50 Years Ago When Nixon Went To China It Forever Changed American Business

It was 50 years ago – today – when Richard Nixon sat down and met face to face with Mao Zedong. It was all about politics – the Vietnam War, the Soviets, the upcoming US election and Taiwan – but nobody could have ever predicted that it resulted in perhaps the single biggest change for the American consumer products industry.

A change that continues to evolve to this day, five decades later.

Looking back, it’s pretty difficult to understand how outrageous this meeting was. Without the vast digital and virtual media apparatus that exists today, Nixon’s trip to China was kept a secret right up until he landed in Beijing. And the meeting between one of the 20^th Century’s Coldest Cold War Warriors and the man who vowed to destroy the “running dogs” of America and the west was something that could not have even been thought about in anyone’s wildest dreams. The Washington Post wrote at the time, “If Mr. Nixon had revealed he was going to the moon he could not have flabbergasted his world audience more.”

Following Nixon’s brief meeting with Chairman Mao and his subsequent week in China, very little of real substance came out of the trip…at least at first. A diplomatic statement essentially said, “we agree to disagree but let’s keep in touch.”

But it wasn’t all that long afterwards that U.S. businessmen began to start booking trips to China. They were already doing business with factories in Japan, Hong Kong and Taiwan but none of those places offered the scale and scope of what the potential of China held: A country of 800 million people with a reputation of being hard working and a reality of being desperate for a way to take their nation out of the detached poverty it had found itself in, thanks to isolation from the rest of the world and self-inflicted disastrous decisions it had itself made.

Could China become a place where the consumer goods that Americans consumed at a voracious rate be efficiently and cheaply made? The Chinese, who were perceived as quick learners and eager to cooperate, were only all-too-eager to accept the Western interlopers. The passing of Mao and the transition to the more practical politics and ideology of Deng Xiaoping facilitated the process and within two decades China had become the factory floor of America.

That became even more so with the trade policy reforms of the early 2000s and China’s entrance into the World Trade Organization. Walk into any store in America this side of Tiffany’s and chances were 90% of what was for sale was made in China. Eventually countries like India and Pakistan first and more recently Vietnam, Bangladesh and other nations in southeast Asia picked up a lot of that business but even today China remains the dominant supplier for goods sold in the U.S. And not just cheap t-shirts and shoes. Everything from semiconductors to Apple iPhones to Volvos to luxury goods bears a “Made in China” stamp.

Today, those same political issues that were avoided back in 1972 remain: Communism vs. capitalism, Taiwan and what to do about Russia. They have been compounded by Covid, to be sure, but also by a China that is now the world’s second largest economy and one that is both newly assertive and ever more guarded under current leader Xi Jinping.

Yet, 50 years later, China and the U.S. need each other more than they did when Nixon and Mao met. Their economies, their reaches into the developing world and the peaceful fate of the world itself rest with these two nations in a way that could never have been imagined back then.

In the meantime American companies continue to do business with China…and vice versa. From that humble first trade of Chinese pandas and American musk oxen (the latter usually forgotten by history) the two nations now do more than $550 billion worth of business with each other. In an era today when things may look bleak and foreboding perhaps it is fitting to look back to a time when the impossible became possible and the unimagined was imagined.

Speaking then, President Nixon said to Chairman Mao, “What brings us together is a recognition of a new situation in the world.”

We are now at a point in time, 50 years later to the day, of another new situation in the world.