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Rio Tinto’s China Advantage

August 16th, 2009

An article just out this morning suggests why Beijing is upset with Rio Tinto. It is not about a deal gone sour, or the theft of state secrets by Stern Hu. Apparently, Rio’s crime was simply that the Australian mining company was very good at gathering market data.

Rio’s negotiating advantage over its Chinese customers was and continues to be that it collates information systematically and analyses it intelligently. This advantage is compounded because Rio is dealing with a steel association that acts as if it has no idea how far China’s steel and iron ore industry has moved beyond its powers of command.

It would be strange if Rio were ‘’stealing” state or commercial secrets because there is no Chinese mill, mine or official who has confidential information worth knowing.

Rio Tinto’s intelligence advantage over the Chinese steel industry was more powerful and less sinister. Hu is nevertheless paying the price.

The Sydney Morning Herald just published the article, and it is definitely worth a read.

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