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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
Well this is the difference between a state that has long term goals of improving it countries vs. corporations that can't see beyond the next quarterly report. Maybe it is true what they say, a capitalist will sell you the rope that you will use to hang him.
Think of it like european scholars rediscovering ancient works from the muslims and eventually doing their own major works again.
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.
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)
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.
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
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.