Lessons from the Bottom


LAST WORD: Lessons from the Bottom
by Marzena Czarnecka

You’re the Nile, You’re the Tow’r of Pisa.
You’re the smile / On the Mona Lisa.
I’m a worthless check a total wreck a flop,
But if, baby, I’m the bottom
You’re the top!

– Cole Porter

You know who I’m talking about. On the map, we’re on top, and they’re on the bottom, but draw the map according to the global economy, and there you have it. They have Disney World and Disneyland. We have West Edmonton Mall (okay, and Paramount Canada’s Wonderland). You get the picture. They’re the elephant. We’re the mouse that defines itself by saying, “Well, you know elephants? I’m not an elephant.”

But sometimes, the bottom can teach the top something, and I think this is the time for Canada to teach our southern neighbour a little lesson about selling to China. Here is the lesson: Do it.

I write this as Calgary-based PetroKazakhstan (Hurricane Hydrocarbons as was) is joyfully selling itself to China National Petroleum Corporation, and a new joke is making the rounds. Question: so, what is the difference between a Canadian and an American? Answer: An American is someone who calls a Chinese company buying a US company a threat to national security. A Canadian is someone who cashes the Chinese cheque.”

A lovely, fat, $4.2 billion cheque. Thank you, CNPC. We feel quite confident that unless a clearly superior (and we mean superior purely in the dollars and cents sense), come the shareholders meeting in October, our Kazakhstan assets will be your Kazakhstan assets.

Now, I realise that CNPC’s purchase of PetroKazakhstan isn’t quite the same as China’s CNOOC Ltd.’s attempt to overpay for US Unocal. Unocal, after all, does have US assets. It also has Canadian ones. And ones in Thailand, Indonesia, Myanmar, Bangladesh, Congo, Azerbaijan, and The Netherlands. Thanks to Chevron Corp, all safely owned by a US company.

But still. Change PetroKazakhstan for, say… EnCana Corp. Would we have seen our Members of Parliament whip themselves into a frenzy and protest the deal as a threat to Canadian national security? Granted, a few headline hungry MPs did make fools over themselves when Min Metals was chasing after Noranda, but on the whole, the nation was fairly complacent, exhibiting a sort of, “Well, someone’s got to buy it” mentality. If it won’t be the Chinese, it’ll be the Yanks (in a bizarre twist, it went to Canucks, with other assets, inter alia, in Missouri, Louisiana, Jamaica, and Chile. But that’s likely temporary).

The two countries’ opposite reactions to the spectre of Chinese-control of formerly domestic companies is the result of our very opposite roles in the unfolding global economy. Give credit where credit is due: the US pioneered the global economy, and it did so from a position of power. In other words, its companies bought up Canada, the Netherlands, and Azerbaijan. Our companies… for the most part, got bought.

That’s given us perspective. We’ve tended to be the “bottom” in most world power plays, and that’s made us humble, even when we’ve come out on top. We understand that globalisation is a complex phenomenon that involves an interdependence of economies, an intermingling of global assets, in the hands of a variety of multinational, variously headquartered companies. From its privileged position as the “top” in globalisation’s first round, our neighbour sometimes misinterprets globalisation to mean US companies owning the globe. Not so, baby. You’re bigger than us, and will always have a bigger share. But China’s bigger than you (so’s India). When they get their ducks lined up, round two may very well go to them. Round three, for sure.

It’ll hurt less if you relax. Now, close your eyes and imagine that instead of selling for less to Chevron, Unocal went for a whopping premium to China. There. Was that so bad? (Isn’t it nice to experiment with different positions).

Marzena Czarnecka is a Calgary-based, therefore likely US-owned, freelance writer writer. And she’s okay with it.

• Thomson Reuters article record

2012: Well, I guess I was wrong, eh? We did whip ourselves up into a frenzy…