At Harris Bricken, we keep close tabs on what is happening around the world, and we know that our friends and clients do, as well. We are happy to provide this podcast series: Global Law and Business, hosted by international attorneys Fred Rocafort and Jonathan Bench, where we look at the world by talking with business leaders, innovators, service providers, manufacturers, and government leaders around the globe.
- Dan and Mark’s experiences in an emerging Asia.
- Changing dynamics regarding manufacturing in China.
- Evolving views on Section 301 tariffs.
- COVID-19’s impact on those doing business in or with China.
- The keys to a smooth transition out of China.
- Southeast Asia’s China competitors.
- The pros and cons of Mexico sourcing.
- Listening, and watching recommendations from:
This podcast audio has been transcribed by an automatic transcriber.
Fred Rocafort 00:07
Global law and global business go hand in hand, but never seem to keep pace with each other. The importance on the global stage of developing and developed nations waxes and wanes, while consumption and interconnectedness steadily increase all the while laws and regulations change incessantly requiring businesses to stay nimble. But how do we make sense of it all? Welcome to Global Law and Business hosted by Harris Bricken International Business attorneys. I’m Fred Rocafort.
Jonathan Bench 00:37
And I’m Jonathan Bench. Every week, we take a targeted look at legal and economic developments in locales around the world as we try to decipher global trends in law and business with the help of international experts. We cover continents, countries, regimes, governance, finance, legal developments, and whatever is trending on Twitter. We covered the important the seemingly unimportant, the relatively simple and the complex.
Fred Rocafort 01:02
We hope you enjoyed today’s podcast. please connect with us on social media to comment and suggest future topics and guests. Today, we are delighted to welcome Dan McLeod and Mark Plum to Harris Bricken’s Global Law and Business. Dan and Mark our directors at East West Associates, a leading provider of commercial operational and risk management solutions and seamless implementation to Western companies competing in the ever changing China, Asia, Mexico, and Central Eastern Europe markets. Dan, Mark, welcome to Global Law and Business.
Dan McLeod 01:49
Thank you very much.
Fred Rocafort 01:51
We’d like to get things started by having you both tell us a little bit about yourselves. And, before the podcast, I was taking a look at your bios. And Mark, there’s one thing in particular that I’d love to hear about. And that’s your experience opening up a representative office in Vietnam in 1994, which was really right after the the US embargo ended. So if you could just tell us a little bit about that experience as you as you introduce yourself.
Mark Plum 02:23
Thank you, Fred. This is Mark Plum. And as we said, we’ve been with East West now for 6, 7, 8 years. East West is a is a boutique consulting firm that really focuses on a lot of USA companies who are in China have been in China want to grow in China, perhaps leave China based on or expand out of China based on recent, you know, social economic events going on with COVID, etc, etc. And myself in particular, I lived in Asia for over 20 years. The last 12, 15 years of my time in Asia I was in in China, I was president of a company called Briggs and Stratton. We had five, I had five manufacturing facilities throughout Asia and Japan, China, Chongqing, Shanghai, in the Philippines, and as well as assembly operation in Vietnam, in roughly over 1000 people and that’s $200, $300 million revenue business. As Fred mentioned early on. In my early years, I was down in Thailand working for a company called train air conditioning and when President Clinton lifted the embargo with Vietnam, I was living in Thailand and I was traveling back and forth weekly, or monthly, I should say up to human city and open up a rep officer in 94 established a distribution center established assembly operation for Trane air conditioning. As in the early years in Vietnam opening up one of the first things that went in were large hotels, and then the large hotel was trained air conditioning systems were pretty dominant. So pretty exciting times back in in the early 90s in Southeast Asia.
Dan McLeod 04:12
Hi, everyone. Yeah, I also had a long career in Asia. I come from a little bit a little different background from Mark. I came up through manufacturing operations management, engineering management, and moved to China in the late late 90s. As many companies were expanding there and went there to set up our first factory there in a JV environment. Subsequently spent 21 years in Asia, the majority of that in China, but also seven years in Southeast Asia based in Singapore but covering the region in and then a year in the Philippines also running an operation. Most of my experience has been in the chemical industry but also done some some work in food trucks. processing a little bit of pharma and electronics processing. But again, primarily from an operations standpoint, in the last five years with East West, I’ve had the opportunity to work and expand beyond that work on projects in China, but also, helping companies expand their supply chains are footprints into Central Eastern Europe and Mexico as well, in addition to other destinations in Southeast Asia. So, yeah, that’s my background, getting 2020 plus years in Asia, working with US companies.
Jonathan Bench 05:36
I noticed on your website, you’ve got some great case studies, we’d love to hear a flavor of the kinds of projects you undertake. Of course, when I think people probably think about lawyers, I say, lawyers, you do one thing, when in reality lawyers do a lot of different things. And so from the outside, I’m thinking, Alright, your, your company does a lot of consulting, you help them figure out what’s going on, manage operational risks, management solutions, but tell us what you do day to day and what your clients value that you bring to their operations.
Mark Plum 06:05
This is Mark, maybe I’ll talk about one of the earlier ones we did with the last one, I already was one of the larger ones. So as we know, China has been, you know, in, you know, 20 years ago, everybody went to China, because it was a large domestic market, and or inexpensive labor to export out of in the course of those things have changed quite a bit. So we’ve been hired quite a bit the last five years for really site site selection, you know, if people come to us and say, hey, we’re thinking about leaving China, or we’re thinking about diversifying and putting some other bets in Asia, outside of China, so we’re not so dependent on China. And one of the early ones we did was a large multinational manufacturer, with actually an iconic brand, asked us to first maybe find a new site for them in China. And we did that. And then we said, hey, you know, where you sell most of your stuff, we noticed, most of it isn’t really staying in China, it’s going to Southeast Asia. So maybe we should put together a study for you that says, maybe you should begin to look outside of China. And this was before COVID. This was even before tariffs, you know, five, six years ago, look outside of China, as the ASEAN market is a large market, and you’re doing some business there, at present, so we put a quick study together, looked at the Philippines, looked at Vietnam, looked at Thailand, looked at Malaysia. In it, we look at all the inputs of components, and you know, labor availability, labor supply, taxes, tax incentives, land, land incentives, cost of building, etc, etc. And we, we put together, we recommend to Thailand, south of Bangkok, and Rayong. And then they asked us, okay, you know, can you help us now go ahead and find the piece of land and build the building and hire the people and help us start it up? And we said, sure. So basically, from the time we told him, it was Thailand, took us about took us two years to then secure the right piece of property, secure the right design engineering firms, make sure we had the right component supplies, and then started the business up and they and that was, again, that was pre-COVID. Pre tariffs. So now, they kind of look like geniuses, because they were ahead of that, which was all by luck. Actually, the reason they really wanted to get out of China was at that time was rising labor rates. So that was one case study that was that was on our website that maybe some of the audience might be interested in.
Dan McLeod 08:44
Some other activity we’ve been involved in, you know, last few years. Things have really shifted in terms of not just tariffs, but companies, freight rates, COVID travel restrictions and disruptions and companies looking to reconfigure supply chains become less, less dependent on one geographic area. And much of this is China centric, but it could impact a number of areas but more and more companies are looking to regionalize supply chains or at least diversify out of one primary manufacturing location in China. And so we’ve been doing more projects recently, looking at opportunities within specific sectors specific component types to to source closer to home, primarily in Mexico where we’ve got several projects going on to help identify potential suppliers. Once identified, quality work with them to qualify them sort of help facilitate the transfer of technology and product manufacturing knowledge into a North American System. prior. And again, this is quite a bit of activity recently there. But and and in some cases, we’ve been quite successful with that.
Jonathan Bench 10:09
That’s great. So let’s turn to the topic of the trade war, import tariffs increase shipping costs, all of that. What has been the global impact? And do you see a lot of companies really taking a serious evaluation of their global supply chain global operations? are a lot of companies looking to diversify away from China? If so, where are they going? What what kind of things are your clients coming to you now for, say, in the last couple of years, since the onset of COVID? You know, even even before that, with the with the trade war?
Mark Plum 10:41
Surely this is Mark. And, as you can imagine, there’s all kinds of combinations, and people are kind of all over the board on this, what we’ve early on when COVID first started in the tariffs first started, frankly, in 2017, I think there was a feeling that the tariffs were going to go away, and it was all going to get back to normal. So not much was really done early on. And then of course, COVID kicked in. So So now, we get I mean, it’s, it’s most of our calls are, how do we shorten our supply chains? In the early years, the large companies, you know, they called the General Motors for X sake, or, or general, GE, you know, we had a just in time supply chains where you could, you could have things spread all around the world, and just in in pretty much have it dialed in where your, your trucking, your suppliers, your your, your freight costs, you know, at that time container, out of Guangdong, Guangzhou, to LA was $3,000. So everything, when it was working was very, very efficient. Now, and these were the big companies that can really manage that. Well. Now we know the efficiencies aren’t there, the freight rates, you know, for that same container are $15000, $20,000? So we find a lot of companies in when they come to us, the first thing we always ask them is where do you Where are you selling most of your product? Right? Okay. So let’s say that the example I gave earlier about the factory, we moved down to move them down to Thailand, because they were selling most of their product and in ASEAN and selling most of their product in, in Australia, in New Zealand. Subsequently, we’ve had many companies who have, you know, are selling other places we had, Dan and I worked on a project about two years ago, a year and a half ago, now where, you know, a million other units were leaving China and going to going to Germany and Italy. So we put together they wanted to be they want to shorten that supply chain, from, you know, getting it across the Atlantic, all the way to Western Europe. So we put a study together and recommended and build a factory forum in Poland. So again, that was all based on their, where their consumption was, and then we and then once you find the right area, then as I said earlier, you have a look at labor, and really labor availability, I mean, chasing inexpensive labor, that can always change as in maybe not be so inexpensive in the future. But labor availability is critical and component supply is critical. And then shortening your supply chain. So and then obviously, if it’s if it’s consumption speak in the USA, Mexico was getting a lot of attention. And we’re spending a lot of time working on on site selections and components supply and labor availability. In Mexico with an eye on how do you get that product from there up to the United States. And then now now that supply chain is, is hours, you know, not 360 days, and it’s 10s to 1000s of dollars, you know, not $15000 or $20,000, a truckload or a container. So, you know, a lot of emphasis on shortening, supply chains and trying to get your production and your components supply, and everything as close to consumption as possible.
Dan McLeod 14:01
And additionally, big part of that, and one of the challenges there is that in China, when we think about China, what’s happened there in the last 25 years, you’ve got extremely broad supplier bases to support a number of different industries. It’s, it’s both broad and deep. From, from, from basic materials all through sophisticated components that go into into final products. Finding an area outside of China looking globally for manufacturing and sourcing presents a challenge of you can’t go anywhere else and find that same breadth and depth of of capabilities, manufacturing capability. So it’s very much part of lining up the requirements with what the appropriate geography tree that can support it, and understand where there’s deficiencies in that geography where you may very well continue to be building into an Asian source, recognize and determine if that’ll work for the client.
Fred Rocafort 15:06
I’d like to take a closer look at COVID and the impact that it’s having, specifically on operations by your company, but also by your clients. Right now, we’re seeing in, especially in some Asian countries there, there’s a real debate as to where the balance needs to be in terms of trying to prevent the spread of the of the of the virus, and at the same time allowing this as activities to to continue looking at the impact that that you’ve seen, directly. And also the impact on on your clients as they try to get on with it with their business. What are your perspectives on that? What have you seen, and what you think needs to happen going forward?
Mark Plum 16:01
Well, you know, this is Mark, as we all know, and we’ve been reading the course, and we know that China is, you know, really from a top down has been very draconian on, on, on shutting down portions and segments of their business. So and so we’ve had an it’s been kind of a, you know, it’s a compounding effect. You know, early on, we had some of our some of our clients, you know, their suppliers were in certain cities that were totally shut down, Wuxi, Wuhan, Harbin, were there then. So their suppliers are shut down, so they’re not working. So in turn, they can’t produce their products in a turn, they can’t ship. So then what happens is those suppliers then were opened up, and then the ports were shut down, because there was an outbreak of COVID in in Guangzhou and in that area, so the ports were then shut down. And then in turn, after that, you know, then now you’re now you’re 6, 8, 10 weeks behind, now, you’re 15, 18 weeks from the time your order would have shipped to have gotten it where it would have been three to six weeks prior. So you know, China’s going to do what China is going to do right when it comes to this. And so most of our, almost all of our clients are again, again, we’re not promoting leaving China at all, we’re just, but most of our clients are looking to have, you know, diversify their footprint. So in the case of when China’s working well, you know, perfect, because, as Dan mentioned earlier, China’s spent 25 years developing this infrastructure now, I mean, I first went there in 1993. So I’ve kind of grown up with, you know, going there with the black pedal bike. And now, you know, 30 years later up to the high speed trains, right, so I’ve kind of seen it all there. And their ports, their airports, their freeways, their trains, their world class in its 30 years, and billions and billions of dollars of investment. So you want to keep that you want to keep your toe in that in that water in that because it’s of the, you know, the the the three the billions of people. However, when things aren’t going so well, in China, you need to be able to shift sometimes productions. That’s why, you know, depending on where you’re selling, and where you’re consuming, you know, having a footprint maybe in Southeast Asia having a footprint maybe in Mexico, depending having a footprint in Central Europe to supply Europe is really advantageous when when you can be able to do it to adjust. And as for the large multinationals, they’ve been doing this for 4050 years, I was doing this one as with General Electric when I was 25 years old, the smaller companies find it more difficult because they may only have one manufacturing site. So in that case, they may have to have an another country or another region, maybe just some sourcing arrangements, so they can least get components. So that’s been kind of, you know, from what I’ve seen here in the last five years, really with the changes and what people are looking for.
Dan McLeod 19:05
Some other challenges more recently, particularly with COVID. As this is going on, and travel restrictions have extended and extended. I think what all of us began this we were thinking, Okay, this might be a three month or six month undertaking and we can you know, we can muddle through. It’s been much longer, you know, it’s two years now. And in the in the case of China in some parts of Asia. It’s not clear when the end of this is, we’re gonna see the end of this work. Unrestricted travel is is common again. Companies have really struggled in many cases to hold their organizations together to maintain focus to take on either expand their market or take on new products, product development and in local areas were three years ago. There was quite a bit of back and forth. Executives on both sides of the Pacific traveling back and forth for to maintain relationships for product development for business planning for strategic planning. Those that networking that face to face networking essentially stop. No virtual methods, you know, whether it’s zoom or teams, that’s some replacement for it. But it’s becoming increasingly difficult. And we talk to clients that are, that have had to take steps to really try to enhance the connectivity within their organization, the ones that we’ve talked to that have had long stable organizations in place overseas, where relationships have been built over time, they seem to be weathering better. But those organizations that may be have been are newer, or perhaps that’s an acquisition, or perhaps there’s a need for change in those organizations changing personnel, either through attrition, or perhaps performance issues, they are struggling mightily to be able to enact those to be able to make progress. And in those cases, they unfortunately seem to be sort of settling having to settle for sort of a status quo, and many of their longer term projects or strategic projects are either going slower on hold until we get to the end of into the travel restrictions.
Mark Plum 21:34
Just on that note a little bit, some of that stuff that Dan’s exactly right, we’ve had clients, most of our clients haven’t been able to travel to China for two years. So if they’re, if they’re organized pretty well, you know, they can take care of their HR stuff because they can third party some of their HR and they you know they’re auditing and tax will most have already had local accounting firms and they may have used the big some of the big four for you know, for audit and tax and that sort of thing. Where we see where a lot of them the mid the mid size company, the billion dollar company that billion to 2 billion where he was still doing a lot of product development on the on the USA side and then and then moving that design and product development in into Asia into their factories there that has suffered because you can’t get your product engineers in your pocket Elon people back you know, either from USA to China or from China to the USA to get up to speed because pure, you know, pure design pure in in in China is is the big firms can do it for sure. Here as I said, you know the General Motors, but that billion dollar company typically still doesn’t have pure raw design in China, they’re relying a lot on Headquarters and Headquarters, people can’t travel there, it’s really affected their product development cycles.
Jonathan Bench 22:53
I’d like to learn more from you about some of the upcoming ASEAN nations that are viable manufacturing alternatives to China. I know you’ve touched on Vietnam touched on Thailand. I’m curious about Malaysia, Indonesia, Philippines. Can you comment about the maybe some of the darlings that are up and coming some of the some of the things that those countries might be facing in order to get to a position where they can collectively challenge China and replace, or at least kind of replicate what you can get in China?
Mark Plum 23:27
Both Dan and I, we have lived and lived out there a long time in different countries kind of have different expertise in certain areas. So in my case, having spent a lot of time living in Thailand from ’90 to ’95. And then as I mentioned earlier, opening up the the Vietnam when the embargo was lifted. We like in those two areas. Case of Thailand. People will laugh when I didn’t laugh when I say this, but Thailand in Bangkok was really China before China was China, meaning in the late 80s, early 90s. All those companies that were resourcing social sets successful in Thailand, then blada moved up to China because they were just like everyone else chasing the inexpensive labor. But so in Thailand, a great auto industry, great auto support industry, I think it’s the fourth or fifth largest auto market in auto manufacturing in the world. For Ford Motor Company, for example, when they came out with their new Ranger about four years ago picked and introduced it in Thailand before they introduced it in their factories in the States. And that’s what was you know, think about almost unheard of in the in the early days. You’d always build something, introduce it first in the states and then take it overseas, but in this case, Ford introduced it first in Thailand and then brought it back to the States so you know a lot of great you know, electronics companies, healthcare companies, plastic petrochemicals so Thailand’s really good. Um, downside is labor rates have come up a little bit but they’re still still about half of what China is on. And then, of course, Vietnam, not as sophisticated as it doesn’t have quite the infrastructure that Thailand does yet, you know, be a components or be it, you know, be a train staff, however their labor rates are about half of Thailand. So, you know, see if you look at China, ale and then bank, Thailand’s half of China and labor, and then Vietnam is half of half of Thailand. So you can kind of book ins, you know, those areas pretty well. And then lastly, and then I’ll let Dan, we talk about other areas, but then we like, we like Malaysia, but you know, quite frankly, labor rates in Malaysia, you have to be very specific. And really what you want to have done there because their labor rates are higher than many cases higher than than China. And I’ll let Dan, talk about the areas that he understands really well.
Dan McLeod 25:54
Yeah, you know, recently, last couple of years, spent some time more time looking at the Philippines and things are I want to say, from a business friendliness standpoint, things are progressing well. And some interesting developments there. Got to know a little bit about the area around what used to be Clark Air Force Base, but generally known as Clark free trade zone, north of Manila, which is being developed into a major multi purpose hall both for manufacturing and logistics. And trying to attract regional headquarters is there as well, it’s been quite impressive, but really the story in the Philippines is around the electronics and electrical equipment industry. That’s their area of expertise. It’s an area where you can find very skilled capable workers at a very reasonable price, decent infrastructure and decent supplier base to support that. And the local population that come that have come up through multinational companies are rather skilled and capable in sourcing, both domestically and also sourcing from other parts of Asia, but particularly China and Southeast Asia. So for the electronics, electrical equipment industry, we found that to be pretty attractive in from developments along lines of being supportive for business that’s, you can see good progress there. You know, nobody thinks of Singapore as a manufacturing destination. So small country is really extremely well developed at a really high cost of living and high cost to operate there. But they’ve also developed some very interesting capabilities where where they rely on land and people in manufacturing assets in nearby in Indonesia, or across the border in Malaysia, to support a manufacturing, perhaps a product development, high level quality assurance, regional sales and marketing efforts based in Singapore, but with a manufacturing sector close by and a lower cost economy. So I think that’s interesting, in in a variety of industries, mentioned electronics, but also medical devices. biochemicals, pharmaceutical industry is also heavily invested there. So those are some of the places that we see a lot of activity in the last couple of years.
Mark Plum 28:32
Yeah, one, one real, real quick note on that is, depending on what you do, and depending on what the country is looking for, right? You know, in the case of that prop that when we have I mentioned we took, this company was the type board of investment, BOI was very, very excited about having one of these companies so they put out some some pretty good incentives in this case, I mean, of course, land and all that sort of thing. But as far as corporate income tax abatements or incentives, they were able to and when we were helped them, of course, negotiated with the board of investment, seven years of no corporate income tax whatsoever. And another five years, I believe it was at 50%. So, you know, most startups, you know, you don’t make money the first couple years. So getting a tax break for three years doesn’t really do that much good. But he started typically making money third, fourth year, so in this case, and they were able to, you know, substantially reduce their their tax burden. Had they stayed up in China where they’d already with it, they’d already exhausted all their tax incentives. So depending on what you’re doing, and depending what the country is looking for, there can be some very attractive incentives being offered.
Fred Rocafort 29:44
So in our work, we’re definitely seeing an increase in the number of companies that are looking for China exits whether these are partial or complete, whether they are based on a desire to expand that footprint. This you described or whether they have bigger issues with with China. And this is something that, frankly, we’ve been seeing, even even before the the tariffs even before COVID. And as you pointed out, we this is not something we directly advocate we, we think every company has has a different set of factors to consider, but it’s certainly something that is becoming more and more common. So, in your view, what are the keys to, to a smooth transition for a company that is looking at making a move away from China? We know that often the the apprehension that such a move causes is is enough to delay and then possibly suspend plans that, on the whole are beneficial to to the companies. So to the extent that some of these companies may need to have some of their concerns allayed? Based on your experience, again, what are the keys to make that transition go smoothly?
Mark Plum 31:11
This is Mark, you know, I think, you know, with a smaller company, I used to say that my see the smaller company, the billion dollar company, and who maybe has one factory in China, or only sourcing out of China, you know, this, this is a daunting thing for them, you know, they you know, they got the boards talking to them, they’ve got the duties, they’ve got the COVID they’ve got the higher labor costs. So, you know, so where, where, once they understand, you know, kind of where they might be able to go and and what are the opportunities, then they have to refocus in okay, if they’re deciding to leave China or severely reduced their, their footprint in China, they have to understand how they’re going to take care of their physical assets, you know, do they have tooling? How do they? How would they manage the tooling? Do they keep the tooling there? Can they move the tooling out? Do they own the tooling, right? That sort of thing. If they’re if they’re deciding to close down permanently, then they have to really unwind, you know, the whole VAT, the whole tax structure, and work with the local municipalities. Because, you know, you never just want to, you know, in some people have done it, and it’s that it’s just kind of pack your bags and run. But, you know, that’s not the right answer. Because you, you certainly want to be good corporate citizens. But more importantly than that, you may want to come back, you may want to continue to work there, right, so you can’t be blacklisted. So you have to really understand all the legal ramifications, you know, closing the building, and moving the tooling and laying the people off, you know, there’s, there’s, that’s all can be done, it can be done fairly timely. Rick tying up the books, and making sure your exit incorrectly as it pertains to tax and tax liability and what’s owed that can take quite a while on. And typically, most companies need a lot of help on that, just because of its Chinese, you know, rules, regulations, etc. So, you know, once you know where your home we want to go, then then you really need to focus on on shrinking or removing your footprint, is smooth and professional as possible.
Dan McLeod 33:19
Yes. You know, after a decision is made to to exit and to leave an operation, the process is fairly well described. It’s not necessarily straightforward, but it’s fairly well prescribed. And we’ve worked with a number of clients on these and it really the emphasis is on understanding the human resources component, understanding what what sort of severance and what sort of liabilities you’ve got, and make sure you fully understand that and comply with it. And make sure you can communicate that to employees at the appropriate time. And then managing the security aspects of it. There are horror stories abound about these, these activities going going poorly. And, you know, whether it’s security, security of facilities, securities of security of intellectual property, security of people, management, planning and managing that effectively is key. You can’t stress strongly enough the need to plan. Sometimes you don’t have as much time as you’d like. But generally, we’d like to see three to four months of a planning exercise going in before major exit so that we can cover all the bases around security, HR aspects dealing with stakeholders, suppliers, customers, local governments, and have that arranged in advance before actually executing and then as Mark indicated, After the after the shutdown of an operation, there’s still a great deal of work and oftentimes many months of work. You’re faced with to unwind and entity from a tax and legal perspective.
Jonathan Bench 35:15
It’s been great having you on the podcast with us today. Love hearing war stories, I love hearing the perspectives the alternative to China. And really, I’m the pragmatist when it comes to China. And I’ve worked with a lot of companies that are going into China for the first time, even during COVID. And during the trade war. And so I see that having this measured approach, not doing anything too hastily, all, it all resonates well with the way that I think that companies, like you said, should be good corporate citizens, but also should go about running their businesses, you know, as with a runway with multiple, multiple options, it’s just sound smart. So we always like to end our podcast with recommendations from our guests, and Fred and I will provide something as well. So we’d love to hear from you. As internationalist, we can stay on point with that, or we can do something totally off topic, something you’ve read something you want something you listened to, you know, a couple recommendations that you think would be interesting for the audience.
Mark Plum 36:13
You know, we have coming up, and I think it’s October, they haven’t really picked the final date yet, but the you know,the 20th Party Congress, and this is a always a big event in China. And, and as I think most of us who probably been on this podcast have read, you know, President Xi is in a very strong position, these, you know, could be, you know, somewhat president for life as some of the terms being used. And then so the party congresses, in the reading in The Economist, and some other other recent pubs, you know, they’re really choosing his supporting crew of which would drive China for the next five or 10 years. And, you know, I think what the kind of consensus is, is, you know, things are probably not going to change dramatically to go back to the, the old days, so to speak, the done days, the more open days. So, I think when people begin to, you know, start reading and falling again, as I said, the, The Economist is always a pretty good read. And in, that’s where they’re doing a lot of publications on this is you, when you do your planning, you need to kind of think through, you know, where do we think China’s going to be in five or 10 years? And then how, how do you design your strategies to fit in it. And if the same person is on top for the next 5, 7, 8 years, maybe things aren’t going to change all that dramatically from what we’re seeing now. So that would be kind of kind of my snapshot, you know, reading a lot of third party information,
Dan McLeod 37:50
I tend to concur, I don’t see a reversal of projectory over the last 6, 7, 8 years. More nationalism, more, generally less open and more repressive, I don’t see that trajectory changing anytime, in the near future and probably be reinforced at the Party Congress coming up as Mark mentioned, so the size of the market, in China, for many companies, it’s going to continue to be attractive. And so many companies want to participate there. I guess what I would suggest is a sort of a measured approach, and I open an open eye approach towards what the long term environments going to be. And so in to take that into account. But you’re going along lines, if you’ve got intellectual property, for example, that is very sensitive, or could be could be desired by the industrial sector in China. Many people have heard of the China 2025 policy, which is really to foster indigenous innovation in strategic industries that will continue to be to be pressed and emphasized perhaps a little more quietly than it was a few years ago because it generated some negative international attention. But it’s definitely still a consideration. And for companies looking to either move into China or expand there, take a hard look at your intellectual property, what you’re bringing in and how you’re going to protect it before you before you make that move.
Jonathan Bench 39:36
Way recommendations. Appreciate those. Fred, what do you have for us today?
Fred Rocafort 39:41
So one of my alma mater, the Chinese University of Hong Kong, does a great job of putting together events on legal issues with a focus on Hong Kong and China but but really, more more broadly more broadly. And I found out today that they have been recording those and making them available for for later viewing, which is great considering the the time difference. And I’m talking specifically about the law faculty, they have done a pretty good job of making this content available. So I’d encourage everyone who has any interest in legal issues. But definitely if they have an interest in Asian, Chinese and Hong Kong legal issues, to take a look at their offerings, their website is Law.cuhk.edu.hk. And they can look because there’s there’s a lot of material there, the CU HK Faculty of Law webinars. And Jonathan, what about you?
Jonathan Bench 40:52
Today, I’m recommending something on point with our discussion. I’ve mentioned Peter Zeihan in the past, and he’s a geopolitical guest with his own consulting firm, came out of strap four. And he pops up periodically in my head a lot. A lot of times when I’m thinking about macro, global issues, surrounding you know, the rise of nations, the fall of nations population demographic changes all of this. So while Dan and Mark are talking about, you know, we’re hopping around the countries in Southeast Asia, I was thinking about how geography plays such a massive role in the rise of some countries and others in the flow of migrants, you know, I mean, you see the, the, it’s just fascinating how this geography underpins so much of of why nations can succeed and what sometimes why they don’t. So I recommend Peter Zeihan’s website, which is just zeihan.com. And I think if you’re the kind of person who wants to understand what’s going on in the world, he doesn’t just focus on one area of the world. He hits on a lot of countries. And he’s written three books now at this point and does some of his speaking engagements you can see on YouTube as well. But I found him a kind of a breath of fresh air, fairly unbiased, unvarnished viewpoints. He doesn’t mince his words. It’s quite a bit of fun to listen to him speak and and read his books. So that’s my recommendation for today if you’re a geopolitical wonk, or a wannabe wonk, Zeihan.com. With that, Dan, Mark, we want to thank you for being on the podcast again with us today. It certainly was fun, and I look forward to following your work more.
Mark Plum 42:31
Thank you very much, sir. Pleasure.
Dan McLeod 42:34
Nice talking to you.
Jonathan Bench 42:38
We hope you enjoyed this week’s episode, we look forward to connecting with you on social media to continue discussing developments in Global Law and Business. This podcast was produced by Harris Bricken, with executive producer Madeline Williams and music composed by Stephen Schmidt. Tune in next week for another episode. We’ll see you then.
Transcribed by https://otter.ai