The Rio Lesson: Ignore it at Your Own Peril

Thanks to JR at JustRecently’s Weblog for this excellent follow up on a previous discussion about the Rio Tinto spy scandal.  For those who intend to do business with China, please take note of the various case studies quoted in JR’s post.  You ignore it at your own peril.

Today, a Bloomberg report suggests that the spying charge against Rio Tinto staff is related to a set of internal meeting notes of the Chinese negotiation team that Rio staffs have allegedly obtained through illegal means.  As a result, Rio Tinto would be able to know the “bottom line” of the Chinese companies in the talks.  What do you think has been cited as “sensitive information”?  Let me surprise you: financial data, production schedules, stockpiles, raw-material costs, gross margins and other details of the Chinese steelmakers, the report said.

For heaven’s sake, am I correct in suggesting that most of these so-called “sensitive information” can be obtained through many other public and legitimate means as well?  But then of course the “ultimate crime” is that “Rio knows our bottom line”.  Big deal!  Chinese steelmakers are known to be willing parties in “informing” the media about their 33% cut bottom line.  As a matter of fact, many small to medium size steelmakers in China are unhappy with the inefficient way CISA is going about with price negotiation, which only benefits a few large steelmakers of so-called “high-end” products.

Some Chinese sources I consulted today suggest that the evidence against Stern Hu will be confined to his role in the 2009 price negotiation.  The fact is: Mr Hu has been negotiating prices for Rio for almost ten years.  Why is it that there is only evidence of wrong doing in 2009?  In the meantime, Chinese government owned online financial publications such as China Security Journal has suddenly published a large number of Chinese articles elaborating on Mr Hu’s “alleged crime and corrupt behaviour”.  I have a horrible feeling that the poor guy has been set up to take the blame.

Meanwhile, according to an ABC Radio report, Stern Hu’s detention is testing the limits of Australia’s relationship with China. Australia’s Foreign Minister Stephen Smith has expressed exasperation that he’s had to glean information about the allegations from public sources – a foreign ministry media conference and a state security public website.  Its information he says should be coming through official channels, where many requests have been and continue to be made.

This entry was posted in sustainable growth, Under the Tree and tagged , , , . Bookmark the permalink.

8 Responses to The Rio Lesson: Ignore it at Your Own Peril

  1. Pingback: Rio Staff made scapegoat for CISA’s incompetence « Under the Jacaranda Tree

  2. justrecently says:

    Looks like if it is time for a travel warning. Until now, Yemen was further up on my at-your-own-risk list.
    But seriously, I think China is on its way into a quagmire similar to the one during the days of Chiang Kai-shek – just think of his “New Life” doctrine than, and all the “Confucian” talk now. Rule of law has never been stable in China – but methinks that the state organs used to be more reluctant during the past decades to make themselves the beadles of corporations against foreigners in such an obvious way. If Rio Tinto can run into this much trouble, I’m wondering about medium-sized and small investors.
    Good luck for those who can’t resist mainland China’s potential. 😉

  3. Ned Kelly says:

    Yep. For the past several days Catherine and I have repeatedly concluded all of our discussions about China with the phrase,
    “The CCP is in a panic”. The country is fraying apart at the seams and the Party is running around like a chicken with its head cut off.

  4. justrecently says:

    I doubt that they are panicking. I’d rather think they are confused. Xinjiang, for one – they thought they could take the land at their terms without the natives resenting. I imagine that they think of America or Australia as some kinds of role model here – but the world has become smaller since. There is a critical public inside and outside China. Maybe this is one of the things that drive the fenqing commenters on Mylaowai mad.
    Anyway, I can also imagine that the politbureau is quarreling. I doubt that Hu Jintao only returned ahead of schedule because of his invaluable Tibet experience.
    Just a question: does imagining and speculating amount to divulging Chinese state secrets?

  5. anonymous says:

    without the natives resenting

    Natives? Read up on your history. The Uighur did not separate from the Gaoche until around 700 AD, before then the Han Dynasty already established itself across Xinjiang up to within a few hundred KM of its modern Western border.

    Not to mention, the Uighur of today are Uzbeks or “Sart-Taranchis”, there is interesting information out on this as well.

    The real natives of the Xinjiang would most likely be the Chinese and Tibetans, and then 2,000 years later the Tocharians (who are not related to the Uighur, but share some genetic material).

    Islam definitely is not native to Central Asia or anywhere but Saudi Arabia.

  6. Bobby Smith says:

    China would be much better nation if there were opposition political parties exist.

  7. C.A. Yeung says:

    Dear Bobby Smith,

    Welcome to our forum. As a matter of fact, the PRC government claims to be a multi-party state under the leadership of the Chinese Communist party (CCP). There are at least 8 other political parties formally registered in China. But in reality, they all claim allegiance to the CCP. So you are definitely correct about the non-existence of genuine opposition political parties in China.

    There are also known cases of suppression of opposition parties in the PRC. The China Democracy Party and the New China Democracy Party are two of the names that I can recall.

  8. Pingback: The Standing Committee’s Erdoğan Minutes « Justrecently’s Weblog

Comments are closed.