Haiti as the Next China: Est-ce Possible?

One of my savviest clients called me a couple weeks ago. This guy is an opportunist. He makes things all around the world. He makes cheap things for which there is an immediate need. He has been doing this unbelievably successfully for around twenty years, all over the world, but lately almost exclusively in China and in Vietnam. He does both OEM manufacturing and manufacturing in his own factories, all depending on the best way to proceed at a particular time, in a particular place, and for a particular product. He studies the world from a manufacturer’s perspective and he is constantly crunching the various numbers that determine where to make little cheap things.

Over the years, I have spent hours talking to him about the information he analyzes in determining where to manufacture and the following pretty much covers it:

1. Political stability and risk
2. Labor costs/efficiency
3. Work ethic
4. Infrastructure
5. Material costs
6. Utility costs
7. Logistics
8. Shipping Costs
9. Where Nike manufactures

He was calling me to tell me he was considering Haiti and that I should look into lining up a good attorney there.

Here is his analysis, very very roughly, in his own words:

I cannot help but be impressed with the resilience and entrepreneurship of the Haitian people. And look at how well Haitians do when they come to the United States. That tells me that what has held them back has nothing to do with culture. I know Haiti has crime and corruption and even before the earthquake it had bad infrastructure, but look at how close it is to the US and think about its future. I see the US and other countries helping it recover both in terms of its government and its infrastructure. The US is going to put in place all kinds of incentives to encourage American companies to manufacture there. We are going to do this both for Haiti’s sake and our own. Let’s face it, our relations with China are bad right now. They are bad on both the political and the economic level and we should be doing whatever we can to reduce our dependence on them. And it is not as though things are getting any cheaper in China either. Wages and utility rates just keep rising. Haiti does have big problems and big risks and its recovery will likely be slow, but I seriously looking at it and you should line up a lawyer to help me when the time comes. If the US government is smart it will be looking at helping more US-friendly countries compete with China. I’m willing to be somewhat of the trailblazer in going into Haiti as I think it’s the right thing to do

And so I did. I contacted an international lawyer at my old law firm who I knew had done some work in Haiti and he recommended a Haitian lawyer to me but said he had no idea how that lawyer was doing. Then last week, the Martindale-Hubbell Blog did a post [link no longer exists] on how some of its lawyer customers were doing in Haiti and the recommended lawyer was in their post.

I secured my client’s approval to write this post and to the extent I can, I will keep you up to date if and when this project progresses.
So what do you think? Why not Haiti?

11 responses to “Haiti as the Next China: Est-ce Possible?”

  1. Why wait for a Haiti disaster? There are many small, poor countries that could use jobs putting tips on shoelaces, or basic IT gear, etc. and many are close to the US (Caribbean, Central America) and Europe (N. Africa).
    Everyone saw China as “cheap, abusable labor and 1 billion potential customers” but that shine is wearing off, especially as Beijing gets pushy with its actual and assumed clout.

  2. The problem here is that China has a much, much better government than Haiti, and so China can build container ports and transportation systems whereas Haiti can’t. Also China has relatively decent schools, which means that almost all Chinese peasants can read and write, whereas many Haitians can’t.
    So the economics of shipping makes it much easier to ship goods from China than from Central America and Haiti. Even with political corruption China has an edge. In China, if you have to bribe someone, you can figure out who to bribe and for how much, and you can get stuff done. In Haiti, it’s not clear who to bribe, how much, and even after you make the payment, you still might end up with nothing.
    This produces a paradox. If you have a reasonably strong and competent government that can “get things done” then you end up with container ports and transportation systems, but you also end up with that government making demands and generally causing friction.
    If you want an example of this paradox look at Cuba. If the US removed sanctions from Cuba, it would very, very quickly become a major industrial and transportation center, because it has what China has. The problem is that any government that can “get things done” will have friction with the US, and in the case of Cuba it’s too much to cause sanctions to be lifted.

  3. Also, Haitians are very resilient and entrepreneurial, but without a rational, stable government, all of that means nothing. I think Haiti will get a not-bad government someday, but not next year. It took China about 150 years to come up with a government that wasn’t a total disaster.

  4. causal: Everyone saw China as “cheap, abusable labor and 1 billion potential customers” but that shine is wearing off.
    Not everyone did. A lot of companies entered China on the belief that China was going to be a “great power” at it would be better to get in at the ground floor.
    causal: There are many small, poor countries that could use jobs putting tips on shoelaces, or basic IT gear, etc. and many are close to the US (Caribbean, Central America) and Europe (N. Africa).
    There are but you run into a problem. The temptation for a major power is to put some sort of puppet in charge of a country, who then gives a blank check for foreign powers to loot the nation. The trouble with people like that is that they aren’t the type of people that are good businessmen or statesmen.
    If you have a government that is genuinely interested in the interests of the people they govern, you will have friction and pushback. One reason China is pushing back on Iran and greenhouse gases, is that they don’t want to push lots of people out of work.

  5. It is true that the decency of the Haitian people shone through in that quake, somehow.
    Also, it is true that the Haitian people do very well in the USA (true of Caribbean folks generally).
    Also, if there is anywhere in the world where sweatshop type investment is desperately needed, it is Haiti.
    Finally, a plus for me: Haiti was one of the first countries in the world to be influenced by the ideas of the French Revolution and the rights of man. They had a shameful burden imposed on them by the French, a huge debt that they incurred when the Haitian’s bought the freedom of the slaves, and to pay that debt, they deforested the whole country. There has been a lot of suffering and corruption but I think this history shows that people of this country have great potential.

  6. “And look at how well Haitians do when they come to the United States. ”
    Really? I have been to areas around the US with high Haitian concentrations and they don’t seem to be doing too well.
    “It is true that the decency of the Haitian people shone through in that quake, somehow.”
    How so? Who doesn’t react aggressively and compassionately when a major disaster like that hits? 9/11, Sichuan Earthquake, Haitian Earthquake. This “decency” is a short-term “shock” effect and not sustainable as clearly evidenced in the US and China.

  7. twofish:
    The problem here is that China has a much, much better government than Haiti, and so China can build container ports and transportation systems whereas Haiti can’t.
    ***
    Haiti doesn’t need to, and the distance between China and the US demands big ships. There are plenty of small ships already existing to transport cargo around the Carribean.
    @twofish:
    I think Haiti will get a not-bad government someday, but not next year. It took China about 150 years to come up with a government that wasn’t a total disaster.
    ***
    Haiti has been occupied by the UN for 20 years to “save” them and nothing good has happened. The UN needs countries to need them and functional countries don’t need the UN.
    @twofish:
    A lot of companies entered China on the belief that China was going to be a “great power” at it would be better to get in at the ground floor.
    ***
    And now those companies are shuddering at how they are being treated under the new power. Serves them right.
    @twofish:
    The temptation for a major power is to put some sort of puppet in charge of a country, who then gives a blank check for foreign powers to loot the nation. The trouble with people like that is that they aren’t the type of people that are good businessmen or statesmen.
    If you have a government that is genuinely interested in the interests of the people they govern, you will have friction and pushback. One reason China is pushing back on Iran and greenhouse gases, is that they don’t want to push lots of people out of work.
    *****
    Chinese business people in Africa and SE Asia are doing the same kind of harm and Beijing throws its weight behind them in the same way that the western powers did 100 years prior, which is causing great rifts in the social/economic fabric of these countries.
    China is pushing back on Iran to let it have nukes and destabilize the middle east. Now the Saudis are suspected of having paid the Pakistanis to build a few nuke warheads in Saudi Arabia, as the Saudis already have delivery systems. China is doing no good backing Iran. People suspect Iran’s Feb 11 warning may be a nuke warhead test.
    As for pushing back in GHG regulation, China wants everyone else to cut back and hand over free money and technology while China does nothing. You can’t be a “poor, developing nation” and have a manned space program.

  8. casual: Haiti doesn’t need to, and the distance between China and the US demands big ships. There are plenty of small ships already existing to transport cargo around the Carribean.
    You need to get a book on international ship Levinson’s “The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger” and use the Amazon “similar books” function.
    Or just go to your nearest port and watch ships being unloaded.
    Modern shipping involves automated loading and unloading of container ships. If you can’t build a container port, then there is no way of getting goods shipped in and out.
    Also the economics of shipping favors large ships even for short distances. The cost of transportation is negligible. What does cost you is the crewing and loading and unloading, so you want massive ships with massive ports even for short distances.

  9. causal: Chinese business people in Africa and SE Asia are doing the same kind of harm and Beijing throws its weight behind them in the same way that the western powers did 100 years prior, which is causing great rifts in the social/economic fabric of these countries.
    Which is why you have to have a strong government that’s willing and able to push back. You simply can’t expect sympathy from outsiders. The US is a great country that is “less evil” than most occupying powers, but ultimately if the US has power over your country, it will set things up to work in US interests, which may or may not be those of your country.

  10. Haiti may be a good place to invest, but the following statement is not proof that Haitians in general are good business people:
    “And look at how well Haitians do when they come to the United States.”
    This is a classic case of selection bias. The Haitians in the US are generally successful probably because these were the go-getters that were able to get themselves out of Haiti in the first place. And what do you have left over in Haiti?

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