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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"
One of the points mentioned is the desire to design for a 10,000 meter curve radius! Now that takes aggressive land acquisition.
Seriously guys?
The only source of the article is a Mandarin to English machine translation?
I'm sure nothing will get lost in that translation...
the greatest enemy capitalism has ever known throughout the history of economics is not communism or socialism, but corporatism. a corporation is a top down autocratic organization that seeks nothing but more profit, be damned any other concerns, like fairness or egaltarianism. when they get large enough, corporations dominate their marketplace by dirty tricks like undercutting competitors prices to destroy them, and rent seeking agreements once they own the whole marketplace by colluding with other large players. ideally, a government would regulate the marketplace and even the playing field for smaller competitors against larger players (oh, you believe no government regulation results in a cleaner more perfect capitalist marketplace? you're a naive idiot). unfortunately, in the west now, corporations corrupt the government and use the government's rules and regulatory powers to not bind them, but instead entrench their marketplace positions and their powers even more
so it is in the west: democracy corrupted by corporatism. but this is but a prelude for the coming truly insidious game. see, us silly westerners have championed capitalism for a long time, but us silly westerners also have this silly anchor around our neck called democracy, respect for the individual. the chinese have no such silly limitations: the citizens have no rights, they are slaves to the autocratic system. you know, autocracy: the corporate model of governance. the future is clear: the chinese autocracy will face the world as one monolithic internally cooperating perfect autocratic corporate behemoth. and it will simply devour the rest of the world. no one can compete with them in size, leverage, production capacity, capital reserves, anything: the chinese will dominate in all regards, and just destroy all else by dominating all marketplaces all over the world
and now that our oh-so-wise supreme court has made corporate donations perfectly legal (justice roberts, you are an asshole and the most anti-american person who has ever lived: protect citizens rights, not corporation rights, you scumbag), and now that there is no need for pesky inquiries like: where the source of the money comes form, the chinese will just buy our democracy outright. multinational corporations now gleefully use chinese workers without rights to make cheap crap. the chinese autocracy will simply buy these multinational eventually and those multinationals to do their bidding in the usa instead, in reverse. the professional prostitutes on the right who will spin anything for their corporate masters (scare us with government death panels when we talk about healthcare or government censorship when we talk about net neutrality): they'll just shill for the chinese owned mutlinationals by finding the right words to spin the complete sublimation of our democracy into corporatocracy as being a Real American (tm). and if the usa has no power against this, why and how would any smaller weaker country fare in the face of the ultimate corporate behemoth known as chinese autocracy?
http://en.wikipedia.org/wiki/Citizens_United_v._Federal_Election_Commission
welcome to the new world. chinese autocracy+capitalism=the ultimate corporate domination of the entire world
soon we will all be slaves to the power structure in beijing. soon we will all be like the typical chinese citizen: workers without rights, chattel to work the mines and factories, nothing more. our democracy flat out bought, sold, and desecrated by multimationals following orders form beijing
that's the future folks. isn't unregulated capitalism grand?
intellectual property law is philosophically incoherent. it is your moral duty to ignore it or sabotage it
China bought a number, with an agreement for Airbus to then build a number in China and not long after that the Chinese companies will have what they need from their relationship with Airbus and will then instead just build their own planes without Airbus making a cent.
Its unclear why Airbus made this deal with China. Could it be just shortsightedness?
http://lkml.org/lkml/2005/8/20/95
Think of it like european scholars rediscovering ancient works from the muslims and eventually doing their own major works again.
Are they respecting patents on the technologies used to make those parts? And are they designing their own parts/machines or just making copies of the imported ones?
What corporations are state owned US intelligence agency backed corporations? Name some.
In China, India, and those other countries.
It is more than just savvy business wheeling and dealing, since it's the Chinese government wheeling and dealing. Which means it's a monopoly: only the government agency can negotiate for that business inside China. And only the specific Chinese corps the government picks can get the business. Those picked corps are picked not necessarily for the best interests of China, but rather for whatever is in the best interest of the government officials with the power to pick them. Which might or might not be the best interests of China. That's Communism.
But it's also industrial policy, which is indeed savvy business wheeling and dealing. The US doesn't have anything like that, except for the corruption part where some industries have orgs that lobby our government to do business with foreign governments that require their government to mediate such international trade, or where the US government does occasionally require our government to play that role in foreign trade, where the orgs use some method other than competitive bids/RFPs to pick which members get the business. The US could have an industrial policy as effective in strategy as China's extreme one, but without requiring the government to actually conduct the negotiations. Just review the completed deals to ensure they comply with the policy, perhaps just random samples plus any over a large value threshold (which would pay in taxes enough to fund the review).
Instead, the US abandons industrial policy, and therefore industrial strategy. And watches China ascend at our expense. Though the top US capitalists have already invested in China's industries, so China's gain is their gain, while they've divested from US liabilities, so our expense is not theirs.
--
make install -not war
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.
My understanding is yes to all. But likely not completely. I have family retired from GE loco, years ago they sold around 50 locomotives to China. First 5 were complete shipped from USA, next 20 were increasingly built in china. Last 25 were left to china. So they bought licenses, made changes, and likely wouldn't hesitate to go beyond the license if desired. GE is probably betting they will be ahead of china by the time the contact is done, and that it is beyond china to maintain the ability, let alone expand and compete. Exactly what patents are ment to be, a head start, but not a permanent monopoly (for the inventors).
Could someone fluent in Mandarin comment on the translation? I'm especially interested in this translation: "The goal of the project is to boost our economy, not theirs." Is the implication that the Chinese gov't wants their trading partners to suffer, or that their partners' situation just isn't important?
China's economy benefits when their trading partners economies benefit. If it's the former (or even the latter, to a degree), that suggests they have other priorities in mind.
As a native speaker, my only comment after RTFAing is that the phrase doesn't exist in the article. The entire article is about how they use strong handed methods to limit negotiating power of their trading partners. The wording is something along the lines of "With government officials leading the project, we leave them very little bargaining power. Either they give in and offer up their IPs, or they get out. And in the case of Siemens railway, even though negotiations broke down once, they came back for a later round."
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.
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
Native speaker here also. It's in the 3rd paragraph in the 2nd section after the introduction titled "Open the door or close it?" The preceding context is "the decision to import foreign rail technology had already been made." The next sentence can be translated as "the intimations of the higher ups is that 'the development of the project should promote our economy, rather than promote their economy' and [those involved] should act upon considerations that are advantageous to China when acquiring these technologies."
The way it's worded doesn't cast those "higher ups" in a bad light (considering every country would prioritize their own economy), but I think it's not entirely unreasonable to also read that as an implicit request to achieve a balance in maximizing Chinese economic benefits while minimizing foreign economic benefits -- that would be the way I'd understand it if I were a shrewed political underling.
your thin skin doesn't make me a troll
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
Could someone fluent in Mandarin comment on the translation? I'm especially interested in this translation: "The goal of the project is to boost our economy, not theirs." Is the implication that the Chinese gov't wants their trading partners to suffer, or that their partners' situation just isn't important?
China's economy benefits when their trading partners economies benefit. If it's the former (or even the latter, to a degree), that suggests they have other priorities in mind.
Although my mother tongue is Cantonese, not Mandarin, such line is indeed there in the original article. It's in the 3rd paragraph after the section subtitle "Door close or open?", quoted as a thought from the higher-up. It didn't really said of "goal" but the meaning is mostly accurate, just that the "not theirs" emphasis were not there.
However, I must say the translation posted here is a little bit twisted, since I am quite sure the implication of that line is not about making the trading partners suffer but only about making themselves the more benefited in the trading process.
Ridiculous. The negative side of China's rise to power is not the color of their skin, but the dismissal of human rights by their federal government.
Didn't like it then, and didn't like being called "an America hater" for being pissed off about the way a few executives were fucking over other countries' workers for short term gain.
Don't like it now, and don't like being called "an America hater" for being pissed off about the way a few executives are fucking over their own country's workers for short term gain.
Same shit, different decade.
Ridiculous. The negative side of China's rise to power is not the color of their skin, but the dismissal of human rights by their federal government.
and what respect for human rights has the US government shown? Iraq war crimes, Afghanistan, Guantanimo, water-boarding of POW's, not to mention the level of spying on it's own citizens as well as now the mainstream humiliation of it's own citizens by the TSA and agent provocateur methods used by the FBI against muslim citizens. AK Marc is right. The elephant in the room is just a mix of xenophobia, rabid nationalism and a hatred of opposing political ideals.
The USA has nothing and never has had any right to boast about it's human rights record. It's bathed in the blood of other nations from it's birth. Sheesh the country can't even get it together enough to care for it's own poor, sick and elderly.
sudo mount --milk --sugar
The colonialists ate Chinese lunch. The current regime isn't serving.
Guess there's not going to be a sequel to the Opium Wars.
It's interesting that the people who criticize centralized economic planning always point to the failures of that model in Eastern Europe, ignoring its early successes, or the more obvious recent successes in China. It goes to show that there's more than one way to organize a political economy, and that the Chinese model has some strategic advantages.
As far as this strategy goes, the thing I find to dislike about it is that it's emphatically nationalist: the goal is to benefit China, at the expense of competing economic powers. But, the criticisms I read here are also at least implicitly nationalist.
Comment removed based on user account deletion
The funny thing is that the Chinese government already considers itself in a competitive "war" with you, and has done for several decades. They will do whatever it takes to "win", primarily for nationalistic reasons (they certainly don't do it for the ordinary citizen, although it is sold as that). Just because you didn't notice it doesn't mean they weren't thinking in those terms. This is quite different to the US where the government funds innovation itself rather than a systematic program of stealing (corporations are trans-national and another thing entirely).
Click here to bribe our politicians, write our laws, and download our jobs.
Funny, you're the ones writing ours :D / Swede
IP agreements are the sad thrashing of the nearly dead; like the dinosaurs trying to escape the tar pits.
WIPO is all very polite and such, but sending soldiers to die for natural resources is one thing, sending them after "IP" is quite different. I hope I'm not proved wrong.
But try telling the Chinese that: they simply won't accept it. The CRH2 is Chinese innovation through and through, it was built from blueprints up by Us Good Chinese People. Same as the Shanghai maglev. Tell any resident of Shanghai that the maglev was built by Germans and they'll turn their brains off.
Shutting down free speech with violence isn't fighting fascism. It IS fascism!
What we do is to exchange market for technologies
true and true. its a basic trade. they gave technology, chinese gave them the money. (as market).
Read radical news here
Newton in a letter to Robert Hooke in February 1676:
If I have seen further it is by standing on the shoulders of giants.
This is not a signature.
... China had been known for doing this for years now. Take, for an example, the way how they built J11 jet fighter, rip-off of Su-27. The problem with Chine, unlike, let say, Japan who is also know for purchasing foreign know-how, is that they do it semi-paid - they pay until the goods are delivered. After that, they just say it does not comply with their standards no more. It's great to have you in WTO, China ...
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.
Typically how it goes is:
1.) China promises a foreign company lots of freedom of business, hundreds of billions in future contracts down the road
2.) China strong-arms the foreign company into a joint-venture 51% owned by a Chinese company (note, this is different from a Chinese subsidiary of the foreign company. The Chinese company is an independent rival to the foreign company). The foreign company must surrender all IP rights to the Chinese company that are developed as part of the 51% 49% relationship.
3.) Having initially imported products form the foreign company, China presses the foreign company to move more and more production to China.
4.) After the foreign company has invested huge sums of money and time into the Chinese market, China changes the law and forces the foreign company to manufacture a set percent (e.g., 40%) of all of the production of their product in China by a domestic Chinese company (again, we're not talking about the Chinese branch of a foreign company, we're talking about a completely separate domestic Chinese company).
5,) In order to meet the strict Chinese-domestic-manufacturing limits, the foreign company has to trade huge amounts of technology to some random state-back domestic Chinese company. Even though some small amount of technology sharing was agreed upon prior to entering the Chinese market, the reality is that in order to produce 40% or so of something (e.g., a bullet train) in China by a Chinese company that was previously built 0% in China, you have to give huge amounts of technology to that company and spend tons of resources to train that Chinese company's engineers. All this technology gifting by the foreign company to the Chinese company is done outside of the technology agreement framework in order to meet the strict 40% Chinese manufacturing quotas.
6.) After the domestic Chinese company has received sufficient advanced technology and training from the foreign company, the Chinese government simply stops making new contracts with the foreign company, starts manufacturing whatever the product was (e.g., a bullet train) 100% in China courtesy of the now-advanced Chinese company, and the government buys exclusively from the Chinese company. The foreign company finds themselves having given all of their technology to a Chinese company as a part of "doing business" in China, and then they find themselves discriminated against and completely forced out of the entire Chinese market. They also find themselves having a new Chinese rival selling what is essentially an identical product for significantly less. And, of course, the Chinese company has an unlimited budget and shapes the laws courtesy of the Chinese government.
No, most free countries do NOT work like this. The Chinese government entices foreign companies to come to China, then changes the laws once they are there in order to strong-arm the foreign companies to give up all of their secrets. Don't get me started on corporate espionage by the Chinese which is at or even greater than the level and frequency of the Soviets during the Cold War, and all of that espionage is state-backed and goes straight to up-and-coming Chinese companies (because Chinese business and Chinese government are intertwined, after all)
Of course, I don't blame China. What they're doing is brilliant--exploitative and dishonest, but brilliant. I blame the greedy short-sighted companies and their selfish executives, and I also blame my own government for creating the business conditions that make this possible.
Right; for example nobody nobody suggested harming Julian Assange for publishing anti USA information. Nobody suggested arresting for treason a man who isn't even American. C'mon; pull the other one.
=~ s,(.*),<sarcasm>$1</sarcasm>,g if any_point_you_wish();
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?
Physical economy has hard limits, but using financial instruments and bubbles to pretend those limits don't exist or can be indefinitely postponed is ridiculous.
There were two parts to what I said. Extracting resources can be done on a scale within the energy budget of the planet and using recycling to maintain a steady state - although at some point we are going to have to look outside Earth, but we aren't quite there yet. Utilising them can be made progressively more efficient thus giving us more 'stuff' for our megajoule. What you've said about CHON based technologies would fall under this category.
Supposedly, the abstract part of our capitalist economies makes things more efficient too - but economists define efficiency not in physical terms but basically in terms of how much crap you can externalise. If you honestly believe the abstract economy improves the efficiency of the physical one, please show your working!
If we can put a man on the moon, why can't we shoot people for Apollo-related non-sequiturs?