CARGO AND
POLITICS
out, I’m already seeing changes
in attitudes. I’ve consummated
half a dozen deals where
Chinese businesses are willing
to buy foreign high-tech
products without demanding
to see what’s under the hood,
form arm-length partnerships
without equity ownerships
and grant foreigners access
to the financial services,
waste management and film
entertainment markets.
The aftermath of the
trade war will also loosen
up China’s domestic air and
ground logistics markets to a
few select foreign carriers like
DHL and UPS that have the
capital to invest in China’s
western frontier. The Ministry
of Commerce desperately seeks
to raise the living standards of
such cities like Gansu, Yunnan
and Shannxi that have not
benefited from China’s great
economic boom.
Many EU countries (Greece,
Croatia, Estonia, Latvia)
complain that the Belt and
Road Initiative (BRI) – China’s
US$4-8trn strategic plan
to invest in infrastructure
projects in over 100 countries
throughout Africa, the Middle
East and Europe to boost
trade, communications and
logistics – excludes foreign
companies from participating
in construction and investment
projects.
China is also listening. As
trade between China and the
BRI grows, thousands of new
ground, ocean and air shipping
routes will materialise. I fully
expect China’s Ministry of
Transport to grant licences
to the many middle-tier and
secondary logistics operators
in such countries as Turkey,
Kazakhstan and Nigeria.
Despite warnings from the US, the UK
has approved Huawei’s involvement
in setting up the UK’s 5G network
A bifurcated world
Unfortunately, we are already
seeing further negative fallout
from both the coronavirus and
a trade war. Not that there was
any love lost between the US
and China previously, but both
countries are now entering a
path of no return. A new cold
war is emerging, but not about
nuclear arms. Rather, high-tech
and commerce are the high
stakes.
This new era will force
countries and companies to
decide: “Who are you with —
China or the US?”
It’s anybody’s guess as to
what other countries and
companies will choose. Each
country will decide on its own,
irrespective of past affiliations
and alliances (NAFTA and
NATO), as to what’s best for
their own economic and
political survival.
Take the UK, for example.
For months, President Trump
and Secretary of State Mike
Pompeo have been arguing in
Prime Minister Boris Johnson’s
ear about the security concerns
Huawei presents to the
free world. He ignored the
pressuring and has given the
green light for the world’s
largest telecoms provider to
build part of the UK’s 5G
cellular network.
To make matters worse for
the US, China’s state media
quoted Johnson saying, “I
love China,” in a February
phone conversation with Xi.
Johnson went on to say that
Britain welcomes China’s
BRI investments in the UK.
Similarly, Italy, Germany
and, most surprisingly of
all, Canada, with its strong
relations with the US, are all
considering collaboration
with Huawei in their 5G
implementations.
All this jostling will put
air logistics carriers in a very
precarious position.
Just ask FedEx. The
CCP accused the American
company last year of
purposely misdirecting
Huawei packages to Memphis
rather than to the intended
address. FedEx claims that it
was an operational error. The
company now sits between a
rock and a hard place trying to
placate both countries while
not favouring any one side.
The upshot of all this? Be
prepared to pick a side – US
or China?
Divided we fall?
It’s 2.00am on an April
morning in Los Angeles
and I’m scheduled to fly to
Shanghai tomorrow morning.
I haven’t been in China
for four months. Things
seem to be getting back to
normal in China. Factories
are back online, mom-andpop
stores open for business,
and my phone, once again,
occasionally rings with
interested parties wanting to
sell or make something in
China. But are we really back
to normal?
I’m not sure. The trade war,
seemingly a success, has left a
permanent scar on US-China
relations that could last for
generations. The coronavirus,
seemingly under control,
has created dissent, distrust
and bifurcation between two
countries that seem further
apart than ever.
I try not to, but I’m
panicking.
22 April 2020 www.airlogisticsinternational.com
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The opinions and views given by
the writer in this editorial are
personal and do not necessarily
reflect those of any institution or
corporate body.
ABOUT THE AUTHOR
Stanley Chao is Managing Director of All In Consulting
(allinconsult.com), assisting Western companies in China,
and the author of Selling to China: A Guide for Small and
Medium-Sized Businesses.
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