American companies

"And the manufacturers were cranking out a lot of goods. In the fall of 2020, I remember visiting the factory of a technology manufacturer outside of Shanghai. An executive had invited me in to tour his new production line. He was a Chinese national who had mostly worked for American companies and still traveled between the two countries. [As we sipped tea in his office](private://read/01k3jwt46q240aq6fe12mqkyr0/16_Notes.xhtml#_idTextAnchor330) after the tour, we chatted about why the United States was then mired in production difficulties, unable to make much of the personal protective equipment that people wanted. “American manufacturers constantly asked themselves whether making masks and cotton swabs was part of their ‘core competence.’ Most of them decided not.” He put down his teacup and looked at me. “Chinese companies decided that *making money* is their core competence, therefore they go and make masks, or whatever else the market needs.”"

"The Trump administration certainly throttled Chinese companies. But it did so by making American companies (especially those selling semiconductors) unreliable vendors. Previously, Chinese companies bought the best components on the market, which were often American, because they wanted to sell a globally competitive smartphone or drone. When they couldn’t buy American, it lit a fire under Chinese companies to try domestic vendors that they would never have previously given the time of day."

"The US government has indulged a preening self-regard concerning how much technological power its country still wields. American companies have spent two decades building communities of engineering practice in China, made up of people who roll up their sleeves to figure out how to overcome their daily bottlenecks. It wasn’t going to be easy to stop their progress; if anything, American policies risked accelerating it. So far, Chinese companies have managed to innovate around most technological restraints; rather than face precipitous collapse, as US policymakers predicted, some have even managed to keep growing at a healthy clip."

"Researcher and professor Per Strömberg at the Swedish Institute for Financial Research, together with some colleagues, has conducted several international studies on “financial distress,” when companies become insolvent or go bankrupt. They show that, if you average out the number of companies over the typical holding period for private equity owners, six years, it results in 1.2 percent bankruptcies per year. These are low numbers, but twice as high as for listed American and Swedish companies overall. The researchers also state that there may be unreported cases, as some private equity firms only state that they have made an “exit” without specifying whether it was a sale or a bankruptcy."