U.S. companies have been using Chinese firms to build inexpensive telecommunications equipment for more than five decades and the long-term implications have made the U.S. impotent in the eyes of telecom mogul David McCourt.
“We don’t even have a real telecom manufacturer for cellular equipment in the United States,” McCourt told Yahoo Finance’s On the Move. McCourt is not a “Trump fan” but understands the Trump administration’s strategy. “We’ve been behind in our policy for trade, industrial advantage and national security and now all three of them are coming home to roost. Now we got a big mess on our hands.”
“I’ve, been in the telecom business for a long time and we’ve been using China for 50 years to manufacture everything,” said McCourt, who has “impeccable credentials as a telecoms revolutionary” according to The Economist, which traced his rise in the early 1980s as a telephone and cable TV mogul following deregulation of both industries by Congress. Today, McCourt is the founder, chairman and chief executive of Granahan McCourt, which according to to The Irish Times is “a private investment firm specializing in telecoms and media.”
McCourt is now focused on the impact of the U.S.-China trade war on the $250 billion telecom infrastructure market in the U.S. Some of the U.S.’s claims against China, like the theft of intellectual property, are legitimate issues, according to McCourt.
“Most people who study the issue would say that they (China) also don’t respect IP the way American companies do. So that gives you a big advantage if you don’t have to pay for the R&D right?” he said.
McCourt is critical of U.S. policies that failed to address China’s surge to telecom manufacturing dominance and U.S. firms that turned a blind eye to their own downfall.
“Our policy in the telecom area was short-term profits. And a lot of companies were merged and sold, and next thing you know, we don’t have a telecom cellular manufacturing company to speak of in the U.S.,” he said.
For example, telecom giant Motorola sold its telecom infrastructure business to Nokia in 2010 and its cellphone manufacturing business to Google which eventually sold it to China’s Lenovo in 2014.
“We’ve known for half a century that cellular was going to be important infrastructure in our country,” said McCourt. “And how did we end up in a situation where we don’t have a manufacturer? It’s crazy.”
Trump is expected to meet with Chinese President Xi Jingping during the G20 meeting in Osaka, Japan later this week. Chinese trade negotiators are publicly stating the U.S, must be willing to compromise. Chinese Vice Minister of Commerce Wang Shouwen was quoted in Hong Kong’s South China Morning Post saying, “We should meet each other halfway, which means that both sides will need to compromise and make concessions, and not just one side.”
In his new book, “Total Rethink: Why Entrepreneurs Should Act Like Revolutionaries,” McCourt explores how “we let the World Trade Organization and UN... become so useless.” Companies, he points out, used to be able to survive with incremental change but McCourt said, “you have to be much, much more aggressive now if you want to get something done.”
It’s a strategy that appears to have worked for China.
Adam Shapiro is co-anchor of Yahoo Finance On the Move.