[ltp] IBM to sell its PC business

[Bert Haskins]

SOTL wrote:

>Hi All
>
>Since there is great interest in this off topic subject it may be approbate to 
>explain this issue a bit for those of you who are not acquainted with 
>international operations of American companies.
>
>First it was reported on CNN [you can go back and find the reference my memory 
>is good enough for me] that IBM had sold the PC division to a Chinas company 
>by taking a 20% equity in the company and that the new managing director of 
>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 foreigners 
>may not own controlling interest in a national company critical to that 
>nation. The US has such a law. Also in times of trouble or war the interest 
>of enemy foreign nationals may be nationalized. The US has such law and 
>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 acquire a 
>local, Chinease company what do you do? Well first you must satisfy the 50% 
>domestic holding so you go down to the old mercantile bank and make an 
>arrangement with them where you borrow the funds in a fashion that the bank 
>owns 50 or 60% of the firm and in return the bank gets a fixed rate of return 
>which is adjusted for inflation which is say international $US prime plus say 
>3%. Now the bank has an in effective just lent you the purchase price at a 
>reasonable rate. 
>
>Next you need local partners to manage the business just as you would in the 
>US. People who know the culture and can operate in the local conditions. That 
>accounts for part of the 30% [100% -50% bank - 20% IBM = 30%]. Another far 
>bigger part of it is accounted for by purchase of local plant and equipment 
>owned by a local manufacture company.
>
>Then you take a business that is fast moving toward a commodity business in 
>which the single biggest cost component is an operating system that is !@#$% 
>and I will let you fill in the blanks.
>
>Meanwhile you go into partnership with 2 firms with bassically the same 
>operating system which go by the names of Red Hat and Sues. Red Hat being big 
>time in the US and SuSE bing big time in Europe both of whom are heavily 
>involved with a third firm called Red Flag of China.
>
>Now what you get from this. First lets look at a little culture first. 
>Americans and Northern Europeans are great at developing new ideas but not so 
>great in running repetitive assembly lines. Chinease and Orientals in general 
>are great in running assembly lines. Plus Chinease cost are far cheaper then 
>American or European ones are.
>
>Now also realize that servers and other transmission equipment is useless 
>without desktop systems.
>
>What IBM has gained is manufacturing capacity that is not subject to the whims 
>of idiots likes of The Smoking Crack Outlaws while adding $1.5 Billion [US] 
>to asses while maintaining control of marketing and sales plus corporate 
>control of the Chinease firm.
>
>News articles you read concerning the demise of IBM PC business should be read 
>with the same level of understanding as news articles you read expounding on 
>how great it is the Rhea Smoking Crack Outlaws own Linus.
>
>Frank
>
Who are the "Smoking Crack Outlaws" ?