China Sends Ominous Signal To Foreign Companies

China’s head regulator of foreign investments recently delivered a frank message to all Western companies who have been planning to pump billions into the Communist country’s Internet infrastructure: Foreigners need not apply.

Wu Jichuan, the head of the Ministry of Information Industries, told Western companies that all online businesses were off-limits to non-Chinese citizens. However, he did say that it was still permissible for foreigners to supply billions in equipment to help build up his country’s fledging telecom industry.

A few days after Jichuan’s remarks, Intel Corp. — apparently in a state of denial — announced its participation in a new e-commerce system operated by Chinese Internet company Sohu.com.

Not Sinking In

While China’s latest stance sent shares of China.com plummeting, its implications have not yet seemed to sink into Western companies’ psyches. In fact, Western CEOs appear to be shrugging their shoulders and winking at one another as if to say: “China doesn’t really mean what it says; it’s just saving face.”

After all, many of these executives are blinded by the prospect of bringing e-commerce to the billions of Chinese consumers. In addition, they really believe that the Communist government needs their investment and technology.

History Repeats Itself

In 1900, after foreigners had virtually invaded China in an attempt to force it into becoming a trading partner, a group of Chinese patriots called “Boxers” killed several hundred foreigners. By doing so, they also kicked off the infamous “Boxer Rebellion” in an attempt to rid China of “foreign devils” for once and for all.

As a result, the major European powers of the day retaliated with all their fury — forcing China to pay a heavy price for years to come.

This lesson is one that Jichuan apparently has not forgotten and one that Western CEOs never learned.

Soft Pedal Its Hard-Line

Charles Zhang, Sohu com’s chief executive, is already soft-pedaling the harshness of Jichuan’s edict by saying that it is in the best interests of the government to promote China’s information-technology industry.

This news is just what the big players want to hear in order to convince themselves that the billions that they are about to pump into China will someday bear fruit.

Wake-Up Call

Sometimes, if I stay up too late, I tell myself that I’m only dreaming when the alarm goes off in the morning. Jichuan’s edict is at least the second alarm that China has sent to foreign investors. This time, I hope they realize that they’re not dreaming and jump out of bed.

In fact, if they don’t, their companies could also earn a footnote in future world history books as the second group of “foreign devils” that were forcefully extricated from China — after first building its telecom and Internet infrastructure.

What do you think? Let’s talk about it.