If only Aditya Chakrabortty had the first clue of the business world he attempts to write about

Aditya Chakrabortty wants to tell us that it’s Thatcherism which explains why the UK has no equivalent of Huawei. The explanation being that if the old GEC was still around then we would have. This is not quite how it did work out:

Namely, where is Britain’s Huawei? How does one of the world’s most advanced economies end up without any major telecoms equipment maker of its own, and having to buy the vital stuff from a company that enjoys, according to the FBI, strong links with both the Chinese Communist party and the People’s Liberation Army?

Well, the most obvious answer is that the Chinese company is better at producing that equipment. We here have heard of that idea of the division and specialisation of labour along with the trade in production that follows. But there’s more error here:

Perhaps the pinstriped jeering got to Weinstock. Even as he protested “we’re not a company to render excitement”, he too began indulging in the 1980s business culture of “if it moves, buy it”. Between 1988 and 1998, academics found that GEC did no fewer than 79 “major restructuring events”: buying or selling units, or setting up joint ventures. But it was after Weinstock stepped down in 1996 that all hell broke loose. His replacement was an accountant, George Simpson, who had made his name, as the Guardian sniffed, “selling Rover to the Germans”. The new finance director, John Mayo, came from the merchant-banking world detested by Weinstock. Together the two men looked at the giant cash pile salted away by their predecessor – and set about spending it, and then some.

They sold the old businesses and bought shiny new ones; they flogged off dowdy and snapped up exciting. In just one financial year, 1999-2000, they bought no fewer than 15 companies, from America to Australia. Suddenly, GEC – or Marconi, as the rump was rebranded – was beloved by the bankers, who marvelled at the commissions coming their way, and the reporters, who had headlines to write.

Then came the dotcom bust, and the new purchases went south. A company that had been trading at £12.50 a share was now worth only four pence a pop. In the mid-2000s, Marconi’s most vital client, BT, passed it over for a contract that went instead to … Huawei.

Indeed so. But what was it that they were trying to do? Well, the GEC of old didn’t in fact have the technology to build those whizzy new mobile telephone networks. They had System X, the digital exchanges for landlines. A great technology of course. But not one that addressed that new world. The reshuffling of businesses was to drop the older technologies and to create a world beating position in these new ones.

Sure, the execution was, how to be polite about this, less than successful. But the aim was to create a Huawei. The entire Simpson plan was to be market leader in mobile and internet technologies, ones that GEC didn’t have as a result of Weinstock not investing at that leading edge of technology.

So the critique fails at a certain level. And yet it gets worse than this again, for it fails at another more basic level. Note again this:

sold the old businesses

What they did was some shuffling within the corporate envelope. Much of the old GEC - suitably tempered by the passing of the decades - still exists within Siemens for example, and that’s not the only home of those operating businesses. What didn’t happen is, as Chakrabortty is implying, that all those centres of excellence, or whatever we might want to call them, disappeared, got closed down, thrown on the scrapheap. It’s just that a different set of capitalists - these days, just a different series of pension funds - own and manage them.

That we buy in telecoms from China and export Range Rovers to China isn’t a problem - this is called trade and it’s wealth enhancing. To blame this on GEC’s failure is an exotic argument, given that the failure was an attempt to build that very modern telecoms powerhouse that would have changed those terms of trade. And finally, corporate reshuffling is just that, a change of ownership, not a ceasing of the existence of the operating units.

All of which it would be useful for a journalist to know if they were to attempt to analyse why Britain is - or isn’t - buying from Huawei.