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Chinese Intellectual Property Acquisition Tactics Exposed
hackingbear writes "In an interview published in Sina.com.cn, Chinese rail engineers gave a detailed account of the history, motivation, and technologies behind the Chinese high-speed rail system. More interestingly, they blatantly revealed the strategies and tactics used in acquiring high-speed rail tech from foreign companies (Google translation of Chinese original). At the beginning, China developed its own high-speed rail system known as the Chinese Star, which achieved a test speed of 320km/h; but the system was not considered reliable or stable enough for operation. So China decided to import the technologies. The leaders instructed, 'The goal of the project is to boost our economy, not theirs.' A key strategy employed is divide-and-conquer: by dividing up the technologies of the system and importing multiple different technologies across different companies, it ensures no single country or company has total control. 'What we do is to exchange market for technologies. The negotiation was led by the Ministry of Railway [against industry alliances of the exporting countries]. This uniform executive power gave China huge advantage in negotiations,' said Wu Junrong, 'If we don't give in, they have no choice. They all want a piece of our huge high speed rail project.' For example, [Chinese locomotive train] CRH2 is based on Japanese tech, CRH3 on German tech, and CRH5 on French tech, all retrofit for Chinese rail standards. Another strategy is buy-to-build. The first three trains were imported as a whole; the second three were assembled with imported parts; subsequent trains contain more and more Chinese made parts."
This sounds to me more like savvy business wheeling and dealing. It's no different than what the Indians, Japanese or Koreans would do.
The story is not that the Chinese are devious, acquisitive SOB's. It's that the west continues to be stupid enough to enable them. http://online.wsj.com/article/SB10001424052748704679204575646472655698844.html Frist post!
an ill wind that blows no good
This is Econ 101 shit and it's embarrassing that Western countries are selling out their high tech companies for a bunch of government debt, poisoned food and defective consumer crap.
"I assumed blithely that there were no elves out there in the darkness"
Think of it like european scholars rediscovering ancient works from the muslims and eventually doing their own major works again.
Because if Airbus didn't make the deal, Boeing would, and then Airbus wouldn't have the consolation of "sold a bunch of planes to China before they figured out how to do it themselves".
You're looking at the whole thing from the wrong angle. The CEO won't care what happens to the company 10 years down the line. By then he'll have taken his golden parachute and cashed in his stock options.
The only thing that matters is the next few bottom lines. So the answer is to get as much money NOW, then run away before the shit hits the fan.
Also one reason that large corporations dominate more and more is because the barrier in many fields are very high. For example, nobody can start a petro or pharmaceutical companies easily without billion dollars of investments to meet all the safety and quality requirements. There are actually large number of small businesses in China now, resulting in intense competition and quality problem. People, with consumerist minds, don't understand that high safety, environmental and quality standard tend to cause consolidation of suppliers and resulting corporations will have more control over the market. They will complain one way or the other.
Not that I'm begrudging anyone success or prosperity, but it seems that the way the Chinese are operating in this respect screws everyone over in the long run. The buy-and-clone mentality can put Western manufacturers out of business, and since all the Chinese companies did was reverse-engineer, they don't really build up internal expertise of the level they just quashed. And just like Embrace,Extend,Extinguish, in the long run innovation doesn't happen as fast as it might have.
There weren't patent agreements between countries back then. China has agreed to abide by our IP laws to facilitate trade, then ignores them. It's one thing when individual inventors and engineers do it, it's quite another when it's state policy handed down to state run companies for state funded projects.
My Other Computer Is A Data General Nova III.
Well everyone in the 1980s thought Japan would rule the world and own everything but internal problems proved that there were limits to their power... just as any nation has limits. We in the US often forget our own limitations because we're used to having our own way.
China has severe internal issues; a massive property bubble that makes the US housing crisis seem tame by comparison; local governments are addicted to land sales to fund their massive infrastructure projects, loaded down with loans from the state banks. Unless you truly believe that empty apartment blocks or even empty cities are a good investment and property prices will always go up that game has to end at some point and when it does China won't be able to hide the pain. Plus massive corruption and cheating (how can you make decisions at the top when all your stats are based on outright falsified data?). Official government statistics say that about 40% of the academic papers published from Chinese Universities contain falsified research and that's just what they will admit.
Did I also mention the leadership/succession problem? How many times in world history has some political succession BS thrown a wrench into a country's previously bright future?
I'll put it another way: if China gets too annoying and the EU+US slap a 50% tariff on Chinese imports who do you think will blink first? The consumers who have to pay $5.99 for that plastic toy instead of $2.99? Or the communist authorities in China facing millions of unemployed laborers with no job prospects, nowhere to go, and nothing to do? The political situation in China is far less straightforward and stable than people suppose.
Natural != (nontoxic || beneficial)
You're distinguishing between "capitalism we want" and "capitalism we don't want" (corporatism). Corporatism is capitalism, it's just a kind of capitalism: an extreme one. Just as Chinese Communism is a kind of socialism, that has some extremes of capitalism along with some extremes of capitalism. But capitalism is simply the assignment of the highest value to capital (property), typically at the expense of devaluing either or both of labor and whatever's left that's not property (eg. the environment, ethics, capital in the public domain). Corporatism is indeed an extreme development of capitalism, though it's not very different from protocapitalist systems like feudalism.
--
make install -not war
I've been debating this with myself for a long time and I've come to the following (admittedly infantile) conclusion:
Capitalism - Getting capital by providing a good or service.
Corporatism - Getting capital without ever providing anything.
That's a fallacy.
Walk through a grocery store or mall. Where are the non-Chinese goods? You can't find them no matter the price. And while I don't shop Walmart, it's common knowledge they strong-arm their suppliers into outsourcing in their fervor to shave a nickel off their costs. Electronics, textile, heavy machinery, even pharma is nearly entirely off-shore. We've only services, aircraft manufacture, and agriculture left.
As a consumer (we stopped being citizens long ago), show me where my power is? The only American thing left to purchase anymore is politicians and I don't have that kind of money.
-- Posted from my parent's basement
No, what happens is that China buys the first 5 loco's for 5M/piece and as they progressed they kept paying the same money for less stuff. In the end they just paid 20M or so for all the licenses and tech expertise and the GE manager that made the deal got a promotion because he had a series of VERY good financial end-of-quarter reports.
Custom electronics and digital signage for your business: www.evcircuits.com
The colonialists ate Chinese lunch. The current regime isn't serving.
Guess there's not going to be a sequel to the Opium Wars.
Whatever fault and atrocity US may have committed, anyone in the world is free to criticize and any US resident is free to discuss and lobby for change. The same cannot be said for China and that is fundamental difference between China and the rest of the free world.
I disagree strong with the Patriot Act, the use of torture and the Iraq War, but even I know that those actions pale in comparison to the tens of millions if not hundred of millions of Chinese that perished in the last 50 years due to the ineptness of an authoritarian regime.
While China certainly has achieve spectacular economic growth in the last 50 years, but I would argue that the US civil rights movement that continues today has far more importance than avoiding starvation.
Just goes to show the absurdity of IP law really. Those treaties are nothing but toilet paper if China can disregard them so easily without consequences. IP as currently envisioned basically doesn't work; it attracts rent-seekers like a flame attracts moths, and it can't be enforced on individuals (explosion of piracy) nor on nations who get no benefit from it (China).
Nobody can expect the Chinese government to go against its own national interest (and although its not a democratic government, in this case the interests of the CCP line up fairly well with their people - both want the most rapid economic development possible).
You can no more build an economy on vastly inflated claims of invention than you can build one on endlessly increasing house prices. Economies are build by extracting resources from nature and shaping them into goods and services that improve our quality of life. Anything that does not fall directly under that description should be treated with extreme skepticism.
If we can put a man on the moon, why can't we shoot people for Apollo-related non-sequiturs?