That's what Caterpillar learned, as
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
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,
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.
(GOOG - Get Report)
found that even Motorola wasn't a big enough player to assure honesty, which may be why
in December it is offloading operations to
, 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.