In China, the lying was handled by the Ministry of Finance, a bastard orphan child in a Marxist country peopled by bureaucrats who struggled on a daily basis to do all manner of impossible things. The first and easiest impossibility—because it had to be done—was for its senior members to cast aside everything they’d learned in their universities and Communist Party meetings. To operate in the world financial system, they had to understand and play by—and within—the world monetary rules, instead of the Holy Writ of Karl Marx.
The Ministry of Finance, therefore, was placed in the unenviable position of having to explain to the communist clergy that their god was a false one, that their perfect theoretical model just didn’t play in the real world, and that therefore they had to bend to a reality which they had rejected. The bureaucrats in the ministry were for the most part observers, rather like children playing a computer game that they didn’t believe in but enjoyed anyway. Some of the bureaucrats were actually quite clever, and played the game well, sometimes even making a profit on their trades and transactions. Those who did so won promotions and status within the ministry. Some even drove their own automobiles to work and were befriended by the new class of local industrialists who had shed their ideological straitjackets and operated as capitalists within a communist society. That brought wealth into their nation, and earned the tepid gratitude, if not the respect, of their political masters, rather as a good sheepdog might. This crop of industrialists worked closely with the Ministry of Finance, and along the way influenced the bureaucracy that managed the income that they brought into their country.
One result of all this activity was that the Ministry of Finance was surely and not so slowly drifting away from the True Faith of Marxism into the shadowy in-between world of socialist capitalism—a world with no real name or identity. In fact, every Minister of Finance had drifted away from Marxism to some greater or lesser extent, whatever his previous religious fervor, because one by one they had all seen that their country needed to play on this particular international playground, and to do that, had to play by the rules, and, oh, by the way, this game was bringing prosperity to the People’s Republic in a way that fifty years of Marx and Mao had singularly failed to do.
As a direct result of this inexorable process, the Minister of Finance was a candidate, not a full member of the Politburo. He had a voice at the table, but not a vote, and his words were judged by those who had never really troubled themselves to understand his words or the world in which he operated.
This minister was surnamed Qian, which, appropriately, meant coins or money, and he’d been in the job for six years. His background was in engineering. He’d built railroads in the northeastern part of his country for twenty years, and done so well enough to merit a change in posting. He’d actually handled his ministerial job quite well, the international community judged, but Qian Kun was often the one who had to explain to the Politburo that the Politburo couldn’t do everything it wanted to do, which meant he was often about as welcome in the room as a plague rat. This would be one more such day, he feared, sitting in the back of his ministerial car on the way to the morning meeting.
Eleven hours away, on Park Avenue in New York, another meeting was under way. Butterfly was the name of a burgeoning chain of clothing stores which marketed to prosperous American women. It had combined new microfiber textiles with a brilliant young designer from Florence, Italy, into fully a six percent share of its market, and in America that was big money indeed.
Except for one thing. Its textiles were all made in the People’s Republic, at a factory just outside the great port city of Shanghai, and then cut and sewn into clothing at yet another plant in the nearby city of Yancheng.
The chairman of Butterfly was just thirty-two, and after ten years of hustling, he figured he was about to cash in on a dream he’d had from all the way back in Erasmus Hall High School in Brooklyn. He’d spent nearly every day since graduating Pratt Institute conceiving and building up his business, and now it was his time. It was time to buy that G so that he could fly off to Paris on a whim, get that house in the hills of Tuscany, and another in Aspen, and really live in the manner he’d earned.
Except for that one little thing. His flagship store at Park and 50th today had experienced something as unthinkable as the arrival of men from Mars. People had demonstrated there. People wearing Versace clothing had shown up with cardboard placards stapled to wooden sticks proclaiming their opposition to trade with barbarians! and condemning Butterfly for doing business with such a country. Someone had even shown up with an image of the Chinese flag with a swastika on it, and if there was anything you didn’t want associated with your business in New York, it was Hitler’s odious logo.
“We’ve got to move fast on this,” the corporate counsel said. He was Jewish and smart, and had steered Butterfly through more than one minefield to bring it to the brink of ultimate success. “This could kill us.”
He wasn’t kidding, and the rest of the board knew it. Exactly four customers had gone past the protesters into the store today, and one of them had been returning something which, she said, she no longer wanted in her closet.
“What’s our exposure?” the founder and CEO asked.
“In real terms?” the head of accounting asked. “Oh, potentially four hundred.” By which he meant four hundred million dollars. “It could wipe us out in, oh, twelve weeks.”
Wipe us out was not what the CEO wanted to hear. To bring a line of clothing this far was about as easy as swimming the Atlantic Ocean during the annual shark convention. This was his moment, but he found himself standing in yet another minefield, one for which he’d had no warning at all.
“Okay,” he responded as coolly as the acid in his stomach allowed. “What can we do about it?”
“We can walk on our contracts,” the attorney advised.
“Is that legal?”
“Legal enough.” By which he meant that the downside exposure of shorting the Chinese manufacturers was less onerous than having a shop full of products that no person would buy.
“Alternatives?”
“The Thais,” Production said. “There’s a place outside Bangkok that would love to take up the slack. They called us today, in fact.”
“Cost?”
“Less than four percent difference. Three-point-six-three, to be exact, and they will be off schedule by, oh, maybe four weeks max. We have enough stock to keep the stores open through that, no problem,” Production told the rest of the board with confidence.
“How much of that stock is Chinese in origin?”
“A lot comes from Taiwan, remember? We can have our people start putting the Good Guys stickers on them … and we can fudge that some, too.” Not all that many consumers knew the difference between one Chinese place name and another. A flag was much easier to differentiate.
“Also,” Marketing put in, “we can start an ad campaign tomorrow. ‘Butterfly doesn’t do business with dragons.’ ” He held up an illustration that showed the corporate logo escaping a dragon’s fiery breath. That it looked terminally tacky didn’t matter for the moment. They had to take action, and they had to do it fast.
“Oh, got a call an hour ago from Frank Meng at Meng, Harrington, and Cicero,” Production announced. “He says he can get some ROC textile houses on the team in a matter of days, and he says they have the flexibility to retool in less than a month—and if we green-light it, the ROC ambassador will officially put us on their good-guy list. In return, we just have to guarantee five years’ worth of business, with the usual escape clauses.”
“I like it,” Legal said. The ROC ambassador would play fair, and so would his country. They knew when they had the tiger by the balls.
“We have a motion on the table,” the chairman and CEO announced. “All in favor?”
With this vote, Butterfly was the first major American company to walk out on its contracts with the People’s Republic. Like the first goose to leave Northern Canada in the fall, it announced that a new and chilly season was coming. The only potential problem was legal action from the PRC businesses, but a federal judge would probably understand that a signed contract wasn’t quite the same thing as a suicide note, and perhaps even regard the overarching political question sufficient to make the contract itself void. After all, counsel would argue in chambers—and in front of a New York jury if necessary—when you find out you’re doing business with Adolf Hitler, you have to take a step back. Opposing counsel would argue back, but he’d know his position was a losing one, and he’d tell his clients so before going in.