Elon Musk thinks he has a special relationship with powerful Chinese officials. There is evidence, he says. He cites Tesla as the first foreign automaker not required by the Chinese government to take on a local partner.
However, the Chinese communists are highly skilled at playing world-renowned elite to their tune. And this “special relationship” reels them in every time.
This has nothing to do with the global slowdown in electric vehicle sales.
China’s Foreign Business ‘Utility Timetable’
In Musk and Tesla’s case, the “takeover” was scheduled when Tesla started sniffing around the idea of locating in China. The clock then started ticking on what a friend with decades of experience in China calls the Chinese Communist Party‘s (CCP’s) “utility timetable.”
The history of foreign ventures in the People’s Republic of China (PRC) goes like this:
- Flourish with unlimited local support.
- Build a market.
- Become the operating model for local providers to copy.
- A local company (and its stakeholders) build up proficiency at some level of sustainability, sometimes by poaching key employees and intellectual property (IP).
- Foreign company starts coming under pressure, with the goal of driving it out of the market or forcing it to sell its assets to the local company.
- Local company takes over the market with second-rate products.
- Foreign company exits China.
A foreign company lasts as long in China as it provides utility to the party.
When the party perceives no more utility to be gained, the hammer comes down.
By the time Tesla went into China this had happened so many times before it should have been obvious. Now, the CCP’s “utility timetable ” for Tesla seems to be accelerating.
Reeling In Tesla
Part of the timetable – a key inevitable telltale sign the end is coming – is the foreign company is pressured to put its China operations under the control of a Chinese citizen. This citizen is also subject to the country’s national security laws, including the 2017 National Intelligence Law. That law requires Chinese citizens and companies to support PRC intelligence operations.
Tesla recently announced that Tom Zhu will be taking charge. He is an Austin-based senior vice president who previously worked for the company in China.
Zhu, born and raised in China, currently holds a New Zealand passport. However, to the CCP, a Chinese holding a foreign passport has no meaning. It is regarded simply as a “flag of convenience” over a Chinese passport, allowing easier navigation around the world. Especially to destinations, colleges, and jobs in countries pushing back against the PRC.
What’s next?
Tom Zhu migrates over the next months from his current job to running the complete Tesla operation in China. Zhu and the China operation, characterized in company powerpoints and annual reports by direct, solid lines of reporting to Elon Musk, will become shredded dotted lines. Meanwhile, lines of reporting to the Chinese Communist Party will become larger font solid lines.
Read more.
