Tesla’s in China – It’s just a question of how long

One day the Tesla experience in China will be a business school case study, though not in a good way.

Elon Musk thinks he has a special relationship with powerful Chinese officials. There is evidence, he says. He cites Tesla as the first foreign automaker not required by the Chinese government to take on a local partner.

However, the Chinese communists are highly skilled at playing world-renowned elite to their tune. And the “special relationship” reels them in every time.

This has nothing to do with the global slowdown in electric vehicle sales.

China’s foreign business ‘utility timetable’

In Musk and Tesla’s case, the “takeover” was scheduled when Tesla started sniffing around the idea of locating in China. The clock then started ticking on what a friend with decades of experience in China calls the Chinese Communist Party‘s (CCP’s) “utility timetable.”

The history of foreign ventures in the People’s Republic of China (PRC) goes like this:

• Foreign company flourishes with unlimited local support.
• Foreign company builds a market.
• Foreign company becomes the operating model for local providers to copy.
• A local company and its stakeholders build up proficiency at some level of sustainability, sometimes by poaching key employees and intellectual property.
• Foreign company starts coming under pressure whose goal is driving it out of the market or forcing it to sell its assets to the local company.
• Local company takes over the market with second-rate products.
• Foreign company exits China.

A foreign company lasts as long in China as it provides utility to the party.

When the party perceives no more utility to be gained, the hammer comes down.

By the time Tesla went into China this had happened so many times before that