Friday, December 31, 2010
Doing Businesses in the Chinese Way-I
“Whatever the cause, though, Beijing’s only smart way forward is to state clearly that a contract is a contract and that Chinese companies must abide by theirs (The Wall Street Journal 9 September 2009).” The controversy between the Chinese companies and the banks of the Wall Street is when fuel prices were high in 2008. China Eastern, Air China, and Shanghai Airlines, as well as China Ocean Shipping makes derivatives contracts with foreign banks to protect the companies from even higher fuel prices. However, after the Lehman Brothers was bankrupted on 15 September 2009, the price of oil has fallen dramatically. The Chinese airlines alone lost about $2 billion. On 7 September 2009, Assets Supervision and Administration Commission, which oversees these companies, posted a statement on its Web side suggesting that the Chinese government might sue to nullify the contracts. The Wall Street Journal criticizes Beijing to violate capitalism rule, while Beijing condemns foreign banks on the Wall Street to cheat rule by selling these contracts to the Chinese companies. Who is right?