This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

China's Gilded Age

That's what Caterpillar learned, as Quartz reports, in taking a $580 million loss because the "trusted" assets it acquired in China weren't worth what they were said to be worth. This despite having some of the "best men" in the market involved, like Emory Williams, who told the Financial Times he was "shocked, shocked" that gambling was going on here.

This has everything to do with Microsoft. Just as Europe found it had to do business with the U.S. during the Gilded Age, so technology companies today are dependent on China. The Chinese technology market is red in tooth and claw, and unless you're able to have a serious presence there you're just asking to get ripped off.

Dell has a serious presence there, $25 billion/year according to the South China Morning Post. Dell is leading the pack of Western companies into western China, Forbes notes, where costs are even lower than on the coast.

Size is not an absolute protection in China, but it helps get the best deals. Size lets you pick your suppliers, and that has a way of weeding out the crooks. Google (GOOG - Get Report) found that even Motorola wasn't a big enough player to assure honesty, which may be why CNET reported in December it is offloading operations to Flextronics (FLEX), an older China hand that may get it better prices.

What all this should tell is us that there is increasing demand in China for the rule of law, for honest business. History tells me it will come after China gets its own Rockefellers and Morgans, not before. Fortunately, our biggest technology businesses are nurturing them.

At the time of publication, Blankenhorn held shares of MSFT and GOOG.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.
2 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
DELL $0.00 0.00%
CAT $70.37 -0.64%
GOOG $642.24 -0.50%
MSFT $46.79 0.09%
AAPL $110.72 -0.53%


Chart of I:DJI
DOW 16,912.29 +122.10 0.73%
S&P 500 1,995.79 +15.87 0.80%
NASDAQ 4,791.1520 +42.7910 0.90%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs