and as internet services become more and more a part of people’s life, then companies need to be much more responsible, both to the users, to the government, to society. Now I think it’s important for us to understand even more about what the government is concerned about, what the society is concerned about, and be even more compliant.”

I don’t know about you, but I find this turn of events fascinating and a bit ironic, no? China and Chinese companies are behaving like our conceited view of Western free commerce, while the West is bogged down in regulatory political bureaucracy and unable to deal with even the simple issue of fakes being sold on Amazon.

There is much at stake here.

Not hi-tech superiority, but internet dominance. These are internet giants, not tech giants—and the difference is not semantic, it's critical.

Internet dominance affects supply chains, employment, goods and services…basically just about everything that affects our daily lives. And the West, the United States, is woefully behind.

Innovation, choice and fresh thinking won’t come from one source—it never has. And every time antitrust foes predicted doom-and-gloom; the opposite happened. Imagine if the Bell companies hadn’t been broken up? Would we have mobile phones today? Maybe…but maybe not. We might still be tethered to land lines.

President Theodore Roosevelt, a famous foe of Big Trust said:

“It is no limitation upon property rights or freedom of contract to require that when men receive from government the privilege of doing business under corporate form, which frees them from individual responsibility, and enables them to call into their enterprises the capital of the public, they shall do so upon absolutely truthful representations as to the value of the property in which the capital is to be invested. Corporations engaged in interstate commerce should be regulated if they are found to exercise a license working to the public injury. It should be as much the aim of those who seek for social betterment to rid the business world of crimes of cunning as to rid the entire body politic of crimes of violence.”

Think about that statement, and now imagine who might share a similar thought today and what we think about their politics.

The game is on. Li Qing, a former official, said in a January interview with a news source in Beijing:

“Competition between China and the United States is becoming more intense. We must give our nation’s innovative enterprises more space to develop, a better policy environment and more room to correct faults. We must encourage enterprises to keep innovating.”

Once the West was adept at correcting problems. No longer.

Perhaps it is most instructive and appropriate to turn to a most relevant source…Sun Tzu:

“The weakness of an enemy forms part of your own strength”

Never stop learning from your competitors—Jack Ma did, and it looks like The People’s Republic has as well.

What do you think?