China Busts a $3B Underground Bank
The Chinese art of selectively enforcing their laws to the detriment of those that won't play ball with the government really makes it hard to believe Xi's press-tornado of successful anti-corruption measures.<p>The government has been actively extorting international companies into "joint" ventures. These ventures essentially require "treats" (as an insider told me) every several months. These treats would be manufacturing processes, engineering drawings of proprietary IP, or technical training for their engineering staff. Boards of Directors can't ignore the scale of the Chinese market, but it comes at the cost of essentially giving away your business prospects within the country inside of 15 year window.<p>China's current long-term strategy seems to be:<p>1) Spend an egregious amount to woo top talent [1], [2]<p>2) Learn from them over the next 5-10 year period [2]<p>3) Transcend the need for foreigners in China<p>It's a pretty terrifying environment and many Chinese investors are desperate to get their money into foreign investments [3]. Instead of laundering illegally earned money, they are laundering legally earned money that they can't get out of China. At least that is the hearsay that I've heard from several different sources (VC events, friends of friends etc).<p>[1]: <a href="https://www.nytimes.com/2017/01/04/world/asia/china-soccer-xi-jinping.html" rel="nofollow">https://www.nytimes.com/2017/01/04/world/asia/china-soccer-x...</a><p>[2] Qi Lu, Baidu's COO YC interview: <a href="https://www.youtube.com/watch?v=WSydk0XzxEE&t=351s" rel="nofollow">https://www.youtube.com/watch?v=WSydk0XzxEE&t=351s</a><p>[3]: <a href="https://www.bloomberg.com/news/articles/2017-01-03/china-drills-down-into-forex-transactions-as-money-exits-abroad" rel="nofollow">https://www.bloomberg.com/news/articles/2017-01-03/china-dri...</a>