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Until this week China had threatened to pass American firms over for billions in government contracts if they didn't surrender their intellectual property. China's president has finally agreed to drop the policy.  (Source: LIFE)
Promise comes after much fear and lobbying across multiple high-tech industries

China finds itself in a unique position in the world today.  On the one hand, it is the world's top high-tech manufacturer, making many of the wonderful electronic devices we enjoy on a daily basis.  On the other hand, it will soon be the world's top economic power and it is increasingly looking to make its own domestic products that are as good or better than those from the U.S., Japan, South Korea, Europe, etc.  The techniques it has used to try to achieve that goal, however, have drawn global scrutiny.

In its bid to do that, the nation proposed a controversial plan that many feared would force companies to give up their intellectual property if they wanted to compete for valuable Chinese government funding.  But after much concern, Chinese President Hu Jintao promised during a visit to Washington this week to "delink" its procurement budget from its "indigenous innovation" policies -- the item in question.

Top business leaders had gone to Washington a year ago to express concerns pertaining to language in the Chinese law that said that for "preferred" status, companies would have to provide products based on "intellectual property that is developed and owned in China and that any associated trademarks are originally registered in China."

The groups stated, "This represents an unprecedented use of domestic intellectual property as a market-access condition and makes it nearly impossible for the products of American companies to qualify unless they are prepared to establish Chinese brands and transfer their research and development of new products to China."

Similar initiatives were being conducted by China on the provincial and municipal levels.  According to John Frisbie, president of the U.S. China Business Council, which represents more than 200 American companies that do business with China, in a recent 2009 Shanghai catalog of innovative products of "the 530 on the list only two were made by foreign-invested companies operating there."

China's technique thus far hasn't been particularly effective in convincing foreign firms to come in and surrender their IP.  Thus President Obama urged China to pursue other avenues to strengthen their high-tech status, such as research and development tax credits.

In May U.S. officials met with Chinese officials in Beijing to discuss the policy.  Those talks led to more discussions in December at the U.S.-China Joint Commission on Commerce and Trade office, and then finally the visit to Washington this week.  At each meeting China slowly agreed to relax the policy a little more -- until the current state, which offers virtually no barrier to foreign firms.

Myron Brilliant, senior vice president at the U.S. Chamber of Commerce tells Reuters, "We hope China will make concrete changes to its indigenous innovation regime at the central and provincial levels to live up to this positive pledge."

Industry officials, however, remain suspicious of China quick reversal.  States Bill Reinsch, president of the National Foreign Trade Council business group, "The thing to watch for is not them overtly ignoring their promise, but trying to slip something else in through the back door."



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Translation
By masamasa on 1/21/2011 5:24:49 PM , Rating: 5
We promised not to extort or blackmail you. That is quite literally what it is. In Western culture you go to jail for that.




RE: Translation
By Master Kenobi (blog) on 1/21/2011 5:55:19 PM , Rating: 5
That's just how China operates. It's no wonder they have achieved so much in such a short period of time, when you basically rip off every other countries R&D you can do quite a lot in a short period of time. What remains to be seen is if Chinese firms can actually develop new and innovative products on their own without resorting to industrial espionage. So far they can't.


RE: Translation
By Smartless on 1/21/2011 7:31:04 PM , Rating: 4
I think its only a matter of time. Let's look at some of the small factor's that come into play.

a) Education - We already educate several at our colleges and some stay but a lot go back. Many of which are responsible for researching breakthroughs that are posted here.
b) Funding - if its anything they have in access of is floating cash. Heck they could buy the company if they really wanted the IP.
c) Industry and Raw Material Resources.. nuf sed.
d) Government/Interference - you know they don't really have as much environmentalist, politicians, or activists there.

I think they taking the easy way out for now but they probably could slam the door if they wanted to.


RE: Translation
By Tuor on 1/22/2011 2:20:34 AM , Rating: 2
They don't need to. All they need to do is get close. They have such a huge population that if they can get close, they can use differences of scale to achieve what they want. They'll be able to do what Khrushchev said that the USSR would do: bury us.


RE: Translation
By wordsworm on 1/22/11, Rating: -1
RE: Translation
By amanojaku on 1/22/2011 1:41:08 PM , Rating: 5
I don't hate the Chinese; I hate the Chinese government. I'm sure the Chinese do, too. And, yes, the Chinese government has ripped off nearly anything while producing almost nothing. Remember that the most profitable and prolific Chinese businesses are backed by the government. At one point China's industrial output far exceeded it's general education. How else were those businesses producing products they couldn't possibly have known to make unless they were using knowledge stolen by the government?

The US got so far because of three things: distance, natural resources, and freedom.

We're bordered by Mexico and Canada, who are not exactly threats. Any other country who wanted to start a war with us couldn't have done it because it was difficult to transport large weapons by sea. This afforded us the peace necessary to make continuous industrial progress. Compare that to Europe and Asia, where neighboring countries were easily pulled into wars. We CHOSE to enter WWI and WWII, Vietnam, Korea, etc... And win or loose, our mainland was never touched. China, on the other hand, was embroiled in various wars until 1949, when it split into the PRC and the ROC. It's only had 60 years to modernize itself, while we've had over 200 years of modernization.

Additionally, the gold, oil, timber, etc... in the US funded successful businesses, and created powerful investors. They in turn funded entrepreneurs who drew talent from all over the world, as Thomas Edison did with Nikolai Tesla. As a large country numerically we have more talent than most, and the ability to draw even more talent from abroad.

Lastly, this country's government is one of the least corrupt and most forward thinking, where any entrepreneur has a chance at success and businesses are not extensions of the government. The US government also makes attempts to enable the poor by making public education available, providing scholarships, and providing loans to small businesses. China has only recently enacted such programs and finally developed a middle class, but historically it ignored the poor in favor of the rich. In 1981 the Chinese poverty rate was 53%; the US poverty rate hasn't been above 25% since 1960 and hovers around 15%. Unsurprisingly, the US has always been a major economic force, while China has become a force since the late 1980s, after it enacted economic reforms. A large amount of talent comes from the poor and middle class, like Thomas Edison, but without education and loans that talent will go wasted.

And how does a person's criticism of the Chinese government's policies turn into a desire to gas people? Paranoid much?


RE: Translation
By roykahn on 1/23/11, Rating: -1
RE: Translation
By chick0n on 1/23/11, Rating: -1
RE: Translation
By tfk11 on 1/24/2011 12:27:03 AM , Rating: 1
quote:
Lastly, this country's government is one of the least corrupt and most forward thinking, where any entrepreneur has a chance at success and businesses are not extensions of the government. The US government also ...


yeah, US law is never written by corporations...


RE: Translation
By Myg on 1/24/11, Rating: -1
RE: Translation
By bug77 on 1/24/2011 8:38:40 AM , Rating: 4
Nice. Apply today's moral standards to the world 250 years ago. That's got to produce some relevant results.

Since you brought that up, do you know how China was formed? Also, how do you feel about Nero not having a fair trial or access to legal advice?


RE: Translation
By HrilL on 1/24/2011 12:11:07 PM , Rating: 3
Have you not learned any Chinese history? They murdered 100s of thousands of their own people during the revolution. They Killed almost a 1000 of their own people as recently as 1989 in the Tiananmen Square massacre.

The Chinese are still repressed people and don't live in a free country. They have one party rule. Any elections are a complete farce.

As Americans we should have been and still should put our own values above our greed. If we'd have done that we'd have no threat from China. We created the beast that will one day be our masters unless we learn to change our ways but it might already be too late.


RE: Translation
By misuspita on 1/25/2011 1:37:29 AM , Rating: 2
You won't. Because it's not the people that makes the decisions but the corporations. And they are always going for the big buck, hence reduction in costs, hence moving production where is the cheapest.

When China will become too expensive, they will move to another poor nation, have people paid for pennies, work 16 hours/day, and make billions in profit. The sad thing for them is that the oriental people have a work conscience, unlike Africa, the probable next target, who has none.


RE: Translation
By Divide Overflow on 1/23/2011 4:26:28 AM , Rating: 2
It's amazing to see how hypocritical China is on IP. Now that they stand to make high tech advances of their own, they are becoming draconian about where and how it is used.


RE: Translation
By eddieroolz on 1/26/2011 1:28:20 AM , Rating: 2
I can't agree more.

I've said this many times on this forum, and I will repeat: The reason for Chinese success is because they blatantly ripped off every single thing out there.

Their high-speed rail train is a direct copy of the Type E3 Shinkansen and the French TGV, reverse-engineered by the Chinese. Then they upped the top-speed without making due engineering considerations. They have the audacity to sell the copied designs to other nations, including the US where they are bidding for the California High-Speed Rail Project. Japanese corporations are up in arms after knowing this truth, but they can't do anything about it.

There are other cases, too many to talk about, but with knowledge of any foreign language even you will be able to search up cases of Chinese IP infringements. Extortion, threats, outright shredding of contracts (after extraction of IP)....the cases go on forever.


RE: Translation
By bug77 on 1/24/2011 6:19:30 AM , Rating: 2
It is actually less than that. Anyone remembers China promising to open-up Internet access during the Olympics?

There is no problem for them to promise anything to get the others off their back. The problem is nobody has the means to hold them to their promise.


RE: Translation
By kattanna on 1/24/2011 10:50:27 AM , Rating: 2
quote:
The problem is nobody has the means to hold them to their promise.


exactly, just like they promise to act on all the bootleg DVD's of movies and software

LOL


Price of doing business in China
By iluvdeal on 1/21/2011 9:36:50 PM , Rating: 2
I can actually understand China's position here. They aren't interested in making a foreign corporation get richer while they get the table scraps. You want to do business in China? You'll need to partner with a Chinese company, build a plant there, hire 1000s of workers, and "share" your technology. China is looking after it's own best interests, can't blame them for that.

They have no respect in China for IP though. Have a good idea? That other company thinks so too and they'll steal it. No need to surrender your IP, they'll clone it, reverse engineer it, etc. The high speed rail industry in China is a good case study:

http://online.wsj.com/article/SB100014240527487048...

China will become the leading economic power in the world, when that happens I wonder how China will react to foreign corporations stealing Chinese IP?




RE: Price of doing business in China
By Tuor on 1/22/2011 2:22:19 AM , Rating: 3
I'm sure they're modernizing their military simply for self-defense purposes...


RE: Price of doing business in China
By Skywalker123 on 1/22/2011 3:06:33 PM , Rating: 1
No, if you want a military strictly for self defense you must have hundreds of overseas military bases like the U.S.


By roykahn on 1/23/2011 12:10:04 AM , Rating: 2
Well said :-)

You also need to be able to launch pre-emptive attacks in violation of international law to exercise "defense".


RE: Price of doing business in China
By bobny1 on 1/22/2011 5:29:42 PM , Rating: 2
Don't forget their basic foundation ** COMMUNISM **. Under the skin they have the same old communist idiology. The only difference is that like Russia and others they have learned that in the modern age there is no need to fire a wapon to conquer the world. It is amazing how they have cloned the capitalist model and use it as a wapon to transform the world. The scary part is that not only China is using it. Other countries like Venezuela(Chavez)and almost all of Latin American countries are using "Twisted democracy" and vertually very little money to manipulate the masses and position their leaders transforming this part of the world into a China- Russia " socialist world". In my opinion, unless the Capitalist world stick together and come up with a short term stragedy the outcome can shapeup pretty ugly.


By roykahn on 1/23/2011 6:08:02 AM , Rating: 2
Only if you think socialism is worse than capitalism.


RE: Price of doing business in China
By FaaR on 1/23/2011 1:25:23 PM , Rating: 2
China is NOT a communist country, except in name only. Strictly speaking it's never been communist at all, although it used to be more communist-ish in the past, before Deng Xiaoping rose to power and and started instituting those economic reforms in the 1980s that led to the China we have today.

China's an oppressive dictatorship with a capitalist market economy. It's not communist at all.

You on the other hand, wouldn't know communism if it walked up to you and bit you in the ass. Back to school with you my friend, educate yourself a bit.


RE: Price of doing business in China
By bobny1 on 1/24/2011 7:26:31 AM , Rating: 2
Obviously you were NOT borned, raised, jailed in a Communist country.."like I did". ...All I can wich is for yor kids ASS to grow safe and free..."like mine".....****IGNORANt!!****


RE: Price of doing business in China
By sviola on 1/24/2011 1:25:28 PM , Rating: 2
You should review your concepts, as the "Bolivarian model" from Venezuela has nothing to do with the Chinese Model.


Eddie Murphy for Negotiations
By Mitch101 on 1/21/2011 3:02:15 PM , Rating: 5
quote:
"The thing to watch for is not them overtly ignoring their promise, but trying to slip something else in through the back door."
Were not gonna fall for the banana in the tail pipe!




By The Insolent One on 1/21/2011 5:13:31 PM , Rating: 2
Where can I find the 6 button?


RE: Eddie Murphy for Negotiations
By amanojaku on 1/21/2011 5:35:43 PM , Rating: 2
I hear that from women much too often...


It's a trap! (C) Akbar
By Pirks on 1/21/2011 3:05:56 PM , Rating: 2
:o)




RE: It's a trap! (C) Akbar
By DanNeely on 1/21/2011 3:40:20 PM , Rating: 2
There's two of them!


RE: It's a trap! (C) Akbar
By Souka on 1/21/2011 4:43:52 PM , Rating: 2
"Hang on, I know some maneuvers that'll out run(?) them"... ship drifts gently to the left....


South Korea's rules
By CZroe on 1/22/2011 1:03:10 AM , Rating: 2
The reason there was a Hyundai Super Nintendo Entertainment System and a Samsung Sega MegaDrive/Genesis was because South Korea had strict laws against foreign companies doing business in their country. Only Korean companies were allowed to sell products there, so foreign companies had to partner with a Korean company and let them brand it. This also lead to a LOT of IP sharing. Watch a typical Hyundai SNES commercial and you'll see animated Warner Brothers characters, Nintendo characters, Disney characters, etc all pushing the SNES (not clips... original animation). Because the games were also sold by Hyundai, they had the right to promote them using the character IP.

All this has changed.




RE: South Korea's rules
By daar on 1/23/2011 12:35:33 PM , Rating: 2
Producing via 3rd party and using IP's to create you're own product is different.

Did Hyundai or Samsung create replicas of the SNES or Genesis, say it was their own creation, and start selling them to over here? No. If there was some agreement for Hyundai to sell consoles/games, then commercials to promote said product with the characters in the product seems legit. It's not like Hyundai started making their own cartoons/games using Disney characters.The only major IP sharing done was one between Sony and Samsung a few years back, and the sharing was mutual.

Really, it's not like Samsung, Hyundai, etc. drastically caught up to leaders in tech overnight like China has, they've been trying to catch up for decades. Maybe that just shows China's method of outright grab for IP infringement was the way to go, only time will tell I guess.


Economic power
By techyguy on 1/21/2011 4:26:45 PM , Rating: 2
It's no wonder that they will become an economic power. They don't acknowledge international copyright infringements. If they ever do, they will be sued into oblivion.

Now where did I put my IPhone 4 that comes preloaded with 100 Nintendo games.




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