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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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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.


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