Willy Shih, of Harvard Business School, writes that Foxconn’s Wisconsin Factory Is What The Chinese Call A ‘State Visit Project’:
Last week I wrote that Foxconn’s giant flat-screen factory in Wisconsin was facing an economic reality check, and might not get built after all. On Friday, after a call between Foxconn chairman Terry Gou and President Donald Trump, it was reported to be on again.
In China, they have a term for this type of project: … “Gao Fang Xiangmu”) – a “state visit project” which is signed during a high-level visit. They are announced during the visit of a head of state, or some high-profile event where there is an important political message. Back in 2015, Chinese President Xi Jinping visited the Boeing widebody facility in Everett, Washington, and announced an order for 300 aircraft. This gave President Xi the opportunity to emphasize the importance of China to Boeing, its workers, suppliers, and the communities they operate in. The specific details would be worked out later.
I think Mr. Gou’s visit to Wisconsin last June was the same thing. A state visit project – a high-profile way to earn some serious good will and political capital. But as Foxconn worked through the details, I suspect they were having trouble figuring out how to make economic sense of it all, for many of the reasons I explained.
This is, of course, economically irrational, and offers benefits only for the political leaders and cronies who stand to benefit personally.
State capitalism (when the public subsidies for business deals) and crony capitalism (where insiders benefit from those publicly-subsidized deals) are the core of the Foxconn project.
There’s a wide gap between business groups that cajole for as much public money as they can get and a free market of private buyers and sellers who make their way in the world without leaching money from taxpayers.
These pro-government American conservatives are tiny versions of the hangers-on and operatives of party-controlled foreign economies.
Previously: 10 Key Articles About Foxconn, Foxconn as Alchemy: Magic Multipliers, Foxconn Destroys Single-Family Homes, Foxconn Devours Tens of Millions from State’s Road Repair Budget, The Man Behind the Foxconn Project, A Sham News Story on Foxconn, Another Pig at the Trough, Even Foxconn’s Projections Show a Vulnerable (Replaceable) Workforce, Foxconn in Wisconsin: Not So High Tech After All, Foxconn’s Ambition is Automation, While Appeasing the Politically Ambitious, Foxconn’s Shabby Workplace Conditions, Foxconn’s Bait & Switch, Foxconn’s (Overwhelmingly) Low-Paying Jobs, The Next Guest Speaker, Trump, Ryan, and Walker Want to Seize Wisconsin Homes to Build Foxconn Plant, Foxconn Deal Melts Away, “Later This Year,” Foxconn’s Secret Deal with UW-Madison, Foxconn’s Predatory Reliance on Eminent Domain, Foxconn: Failure & Fraud, Foxconn Roundup: Desperately Ill Edition, Foxconn Roundup: Indiana Layoffs & Automation Everywhere, Foxconn Roundup: Outside Work and Local Land, Foxconn Couldn’t Even Meet Its Low First-Year Goal, Foxconn Talks of Folding Wisconsin Manufacturing Plans, WISGOP Assembly Speaker Vos Hopes You’re Stupid, Lost Homes and Land, All Over a Foxconn Fantasy, and Laughable Spin as Industrial Policy.