East Providence, RI

Monday, November 10, 2008

According to news sources, the Federal Bureau of Investigation warned both the Obama and McCain campaigns that their computer networks had been hacked into by a foreign organization during the presidential contest. It was not only the campaigns. It is also reported that that Chinese hackers had penetrated the computer networks of the White House on more than one occasion. Besides the White House, last year Chinese hackers penetrated computers at the Department of Defense.

While unsettling this is hardly surprising. Governments have always used almost any means at their disposal to spy on other countries. I am sure and hope that the US does the same.

What is surprising is that American companies are ignoring the threat. We have been deluged over the past several years with stories about the advantages of globalization. Specifically, there are reputedly hundreds of thousands of inexpensive, well trained Chinese engineers who can work at a lower wages to help American companies do research. To take advantage of this talent many companies have opened research facilities in China

A rather flagrant example is IBM. The company feels that it can handle the risk of intellectual-property theft well enough to open cutting edge research China. Really? I might be able to imagine that IBM has the technical resources that exceed those of the United States government, but I really doubt that even IBM can see into the hearts of each and every one of their employees to prevent theft. The reality is that despite their denials, US companies who place research facilities in countries like China are being robbed. China is filled with state owned companies who are the happy beneficiaries of state sponsored corporate espionage. Although they don't know it, I am sure that the costs to companies like IBM, who open these facilities, will be much higher than any savings in wages. In hard economic times, it might seem attractive to find lower wages near major markets, but over the long term, this strategy will be doomed to failure.

I am William Gamble, JD, LLM, Ex MBA, KSC, a consultant specializing in emerging markets. I successfully predicted the collapse of the Chinese stock market and real estate market. I have been quoted or interviewed by ABC, CNN Asia, Bloomberg, Fox, CNBC, NPR and other television and radio stations around the world. I have published 24 letters in Financial Times and articles in Foreign Affairs, and Harvard International Review. I have been quoted USA TODAY, The Far Eastern Economic Review, The International Herald Tribune, The South China Morning Post, Sankei Shimbun. I have written two books Investing in China and Freedom: America's Competitive Advantage in the Global Market. In the past year I have spoken to CFA societies in 10 countries and 9 US cities as well as other conferences all over the world.

William Gamble, Your Globalized Lawyer

Author: Freedom: America's Competitive Advantage in the Global Market

EMERGING MARKET STRATEGIES

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1990 Pawtucket Ave

East Providence, RI 02914

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Internet: william@emergingmarketstrategies.com

http://www.emergingmarketstrategies.com/

William Gamble

Emerging Market Strategies

East Providence, RI

401-272-8906

401-272-8139