Asia’s chief executives do not work for Donald Trump, or do they?
Foxconn Technology Group’s billionaire founder Terry Gou says the world is overreacting to Donald Trump’s trade war. Softbank’s chairman Masayoshi Son says he’ll invest US$50 billion in America because of the US president’s “passion” and “energy”.
There’s only one logical response to such views from two of Asia’s smartest CEOs: Huh?
On June 28, Gou and Son joined Trump in the US state of Wisconsin, where Foxconn is opening a US$10 billion plant. Trump, not surprisingly, used the groundbreaking ceremony to tout his hardline stance on Beijing.
“We’ve helped rebuild China,” Trump said. “Someday they’ll say thank you. But we don’t want to do that any more. We want to have a fair and balanced situation.”
Yet 48 kilometres away, Gou and Son can find ample evidence that they may be making dubious bets on Trump’s economy.
There, Harley-Davidson, as iconically American a company as you can find, is plotting a move abroad to avoid the very trade policies both men claim aren’t a big deal.
Harley’s CEO Matt Levatich zoomed from hero to zero with the Trump crowd. In February 2017, a leather-jacket-clad Levatich brought a couple of motorcycles to a White House keen to showcase US manufacturing.
Trump called Harley “one of the greats” then. Now, he’s attacking it, suggesting Levatich’s production decision may be the “beginning of the end” for his company.
All this makes you wonder: Do Gou and Son know they work for their shareholders, not America’s erratic leader?
Trump’s “America First” predilection is a clear and present danger not just to global trade, but to the very supply chains on which Foxconn and SoftBank rely.
Seriously, American companies are reluctant to move production back home - never mind Asian CEOs with myriad options.
What’s more, Trump’s “make America great again” programme holds far more promise for China. As Chinese President Xi Jinping corners the future with his “Made in China 2025” plan, Trump is bringing back coal.
Beijing is going all-in on electric vehicles, while Trump is scaling back fuel-efficiency standards. Beijing is racing to boost productivity, while Trump thinks a trade war will raise America’s game. Trump even wants to eliminate the Labor Department charged with honing US skills.
Gou and Son can speak for themselves on why this is the workforce in which they want to invest. More likely, this is a ploy to flatter, placate and distract a US leader who knows more about holding grudges than striking deals.
Granted, Foxconn is winning about US$3 billion in tax and other incentives. That’s in exchange for a 20-million-square-foot complex that would, in theory, create 13,000 jobs over several years.
The question is, can Wisconsin, a state with a crushing debt load, afford to honour that deal in the years ahead?
And in the short-run, is the lunacy of Trump’s protectionism worth the risk? State lawmakers are slamming the Foxconn deal, calling it too generous and too opaque. Expect investigations. Good luck with that, Mr Gou.
What of Son, who is single-handedly remaking the global venture capital industry? For all his smarts in investing in Alibaba in 2000 and seeing early on the promise of Singapore’s Grab, Son sure seems ahead of his skis with Trump’s economy.
If his US$50 billion figure is a bluff to distract Trump and shield SoftBank from Twitter attacks, then fine. Or if Son scores massive concessions, enabling him to take on Tesla’s CEO Elon Musk, perhaps the end justifies the means.
But Asia’s top CEOs must remember that one day Trump will leave the White House. The wreckage of his retrograde policies will take considerable time to repair. So might dealing with investors wondering why, oh why, they got in cahoots with Trump.
William Pesek is a Tokyo-based journalist and author. He has written for Bloomberg and Barron’s