US Senators Voice Concern Over Chinese Access To Intellectual Property (reuters.com)

Leaders of the U.S. Senate Intelligence Committee said on Tuesday they were concerned about what they described as China's efforts to gain access to sensitive U.S. technologies and intellectual property through Chinese companies with government ties. From a report: Senator Richard Burr, the committee's Republican chairman, cited concerns about the spread of foreign technologies in the United States, which he called "counterintelligence and information security risks that come prepackaged with the goods and services of certain overseas vendors. The focus of my concern today is China, and specifically Chinese telecoms (companies) like Huawei and ZTE that are widely understood to have extraordinary ties to the Chinese government," Burr said. Senator Mark Warner, the committee's Democratic vice chairman, said he had similar concerns. "I'm worried about the close relationship between the Chinese government and Chinese technology firms, particularly in the area of commercialization of our surveillance technology and efforts to shape telecommunications equipment markets," Warner said.

Comments

We sold our soul long ago

[Anonymous Coward]

We sold our soul long ago when we allowed the blind capitalistic pursuit of cheaper labor to ship a large portion of our manufacturing capacity overseas, primarily to China. Anyone with a brain understood that by doing this we were giving them our IP and in the long term it would probably be a bad deal for us, but we allowed short term pursuit of higher profits to make the decisions and the government was perfectly happy to look the other way, as long as those fat corporate campaign contributions kept flowing.

I don't blame China. They simply used our greed against us. Well played, China. Bravo.

Re:We sold our soul long ago

[TheRaven64]

20 years ago, I attended a talk by a Sinologist who talked about Cocoa Cola's entry into China. The Chinese government had required that they partner with a Chinese company and produce their product locally, in 1984. The Chinese company then spent 10 years studying Cocoa Cola's products, workflow, supply chain, and so on until they understood it better than Cocoa Cola. Then they started producing their own versions, and used this as leverage to increase their ownership share of the joint venture. Anyone who engaged in this kind of 'partnership' after this point had no excuse for claiming that they were doing anything other than selling their company to the Chinese

Re:We sold our soul long ago

[Anonymous Coward]

I worked for Procter & Gamble 20+ years ago. Back then there was a project for P&G to start making Crest toothpaste in China, part of the entry in to that market. Well, long story short, we had to hand over all the IP related to Crest and the manufacturing lines to them to even get the 'right' to enter into the market, plus every tube of toothpaste sold there had to be manufactured there. What we did is get 1950's era line(s) back in working order and shipped them over, plus the old Crest recipe from same time. So both China and P&G benefited. China for jumpstarting their research into toothpaste and P&G entry into the market. Now many years later P&G is almost out of the market as local companies in China now have the 'inside' track on deals/market share, etc, etc.. So, if anyone thinks the Chinese play fair, you have your head in the sand, but the opposite is true as well, if US Corporations hadn't sold their soul and IP to China they wouldn't be in the pickle they are today, and the US as well.

Re:We sold our soul long ago

[NicknameUnavailable]

You are conflating capitalism and globalism. they aren't the same thing at all. Capitalism and greed work great, except when you mix them with globalism or communism. What we have is not a failing of capitalism, it is the result of a government allowing free trade in a global environment which has non-capitalistic (e.g. communist, socialist, and control-economies of other varieties) acting within it. At a bare minimum we need to eliminate free trade and match tariffs to the cost differences of products, ideally we should weight those tariffs even more heavily such that other countries don't even have a chance at competing with US-based products and services. From an outside perspective our nation needs to have the apparent structure of the most dangerous competitor (e.g., China with its monolithic structure acting in unison,) internally we can still keep the capitalism and the benefits it offers from personal liberty through productivity benefits. You can create that interface simply by ensuring it costs more to import anything (labor, goods, services, etc) from a foreign nation.

It is by no means a failing of capitalism that it can't compete against a communist society fueled by slave labor like work conditions and a third world like standard of living, unless you are suggesting we should drop to that level just to compete for some hand-wavy globalist agenda. The failing is in treating China as an equal, no other nation is our equal and no nation should be treated as our equal. This is literally the entire purpose of government: to ensure our citizens have the greatest share of resource scarcity possible, by economics, war, or whatever else.

Re:We sold our soul long ago

[larryjoe]

Guess what? Everyone steals from everyone else, one way or another. Knowing something can be done is more than 50% of the way towards being able to duplicate it. Smart companies don't just duplicate someone else's work, they improve on it, and 'steal' their market share that way. So far as I can tell it's always been this way; it's called 'competition'.

I think you're using "steal" as a synonym for acquire. There are many ways to acquire technology. Most people generally applaud R&D that utilizes publicly available information. Most people probably also condemn criminal theft of technology. Then there is the gray area, where technology is effectively stolen but where the theft is legitimized via laws that explicitly proclaim such theft to be lawful. This is the case in China. Yes, the companies voluntarily enter into these theft arrangements, but it's still legalized theft. This situation is similar to blackmail, i.e., if you do not give me your technology, the future of your company is in jeopardy.

Perhaps the real question that others have touched upon is why American (and other) companies feel the need to expand into China and enter into this problematic arrangement. I think that a large part of the motivation is the same problem that causes short-term cost cutting at the expense of long-term growth and stability. The decision makers at these companies are incentivized to be short-sighted, to maximize their bonuses even at the cost of longer-term stability. These executives aren't emotionally attached to their companies, and they incur no penalty in sabotaging the future of their companies. I think that's the real problem. It's a problem that could be entirely corrected by the non-Chinese companies (e.g., by making all bonus contingent on long-term success), but again the members of the compensation committees also profit greatly from the current situation and therefore are incentivized to perpetuate the problem.

Isn't that a herd of horses running away?

[Snotnose]

Maybe now is a good time to shut the barn door.

Don't forget how to properly differentiate:
- Worrisome Threat To Our Technological Edge: the Chinese/Indians reached in and took the secret sauce
- Shortage Of Qualified Engineers: we brought in people from China/India on short-term visas, taught them the secret sauce recipe, and forced them to return home.
- US Companies Must Remain Competitive: we outsourced the secret sauce to China/India to boost our quarterly results.

Who would have thought!

[hyades1]

And these corporate blow boys are just now figuring out that dealing with China means they will suck every iota of technology out of your company and throw it back a year later as their own?

Seriously...it's 'way past time Americans at least made a token effort to get control of their government back from the oligarchs.

Re:Who would have thought!

[AHuxley]

The CIA should have warned the USA decades ago. But no. The CIA thought letting the US university system fill with academics from China would spread democracy back to China.
That the carefully selected Communist party members allowed into the US university system to "study" would love freedom so much they would make China democratic when they returned to China.
That the CIA could gain spies deep in China by been nice to academics from China while in the USA.
Did China allow the CIA charm to build up a huge spy network over decades back in China?
The people allowed to study in the USA did not respond to the CIA approaches and stayed loyal to China while taking all US tech and science back to China.
The CIA just let more in to try and find a few who would turn and spy for the USA back in China.
The US gave China decades of free access to it top educators. Every US industrial and scientific secret was lost to China in a generation.
China spied for generations on the USA and the CIA and FBI did nothing to stop the flow of information back to China.
Now China sells the innovative US methods, products and services back to the USA.

Free backup!

[Anonymous Coward]

Listen - we put Donald Trump in the white house.

Donald Trump.

No, really - Donald Trump.

If I were some other large nation, I'd want to send some folks over there to just, well, save any important pieces of information, perhaps get a few pieces of future historical artifacts before this small era of human history crashes.

Seriously - we elected a cartoon parody of human greed and cruelty as our president - by choice. Many things have gone horribly wrong if you can't recognize how utterly stupid that is.

IP?

[nospam007]

Trump will sell them a few airports shortly, they already bought a few ports.

Re:I am intrigued avout the "worry"...

[ShanghaiBill]

They are a backward and violent people

In the last 50 years, America has been in over a dozen wars and military interventions. China has been in one.

The murder rate in China is one sixth of America's rate.

Perhaps you mean "official" violence against their own people? America "wins" there too, by arresting and imprisoning more than 4 times as many people per capita.

So who is more violent?

Re:I am intrigued avout the "worry"...

[Comboman]

I'm more worried about the close relationship between the US government and US technology firms, like Verizon corporate douche-bag Ajit Pai becoming head of the FCC.

Not the recipe, the process

[DrYak]

There is no secret to making "cola" {...} The Chinese did not learn to make cola by "stealing" Coke's "secret recipe".

What the above poster is trying to tell about is not the actual recipe of Coke's own spin on cola-based caffeined drinks.
(The recipe isn't actually that much a secret. e.g.: In several markets, local food and beverage law require the content to be explicitly stated on the label).

What is the key matter is that the Chinese owners of the outsourced manufacturing plant will analyse the *process* of manufacturing - i.e.: the methodology used by Coke to produce their drinks at industrial scale.
And that's the thing they can better : making a manufacturing plant better and more efficient at producing soda drinks.

To quote the relevant part :

The Chinese company then spent 10 years studying Cocoa Cola's products, workflow, supply chain, and so on until they understood it better than Cocoa Cola.

To make a much beloved /. car analogy :
they didn't copy the general concept of making a metal can box with 4 wheels and a motor on it.
they looked at how Ford's specific own-invented Ford process to mass-produce cars, they'll look into the basic feature sets that seem to interest customers and that manufacturer seem to concentrate on (everyone wants extra features like radio and cup holders)
then they'll get good at making not so bad knock-offs at a smaller price and craptastic "only in shape" copies, that sell at a fraction of the price but still somehow hold together long enough for the customer to buy them and only break down later on the way home.

Re:Not the recipe, the process

[AK Marc]

The US market is explicitly protectionist. Once one Chinese maker spends the billions to enter the US market, the rest will follow, whether separately or as sub-brands of the first. Though the names of the Chinese makers are generally horrible. No cowboy wants to drive around the ranch in a "Chery" or SAIC. They'd do better buying the Datsun brand from Nissan, or buying up a disused American make, like https://en.wikipedia.org/wiki/... a make clearly owned by a single person, that could be bought by a Chinese company and resurrected.

The Chinese understand the products well, but not the marketing it would take to make them work in the US.

Re:Not the recipe, the process

[AmiMoJo]

It's Coke's manufacturing process really a secret or even particularly innovative? They are far from the only big beverage manufacturer, and much of the technology is made by industrial process experts rather than developed in-house.

I can't really see much of a barrier to a western company simply hiring some ex-Coke employees and learning their "secrets". The thing that stops it happening is the vast amount of money required to set up a factory and distribution network at that scale, and the difficulty of entering an already saturated market.

The Chinese are actually very advanced in distribution, so these days it's often the west learning from them. But really this idea that everything has to be kept secret or will be instantly cloned is silly - if your business can be cloned and replaced that easily then it has bigger problems, most of them coming from local competition.

Re:Not the recipe, the process

[drinkypoo]

Some Volvos sold in the US are made in China, but it is indeed not yet very common, partly because US protectionism makes importing cars from China relatively expensive

5% is not expensive. We have to pay 25% to ship a car over there. Chinese protectionism makes American protectionism look quaint. We do still have the chicken tax, but you didn't say anything about light trucks. Also, nothing prevents the Chinese from building plants here to build vehicles for our market, but we can't build plants there to build vehicles for their market. We have to partner with one of their corporations.

Protectionism is absolutely not the reason we haven't seen Chinese cars here yet. Everyone, including American companies, has to meet the same standards for a new vehicle. Even most European cars aren't capable of passing our small offset crash test, yet. USDM cars are provably safer than those in any other market.

Never mind the Russians

[HangingChad]

Never mind the Russians trying to undermine the duly elected government of the United States with the assistance of a national political party. Let's pay attention to the Chinese instead.

Re:Never mind the Russians

[forkfail]

Eurasia is, and has always been, our friend and ally! Eastasia is, and has always been, our enemy!

They like IP?

[houghi]

The way they treat IP, I think it will be in better hands than what the US is doing with it. Midn you, I am eneither Chinese nor USian, so I will get screwed no matter what (alas not by a female).

China plays Trump like a piano

[Anonymous Coward]

Interesting article in The Atlantic:
https://www.theatlantic.com/magazine/archive/2018/03/trump-china/550886/
Trump has abdicated US "soft power" everywhere just as China builds up its own global influence.

By showering him with perks (21-gun salute, banquet in the Forbidden City, etc.), China is treating Trump just as his casinos do to gamblers by encouraging them to continue to lose money.

The problem with fake assets.

[ewibble]

The whole concept of owning IP shipping manufacturing overseas is flawed. IP is a made up asset that can be removed at any time with no effort the part China. All they have to do is say they won't follow US patent and copyright law an they have all the manufacturing capabilities and all the intellectual property. What exactly can the US do about it?

That is the problem with made up assets they can just as easily be unmade.