Writing for The Atlantic, Mitch Moxley recounts a gig he recently took up in China.  Apparently, Caucasian males living in the country are being recruited to pretend to be high ranking officials of American companies.  They go for ribbon-cutting ceremonies, to schmooze with local dignitaries, and to give speeches about how wonderful it is to expand their business to China:

One friend, an American who works in film, was paid to represent a Canadian company and give a speech espousing a low-carbon future. Another was flown to Shanghai to act as a seasonal-gifts buyer. Recruiting fake businessmen is one way to create the image—particularly, the image of connection—that Chinese companies crave. My Chinese-language tutor, at first aghast about how much we were getting paid, put it this way: “Having foreigners in nice suits gives the company face.”

Sounds odd, yeah?  It should, because the American companies these recruits are paid to represent don’t actually exist.

So what’s going on here?  The author of the article doesn’t get in to that, and doesn’t specify if his paycheck ended up coming from the fake company or another entity.  However, I don’t think it’s too difficult to figure out from clues (intentionally placed or not) in the article, as well as information from other sources.  For example, Moxley notes that companies in China think that having foreign businessmen operating in their country makes them look good:

Recruiting fake businessmen is one way to create the image—particularly, the image of connection—that Chinese companies crave. My Chinese-language tutor, at first aghast about how much we were getting paid, put it this way: “Having foreigners in nice suits gives the company face.”

However, I’m not sure I entirely agree with the quote, at least if you take it at face value.  In that case, it would seem to be more believable for Moxley to have been hired as “foreign investor” or “foreign client” rather than a high-ranking official of an American-owned company.  The company specified in this article is not already a Chinese company that had committed an embarrassing error.  So my speculation is that there is a much bigger picture here.

Rather than this being an operation some company has taken to make themselves look good, I think it more likely that the Chinese government is doing this to encourage foreign corporations to come in and build.  Engaging in economic propaganda, if you will.  It makes sense, given the massive economic expansion China has undergone in the last 15-20 years.  Their home grown industry is booming, so now it is the time to involve the international players more directly.

Foreign companies are not unknown in China, of course.  An increasing amount of products other nations use are produced there, though usually by Chinese or other Asian companies.  Walmart is often cited as a company that has a pretty big operation there.  And until recently, Google tried to expand its search engine there, before censorship concerns (and fairly lackluster performance) promoted them to pull out.  However, China obviously wants to continue promoting itself as a place for foreign companies to expand operations, especially in fairly untapped locales like Dongying.  What better way to do that then show that foreign companies are already interested in them?

So why the show, carting in expats to act the part of corporate officials for American companies?  Well, if statistics from the US-China Business Council serve as an indicator, foreign investment in China is down since 2005.  On the other hand, foreign investment from the U.S. has remained stable during that time (check out the stats from Taiwan!).  But there is this article from the Council’s president that suggests that recent tensions between China and foreign companies, like the loss of Google, may create an atmosphere where investors, particularly from the U.S., are leery of going to China.  I could see this scaring some officials in Beijing, as they know about Google’s standing in the U.S.  The thinking will be, “If Google doesn’t want to invest in China, will other U.S. companies take that as a sign that they should stay away, too?”

I know the article criticizes policies enacted recently that it sees as protectionist.  However, even if some industries are protected in favor of Chinese companies, that doesn’t mean they will all be treated like that.  There will still be areas where the country will wish to woo foreign investors.  So we come back to the idea that the government is putting on a show of pretending that investors are coming in, especially to industrial cities like Dongying.  Perhaps it’s a way for China itself to save face in light of the Google debacle.

Of course, the strategy has risks, as we clearly see with the Atlantic article.  Now to be fair, maybe nobody involved in this project (whether it is a corporate or government initiative) expected that one of their hired actors would later submit an article to a major American magazine exposing it.  However, maybe they factored in the possibility, and are banking on the chance that news of it happening won’t have very widespread exposure, or that it will be forgotten over time.  So this kind of economic theater could still be successful in keeping foreign companies coming in.

One thing is certain: that China will be at least one of the countries to seriously compete with in this century.  I believe they have the best chance of toppling the U.S. as the economic powerhouse of the world, and in some ways, they already have.  Even if the fake company program doesn’t pan out, China’s ambition is such that they will continue to look for ways to become the top dog.  So there will continue to be a great economic battle to observe in the coming years, guaranteed.