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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.
Think of it like european scholars rediscovering ancient works from the muslims and eventually doing their own major works again.
I worked for a high tech company where the Chinese just seized the imported equipment outright and stopped payments. No doubt everything was duplicated and what software wasn't already transferred was reverse engineered. Posting anon...
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.
intellectual property IS a joke. as you can see, the chinese have proven to you what a joke it is. the way to fight the chinese is to only do business with them and only allow their business into your country, as long as their business abides by certain standards, such as worker's rights. supporting intellectual property is not an effective strategy
furthermore, intellectual property is a concept that the chinese will just as happily wield against those in the west when their power is entrenched enough. the very idea of intellectual property is exactly the sort of anti-capitalist rent seeking monopolistic practices autocratic corporations like the chinese government engage in, that should be opposed, in the NAME OF capitalism and free markets
intellectual property law is philosophically incoherent. it is your moral duty to ignore it or sabotage it
capitalism is the competition between equals in the marketplace. corporatism is the abuse of and domination of the marketplace by its largest players
to maintain a truly capitalistic marketplace, you need government regulation to level the playing field between the large and the small (despite what some deluded naive fools will tell you otherwise). the unfortunate reality is that currently in the west corporations simply corrupt the government's regulatory laws and enforcement apparatus to entrench their position, rather than oppose their position, as the government naturally should
i'm not saying getting corporate corruption out of our government is easy, but i am saying that it is the only way we can move forward. because unfortunately, the chinese government will simply use our own corporate corruption against us, in the form of multinational corporations interfering with our internal politics with their money. if we don't fight corporate influence of our democracy, we are facing the ultimate victory of autocracy and corporatism over capitalism and democracy in the form of the rise of china, which will use our own unfortunate collusion with corporations against us eventually, as beijing becomes the eventual master of multinationals
intellectual property law is philosophically incoherent. it is your moral duty to ignore it or sabotage it
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.
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.
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make install -not war
you have to use your terms more precisely. fascism is a nice scare word, but what you describe as an accepted ideology died in failure in world war ii. you need to update your terminology. i am not interested in debate about how and why fascism is corporatism, i am interested in defeating corporatism. as such, fascism, is just a bugaboo, a scary word, and not a useful intellectually valid concept
what we are really fighting is corporatism, and corporatism alone, corrupting our democracy. the oligarchy in beijing, which will eventually come to own all multinational corporations as their economic power becomes the greatest in the world, will wield their influence through corporations to subvert our democracy
that's the danger
fascism, communism: these are dead terms from the previous century. i will not use those terms because i wish to be taken seriously, and no one serious thinks of the idea of fascism or communism as valid ideologies anymore. one died in 1945, one died in 1990. the year is 2011. update your terminology please. i'm interested in intellectually useful terms, not scary boogeyman words from the dustbin of history
intellectual property law is philosophically incoherent. it is your moral duty to ignore it or sabotage it
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).
That couldn't happen, it's bribery by a foreign power! It would be just like President Ford getting a large donation for the Republican Party in person in Jakarta on the day Indonesia invaded East Timor, and the USA reversing their policy on East Timor on that day, even calling them (the same party that runs East Timor today) Communists! Oh wait. When the papers were released in 2005 we found out that was EXACTLY what happened.
Time to start learning Mandarin.
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.
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)
Russia recently got dinged on the same issue with regard to the Su-27, which they allowed the Chinese to manufacture under license but that the Chinese then copied, and now they're refusing to manufacture the Su-35 in China as a result.
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.
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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
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
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.
The colonialists ate Chinese lunch. The current regime isn't serving.
Guess there's not going to be a sequel to the Opium Wars.
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).
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?