Earlier quoted context omitted.
Invoking whataboutism is not a defense against hypocrisy.
Pointing out someone else's hypocrisy is not a defense of bad behavior.
It does delegitimize the complaint
How China Systematically Pries Technology from U.S. Companies
141–150 of 208 posts
Re: How China Systematically Pries Technology from U.S. Companies
#142Earlier quoted context omitted.
When China was admitted to the WTO, manufacturers in China gained access to other WTO member markets on better terms than they had before. And, in theory, in exchange for that access, outside companies gained new access to the Chinese market - to investing in factories there and selling products and services there. That was supposed to be part of the WTO deal. But, the requirement in China that state owned companies…
No WTO is about trade and it is fairly silent on investment. See https://www.wto.org/english/tratop_e/invest_e/invest_info_e.... "As an agreement that is based on existing GATT disciplines on trade in goods, the Agreement is not concerned with the regulation of foreign investment. The disciplines of the TRIMs Agreement focus on investment measures that infringe GATT Articles III and XI, in other words, that discrimin…
Thanks.
I think a recent EU complaint to the WTO about IP transfer rules in China does a better job of explaining the issue than I have. Bloomberg wrote about it in June:
In its complaint, the EU is targeting rules in China on the import and export of technologies and on Chinese-foreign equity joint ventures. Certain provisions “discriminate against non-Chinese companies and treat them worse than domestic ones,” violating WTO requirements that foreign businesses be put on an equal footing and that IP such as patents be protected ...
From
https://www.bloomberg.com/news/articles/2018-06-01/europe-ta...
or
https://www.bloombergquint.com/global-economics/2018/06/01/e...
Re: How China Systematically Pries Technology from U.S. Companies
#143Earlier quoted context omitted.
Can't the companies just not do business in China if they don't like the contract? Other countries have similar laws, like it forces companies to hire local people or spend part of the money locally. If China can afford to not respect the IP laws then there is nothing what a company can do, eventually the secrets would be reversed engineered.
You can. However 1 billion potential customers are dangerous to ignore. It isn't just that they don't buy from you, it is that they buy from your competition - which can include a brand new company they start locally - which gives your competition enough cash to design their next version better than yours.
Its not dangerous to ignore if it results in your entire IP portfolio getting expropriated and used to crush you.
Its a siren song that is enabled by increased quarterly profits, even knowing full well the risks, it will be another CEO and board before they come home to roost.
Re: How China Systematically Pries Technology from U.S. Companies
#144Earlier quoted context omitted.
You can. However 1 billion potential customers are dangerous to ignore. It isn't just that they don't buy from you, it is that they buy from your competition - which can include a brand new company they start locally - which gives your competition enough cash to design their next version better than yours.
Its not dangerous to ignore if it results in your entire IP portfolio getting expropriated and used to crush you. Its a siren song that is enabled by increased quarterly profits, even knowing full well the risks, it will be another CEO and board before they come home to roost.
It is a double edge sword for sure.
Re: How China Systematically Pries Technology from U.S. Companies
#145It's hard for me to believe that all the smart, capable company executives involved in planning and execution of operations in and around China are oblivious to IP risks. There is an obvious upside of operating in Asia, both cheap labor (though now decreasing) and strong work ethic coupled with access to a huge market. It seems to me that execs understand and take a calculated risk when they choose to do business in…
IP theft is a long-term risk, while cheap labor and access to the Chinese market are short term benefits. Company executives may have short term incentives, and little interest in the long term health of their organizations. Company executives have to compete with executives willing to compromise their company's long term health in the short term.
Well said. It reminds me of Warren Buffet's statements about insurance companies and excessively low premiums.
The well-run insurers are always competing against the most poorly run, excessively risky insurers.
Some of these poorly run companies offer irrationally low premiums and gain lots of customers because of it -- but then go bankrupt. OTOH, well run insurers that used sound underwriting principles and charged rational premiums end up with fewer customers.
Re: How China Systematically Pries Technology from U.S. Companies
#146Earlier quoted context omitted.
Then how do you complete when your competitors already have and their costs are now significantly reduced?
If you absolutely require lower wages to make a profit (your business plan has already failed, but let's go with it): Go to any one of a number of other countries that don't expect you to partner with a communist dictatorship and give up IP in order to have goods produced there? Vietnam, Thailand, Malaysia, Mexico, India? It seems like a pretty obvious "AVOID" signal for me, but I'm not running a multinational that's…
but the countries you listed also require local partnership.
Re: How China Systematically Pries Technology from U.S. Companies
#147Earlier quoted context omitted.
By whose standard? It’s awfully convenient for the United States to reap the benefits of “lower standards” and then shut the gates after they no longer need those lower standards.
Would you consider slavery acceptable in developing nations? After all, the US benefited from it while it was growing, why should we deny the economic benefits of slavery to other countries.
If the offer on the table for developing countries is either take the poison pill or never develop (where the poison pill is lax IP, lax environmental laws, child labor, exploiting other countries for resources), I think you'd be hard pressed to find a country which wouldn't make that sacrifice.
Re: How China Systematically Pries Technology from U.S. Companies
#148Earlier quoted context omitted.
No WTO is about trade and it is fairly silent on investment. See https://www.wto.org/english/tratop_e/invest_e/invest_info_e.... "As an agreement that is based on existing GATT disciplines on trade in goods, the Agreement is not concerned with the regulation of foreign investment. The disciplines of the TRIMs Agreement focus on investment measures that infringe GATT Articles III and XI, in other words, that discrimin…
Thanks. I think a recent EU complaint to the WTO about IP transfer rules in China does a better job of explaining the issue than I have. Bloomberg wrote about it in June: In its complaint, the EU is targeting rules in China on the import and export of technologies and on Chinese-foreign equity joint ventures. Certain provisions “discriminate against non-Chinese companies and treat them worse than domestic ones,” viol…
EU's complaints depend on the TRIPS agreement https://www.wto.org/english/thewto_e/whatis_e/tif_e/agrm7_e.... , which appears to be silent on investment as well. If EU obtains a favorable ruling it would likely require China to treat patents owned by foreign entities equally as those owned by the Chinese. However it is unlikely to say how China should regulate foreign investments. Indeed under WTO countries have no obligations to allow foreign investments at all. Plus TRIPS contains this as well: "More precisely, Article 7 (“Objectives”) states that the protection and enforcement of intellectual property rights should contribute to the promotion of technological innovation and to the transfer and dissemination of technology, to the mutual advantage of producers and users of technological knowledge and in a manner conducive to social and economic welfare, and to a balance of rights and obligations." https://www.wto.org/english/tratop_e/trips_e/techtransfer_e....
Re: How China Systematically Pries Technology from U.S. Companies
#149And so what??? The US pried the textile and locomotives industries from the UK, check the history of Samuel Slater[1]. Same happened for Japan under Meiji restoration. India and Brazil do the same for pharmaceutical patents, because they're too poor to afford paying them. Stealing IP will happen, no matter what treaties and governments try to do. For poor countries it is a path they just don't have the luxury of givi…
> Stealing IP will happen, no matter what treaties and governments try to do. For poor countries it is a path they just don't have the luxury of giving up. I feel like this misses the point. I don't expect people to complain much about IP being stolen by competitors - that feels like an security/internal problem. The issue with China seems to be that they force partnerships with Chinese companies, resulting in wester…
That's so called exchange the technology by the market. If you are in the condition of China, what will you do to avoid yourself always stay in the lower level manufacture status? Imagine that's you as a human being, are you willing to always do the low pay labor work, or learning the knowledge and experience from your colleague secretly as they not willing to share with you, then try to position yourself a better career path?
Re: How China Systematically Pries Technology from U.S. Companies
#150And so what??? The US pried the textile and locomotives industries from the UK, check the history of Samuel Slater[1]. Same happened for Japan under Meiji restoration. India and Brazil do the same for pharmaceutical patents, because they're too poor to afford paying them. Stealing IP will happen, no matter what treaties and governments try to do. For poor countries it is a path they just don't have the luxury of givi…
And this is bad for the future of citizens and corporations of the US, especially if it continues, because Chinese firms will use this to compete vigorously with the US firms that spent the time and money developed the tech. Much of the WSJ's readership has a vested interest in that not coming to pass. That's "so what".