Mitt Romney, Bain and China

In last night's debate, the two nominees discussed China repeatedly in relation to foreign policy and economy-related matters.

Although President Barack Obama first brought up China in relation to clean energy development, it was former Governor Mitt Romney who first took a hard line mentioning that he would  'crack down' on the Chinese.

Romney and running mate Paul Ryan frequently refer to China in relation to the deficit and they often portray the country as an economic threat to America.

The pair have even accused the president of shipping jobs to China.

However, Romney's tough China stance appears at odds with his history at Bain & Company and its spinoff firm Bain Capital.  Both companies became involved in China investments and outsourcing. 

A recent AP article outlined Romney's connections with Bain & Company when it opened an office in Shanghai in 1993

At least seven Securities and Exchange Commission filings from May to December 1993 by Marriott International, Inc., where Romney served as a director, listed him as "chief executive officer of Bain & Company, Inc." A 1998 Sports Authority SEC filing said Romney was Bain's CEO and chairman to 1993 and a director to 1998. A March 1993 federal credit document obtained by Rolling Stone magazine listed him as Bain's "principal." A Boston Herald news story written in October 1993 by current Romney senior adviser Eric Fehrnstrom described him as Bain's chairman and former CEO.

At Bain Capital, Romney took a paid leave of absence in February 1999 to run the Salt Lake City Olympics, but he continued on officially as sole shareholder, managing director, CEO, and president.  He continued to sign documents for the company and to conduct other work for both Bain Capital and some of the companies that it controlled.

However, we should note while the Romney campaign has made much effort to separate Bain & Company from Bain Capital, evidence shows that the two companies worked together in building up foreign investment in China.

Two companies worked in China by mid-90s

A group of Bain & Company founders started Bain Capital in 1984.  Bain & Company itself was a major original investor in the new firm and, for a period, it received a share of Bain Capital's profits.  Initially, Bain & Company executives had the right to veto the spinoff firm's investments if there was a conflict of interest.

When Bain & Company experienced difficulties in the early 1990s, they even hired Romney back from Bain Capital to help get their house back in order.

Most importantly, the evidence points to Bain & Company helping foreign companies including Bain Capital find investments in China. 

When Bain & Company first opened an office in Shanghai, they became active in helping the country adapt to the free market system. In particular, they were involved with a high-level seminar focused on teaching Western capitalist principles and methods to Chinese firms.

During the seminar, Bain and Company will outline Western ways in enterprise valuation, mergers, and acquisitions, and in enterprise performance improvement.  The two sides will hold discussions on how Chinese enterprise can most effectively use foreign investments.

-- Daily Report, U.S. Foreign Broadcast Information Service, Issues 229-239, 1993

According to The Asian Venture Capital Journal, Bain and Company was seeking foreign investments for Chinese firms by at least 1995 and one of the investors was Bain Capital.  

Bain's venture capital fund, Bain Capital, has so far directed its $50 million in investments entirely within the U.S. Yan admits that the firm's outlook on China is cautious. "I have seen a lot of deals that have a cash flow payback of less than two years, bu there are not a lot of them and those deals tend to be rather small."

--  The Asian Venture Capital Journal, Vol. 8, 1995, p. 26

Bain and Company VP Yan added that "half of the time we tell our clients not to invest in China."  Although, primarily a management consulting firm, the evidence shows that Bain & Company was also seeking foreign investments for Chinese firms.  

Indeed, by 1996, according to the U.S. Foreign Broadcast Information Service, Bain and Company had attracted a substantial amount of foreign investment into the country.  How much of this came from Bain Capital is still unclear. 

"In the long run, our business focus on both foreign and multinational companies and Chinese firms will be two sides of a coin," said Rick Yan, vice-president of Bain Co Inc., which has been helping foreign businesses invest a combined 500 million U.S. Dollars in China since 1993."

-- -- Daily Report, U.S. Foreign Broadcast Information Service, Issues 76-84, 1996

By 1998, groups like Bain & Company, the Boston Consulting Group and McKinsey and Company were actively working in China on various types of consulting including bringing in foreign investors.

"Our strategy is to work with Bain Capital and other direct investment funds to become equity partners of SOEs [state-owned enterprises] and work with them to turn around their performance through strategy development, management enhancement, and performance-based incentive systems."

-- Harvard China Review, vol. 1, 1998

Romney's hypocrisy

No matter how one looks at it, Mitt Romney was active with Bain & Company as director at least until 1998, and in various capacities with Bain Capital until 2002. 

For about a decade, he certainly knew about both companies' dealings in China.  So, it is a little strange that he should take such a hard line against a country that he and his partners helped to succeed in the Western free market system. 

Romney likely to appeal to base tonight

When Mitt Romney formally accepts his party's nomination tonight, he has two main directions that he can take if he wants to make major impact.  He can go after President Barack Obama hard to appeal to the party faithful or he can attempt to woo independents watching on prime time television. 

By giving the Tea Party and other conservatives plenty of "red meat" tonight, it will show that he is trying to energize them for the ground war.  The party base wants to hear tough attacks on Obama and the Democrats.

On the other hand, independent voters tend to dislike negative campaigning from either party.  If he goes on the offensive, his already low likeability ratings go plunge even lower as he addresses a nationwide audience.The likeability index is one of the barometers that can indicate which way undecided voters will break as the election nears.

From released excerpts of the speech, it appears that Romney will attack Obama, but not with the same energy that he has used on the campaign trail.

In yesterday's post, I mistakenly said that Bill Clinton would be the keynote speaker at the Democratic Convention when in reality it will be San Antonio Mayor Julián Castro, the first Latino to ever to deliver a  Democratic convention keynote.   Bill Clinton will instead enter Obama's name into nomination. The Democrats will feature a strong lineup of women including Elizabeth Warren, Tammy Duckworth, Barbara Mikulski, Kamala Harris, Caroline Kennedy and Eva Longoria.

The Democratic schedule will feature First Lady Michelle Obama on Tuesday, Sept. 4, along with Mayor Castro.  On Wednesday, Elizabeth Warren will speak before Bill Clinton who will counter Paul Ryan's speech on the second day of the Republican convention.  Vice President Joe Biden will introduce President Obama on Thursday.

President Obama with actress Sissy Spacek in Charlottesville, Va., Aug. 29, 2012.  (Official White House Photo by Pete Souza)

GOP nominates Mitt Romney

The Republican Party nominated Mitt Romney today as their contender for the U.S. presidency. The delegation from New Jersey sent Romney over the top with the magic number of delegates although the nomination does not become official until he formally accepts it on Thursday.

Today's event occurred as Hurricane Isaac made an official first landfall off southeastern Louisiana. Forecasters expect Isaac to make a second landfall sometime tonight possibly south of New Orleans.  The tropical weather is upstaging the convention to some extent and organizers are careful not to seem insensitive while celebrating the Romney nomination.

The location of the event in Florida helps to highlight the importance of that state for the Republican nominee. North Carolina, the location for the Democratic National Convention, has been looking good for President Obama lately.  In previous polling, the state looked like it was sliding in Romney's direction.

However, the three most recent polls may suggest that Obama has closed the gap and pulled into a tie with his opponent.

On prime time television tonight, Ann Romney and New Jersey Governor Chris Christie will try to "humanize" the nominee who many view as lacking in animation and feeling. On Wednesday, we can expect more of the same thing as Republicans attempt to create a clear image of Mitt Romney for the nationwide viewing audience.

With only 70 days left until the election, the GOP does not have that much time to define their nominee for voters.  Television ads help, but nothing is quite so effective as seeing the candidate live during a televised broadcast.  Thursday will really be Romney's biggest opportunity to let people know who he is and what he stands for.  The other big major windows will be the three debates with President Obama coming in October.

While many people on the Democratic side worry about Romney's fundraising advantage, up to now it has not done much to swing the election in the Republicans favor.  For the 2012 election, Romney and the Republican Party have spent about $368 million compared to about $262 million for Obama and the Democratic Party.   Outside spending for Romney so far is at $107 million compared to only $39 million for Obama.

However, the president still leads by a slight margin in national polls and he is doing quite well in battleground state surveys.

Gingrich surging as South Carolina vote looms

Newt Gingrich is surging in South Carolina polls while Mitt Romney's campaign appears to be collapsing the day before the big primary.

I have viewed South Carolina as a 'king-maker' state ever since the 2008 primary and it could play the same role for the Republicans this time around unless it is a very close race. With Rick Perry dropping out of the race and conservatives appearing the recognize the need to rally around a single candidate, Rick Santorum's support appears to be drying up in the southern state.

Of the remaining conservatives, Gingrich seems to be picking up most of the votes from Perry and Santorum.

Sarah Palin thinks the interview with Gingrich's former wife just before the primary will actually help rather than hurt Newt. She may be right.  Conservatives are generally suspicious of the "liberal" media and the timing of the interview may play into Gingrich's hands as he will be viewed as victimized by the "left."

If Gingrich wins, he will be in a good position to rally even more conservatives into his corner. When you do the math, it's obvious that the conservative candidates combined are well ahead of Gingrich in the overall vote count.  In conservative Iowa, it appears that Santorum will actually come out the winner.

Should conservatives coalesce around Gingrich, he should become the favorite in many states where the Tea Party has established powerful get-out-the-vote machines.



Newt Gingrich's Explosive South Carolina GOP Debate

Romney wins New Hampshire primary

Mitt Romney has won the New Hampshire primary with Ron Paul coming in second and Jon Huntsman in third place.

The outcome was not unexpected giving Romney's wide lead in the polls. All attention will now turn to South Carolina, which has acted as a litmus test for nominee candidates in recent times.




Campaign manager Jim Messina lays out the various paths that President Obama can take to win the presidential election in November.

GOP primary candidates to meet in CNN debate

Republican presidential hopefuls will be meeting in a CNN-sponsored debate tonight in New Hampshire.

Two recent polls show that Mitt Romney is leading the pack of present contenders with Sarah Palin close behind.

President Obama has no serious challengers on the Democratic side.