Asian titans rip a page from Trump's book

The promises from the big Asian business leaders will be tough to keep, experts say

Asian titans rip a page from Trump's book

In his book on deal-making, President Donald Trump offered a key piece of advice on getting what you want: promise big.

“I play to people’s fantasies,” he said in 1987’s “The Art of the Deal.” “People want to believe that something is the biggest and the greatest and the most spectacular. I call it truthful hyperbole. It’s an innocent form of exaggeration — and a very effective form of promotion.”

Some of Asia’s biggest dealmakers understand that principle — and are making big promises accordingly. In recent months, Alibaba’s founder, Jack Ma; Japanese tech investor Masayoshi Son; and head of Foxconn Terry Gou, have made big, public plans to invest in the United States. Together, the deals proposed would help to create more than 1 million US jobs and tens of billions of dollars in new investments.

Their promises have set off a host of offerings from Asia in recent weeks — even if those offerings are not entirely new or solid. Toyota Motor of Japan promised in January to spend $10 billion in the US over the next five years, which would essentially match its previous spending levels.

News reports that Samsung of South Korea may also build a US plant won praise from Trump on Twitter. Samsung said it continued “to evaluate new investment needs in the US that can help us best serve our customers.”

In contrast, US firms have made largely symbolic or modest promises to keep a small number of jobs in the United States, while European companies have been mostly silent. Only Intel seems to have borrowed a page from the Asian tycoon playbook, as its chief executive, Brian Krzanich, appeared with Trump to announce a $7 billion Arizona plant that was conceived in 2011 and then delayed. ‘

The promises from the big Asian business leaders will be tough to keep, experts say. But they show that Asia’s tech titans see a familiar figure in Trump.

The US leaders have largely shied away from interfering in individual business decisions, instead relying on competitiveness to keep American companies ahead in a global market. But Trump’s focus on job protection, tariffs and the dictating of terms to business leaders is closer to the more mercantilist outlook that Ma, Son and Gou see to varying degrees in China, Japan, Taiwan and other places in Asia.

“They see where this guy Trump is coming from and, at a visceral level, identify with him,” said Alberto Moel, an analyst at Sanford Bernstein. “It plays directly into their style. These guys are political animals. They live in Asia, where things are different. There’s more autocracy and more connected transactions. In the US, people still expect things to be fair.”

The Asian executives come from a region Trump accuses of using unfair trade practices and stealing US jobs — and all three have a lot to lose. It is not clear whether their lofty promises will lead to better treatment from the Trump administration.

Alibaba, which has shares that trade in the United States, has been under fire there for the fakes that proliferate on its Chinese sales platforms. It also has an eye toward expanding into places like Hollywood.

Son’s SoftBank owns Sprint, the US telecom company, and has long desired to expand. Foxconn — a Taiwan-based company with many factories in China — assembles iPhones and other gadgets for Apple, which Trump has said should make its products in the United States. Foxconn also has plants in Mexico that benefit under the North American Free Trade Agreement.

A SoftBank spokesman said, “Son was greatly encouraged by the economic agenda of the new administration, and he intends to invest significant resources in the US in the years ahead.” A Foxconn spokeswoman said that the company was evaluating an investment in the United States and that it expected a new US project would create “many direct and indirect job opportunities.” An Alibaba spokeswoman declined to comment.

Of course, the United States has a long history of supporting its homegrown industries. Still, East Asian governments often intervene more directly in business, and many of Trump’s proposals suggest he wants to adopt similar strategies.

In China, government officials give public and financial support to building up industries to make the country less dependent on exports. In Japan, the government is supporting a new effort to build an aerospace industry. In South Korea, the government has lavished subsidies and tax breaks on its largest exporters, like Hyundai and Samsung.

Even Trump’s public praise and cajoling have an East Asian feel. “In Japan and China you need to go through these rituals,” said Willy Shih, a professor at Harvard Business School. The first to pay homage to Trump was Son, who in a meeting late in 2016 vowed a $50 billion investment that he said would create 50,000 jobs. Then in January, Ma of Alibaba assured Trump that small businesses selling goods on his websites in China would add 1 million new US jobs.

More recently, Gou of Foxconn said at a news conference that Foxconn was considering a $7 billion investment in a flat-panel production facility in Pennsylvania that could create up to 50,000 jobs.

Fostering good will

The Asian companies appear to have fostered good will. After meeting with Ma, Trump said that the Alibaba founder loved the United States and China, and that the two of them would “do some great things.” It is not clear how many of the pledges will come to pass.

Gou has cautioned that the Pennsylvania plant is more a wish than a promise. Putting a flat-panel production centre in Pennsylvania places it far from the electronics supply chain that crisscrosses Asia. There is also less experience in building such factories in the United States, and regulatory risks could threaten to turn a multibillion-dollar investment into a big money loser if there are delays in opening it.

All three of the tech leaders are consummate showmen and self-promoters. In a recent investor letter, Ma said that in the next 20 years, the company would create 100 million jobs. Son has a 300-year plan for SoftBank, and he often follows up big deals with big promises.

In places like China, Gou has used the lure of a huge factory to extract major tax breaks. But in other countries, such as Indonesia, long talks about building a plant failed to bear fruit. Still, their tactics could work with a president who has said he wants to emulate East Asia even as he fights it over jobs.

“We got to bring back the jobs from China, we got to bring back the jobs from Japan, and all these countries that are ripping us off,” he had said at one campaign event. But he had added, “I don’t hold it against these other countries. I mean, if they can get away with it, let them do it. I want to get away with things.”

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