[ltp] IBM to sell its PC business

[SOTL]

Hi All

Since there is great interest in this off topic subject it may be approba=
te to=20
explain this issue a bit for those of you who are not acquainted with=20
international operations of American companies.

First it was reported on CNN [you can go back and find the reference my m=
emory=20
is good enough for me] that IBM had sold the PC division to a Chinas comp=
any=20
by taking a 20% equity in the company and that the new managing director =
of=20
the Chinease company would be a VP of IBM located in IBM HQ New York.

Now Chinease law like law in most countries of the world is that foreigne=
rs=20
may not own controlling interest in a national company critical to that=20
nation. The US has such a law. Also in times of trouble or war the intere=
st=20
of enemy foreign nationals may be nationalized. The US has such law and=20
applied it quite freely to Japanease and German interest in WW2.

So assume that you are a foreign company say an IBM and you wish to acqui=
re a=20
local, Chinease company what do you do? Well first you must satisfy the 5=
0%=20
domestic holding so you go down to the old mercantile bank and make an=20
arrangement with them where you borrow the funds in a fashion that the ba=
nk=20
owns 50 or 60% of the firm and in return the bank gets a fixed rate of re=
turn=20
which is adjusted for inflation which is say international $US prime plus=
 say=20
3%. Now the bank has an in effective just lent you the purchase price at =
a=20
reasonable rate.=20

Next you need local partners to manage the business just as you would in =
the=20
US. People who know the culture and can operate in the local conditions. =
That=20
accounts for part of the 30% [100% -50% bank - 20% IBM =3D 30%]. Another =
far=20
bigger part of it is accounted for by purchase of local plant and equipme=
nt=20
owned by a local manufacture company.

Then you take a business that is fast moving toward a commodity business =
in=20
which the single biggest cost component is an operating system that is !@=
#$%=20
and I will let you fill in the blanks.

Meanwhile you go into partnership with 2 firms with bassically the same=20
operating system which go by the names of Red Hat and Sues. Red Hat being=
 big=20
time in the US and SuSE bing big time in Europe both of whom are heavily=20
involved with a third firm called Red Flag of China.

Now what you get from this. First lets look at a little culture first.=20
Americans and Northern Europeans are great at developing new ideas but no=
t so=20
great in running repetitive assembly lines. Chinease and Orientals in gen=
eral=20
are great in running assembly lines. Plus Chinease cost are far cheaper t=
hen=20
American or European ones are.

Now also realize that servers and other transmission equipment is useless=
=20
without desktop systems.

What IBM has gained is manufacturing capacity that is not subject to the =
whims=20
of idiots likes of The Smoking Crack Outlaws while adding $1.5 Billion [U=
S]=20
to asses while maintaining control of marketing and sales plus corporate=20
control of the Chinease firm.

News articles you read concerning the demise of IBM PC business should be=
 read=20
with the same level of understanding as news articles you read expounding=
 on=20
how great it is the Rhea Smoking Crack Outlaws own Linus.

Frank