April 2001 | Commentary | Checking In

Peace and Tranquility

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In light of the Chinese government's reaction to the recent spy plane incident, prudence dictates that readers of this magazine—inbound logisticians and supply chain managers with crucial assets and supply lines stretching across China—seriously consider contingencies now. The treasure you have invested in China is at some risk.

The spy plane incident reminds me of a speech I heard at the Intermodal Expo several years ago. An executive of a Japanese carrier cited an old Asian proverb: for trade to flourish, "peace and tranquility must reign." It was the time of the Gulf War and some called Japanese contributions to the cost of the war parsimonious.

It appeared that, while many countries were enjoying the trade benefits of peace and tranquility, the United States shouldered much of the burden of keeping the peace. That proverb remains relevant today. We still are the world's policeman.

Even though the spy plane incident has been partially resolved, it poses a question to business managers with interests in China: Why would many companies in this country and around the world be willing to risk their treasure in a country that has, in the not-so-distant past, treated its own citizens in an ill-advised and reactionary manner?

The answer? "Peace and tranquility," assured in large measure by the stabilizing military presence in the area of a power without geopolitical ambitions—that would be us. It should be clear to the Chinese that this stabilizing influence—one that their trading partners trust, and that provides peace and tranquility—benefits them more than anyone else.

The imprudent handling of the plane incident tells us one of two things: either the Chinese do not understand that old Asian proverb or they care less about trade than expanding their geopolitical power. If the Chinese government does not understand the proverb, the solution is easy. Businesses in Hong Kong, Japan, Korea, even Vietnam, can explain it to them. If the Chinese government does not care about trade, future disruptions to your business with China are guaranteed, with a capital G.

Think about how an interruption of supply from China will impact your ability to serve your customers. Consider what the loss of a manufacturing facility—for a week, a month, forever—would mean.

Readers of this magazine control the flow of billions of dollars of trade goods coming inbound from China. Or do they? Is that control an illusion? The spy plane episode suggests that a true situation analysis must now include the costs of disrupted supply lines and lost manufacturing capacity.

Throughout history, except for war goods, trade has always suffered when peace and tranquility cease. We can hope the Chinese government considers this in the future. The question is, can you build your business on hopes?

If you have an answer to this question, I'd be interested to hear it. Send an e-mail to china@inboundlogistics.com

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