In order to do business in China, non-Chinese companies must partner with a Chinese company. The International company shares their IP with their Chinese counterpart, and the Chinese counterpart in turn shares the IP with the their partner, the Chinese government. The Chinese government takes the IP and shuffles the IP to the company or companies best suited to exploit the IP. This has been taking place as long as China has been open to International business.
International companies in a rush to get access to the largest single market in the world have freely given away their IP, because they didn't think the Chinese could ever catch up. Companies are now moving partnerships away from China, and it's forcing the Chinese to steal the IP in order to keep their edge.
I try very, very, hard to avoid buying products made in China. I"m OK with every other country in the world, except China.
“In order to do business in China, non-Chinese companies must Partner with a Chinese company.”
These days, what you’ve asserted here, is only true in a very limited set of circumstances.
For example, one of my companies is an engineering/supply chain consulting firm and the other is a fully licensed CM factory. With our factory, I have the China government paying me VAT tax rebates on export. I don’t have a Chinese partner, for either of these companies.
That said, it is very difficult to get setup here, without a Chinese partner. It is a difficult convoluted process. And, the locals have no incentive to see a foreigner succeed.
But if Americans want to own a private factory here, and more fully control their own IP and what they allow Chinese nationals to see. From my view as an American that owns a factory in China. They can do it!
Get on a plane, come over here, stay a couple years getting it done, and voila, you own your own factory in China, without a Chinese partner.
International companies in a rush to get access to the largest single market in the world made their own bed with their rampant and unconstrained greed. They outsourced all of their pollution and their manufacturing jobs to China, and now they turnaround and breathlessly accuse China of ripping them off. I can't accept this kind of blatant hypocrisy.
When will people stop droning the same tune over and over? Have you ever seen the situation on the ground? A foreign company can establish a wholely owned company in China with pretty much any business scope with 3 wide exception categories: mining strategic metals, news business (how Chinese editions of foreign media are done is a very long story,) seed stock (say thanks to Monsanto executive who was smart enough to thrown an insult on a Chinese official.) And this was true for at least a decade.
I have learned to accept that the average HN user turns into a complete idiot when anything China-related gets posted. It's basically "hurt durr dem evil commies".
Even when it's something like "Chinese researchers discovered X" you can be sure the top comment is someone pointing out how evil their government is, adding nothing to the actual topic. Imagine that anytime something about an american company gets posted, people start commenting on Guantanamo bay, drone bombings etc.
It think the problem is that you have a mistaken conception that those IP belongs to "You" and when the company shares it with Chinese companies, they are taking YOUR belonging and giving it to others. When in the very first place, you have nothing to do with the IP in the first place.
This is by the way, not against any WTO rules, or the US and other nations would have sued China long ago regarding this.
I honestly don't see it the way others do. China is having a lot of negative externalities imposed on it by manufacturing for multinationals. At least this transfer of IP does a bit to offset those externalities. No one wants to be a sweatshop forever.
Every major industrial nation rose by taking the IP of others by legal or illegal means. That includes Germany, Britain and the United States. Besides, IP as property is a very new concept historically and countries with IP will always believe it's immoral to "steal" IP as of course it is to their advantage for morality to be structured this way. Whereas countries without will always view IP in more flexible ways. Can ideas really be property? Humans are humans, we always try to rationalize and moralize the things we do even when the real underlying reason is stark naked self interest.
But it’s not giving. Clesrly the international companies are still doing it and it’s because there’s still money to be made.
Shouldn't it be "What's better"? Or would you prefer the arrangement to not be done by 2 consenting parties?
> I try very, very, hard to avoid buying products made in China. I"m OK with every other country in the world, except China.
How does the first 3 paragraphs lead to your last paragraph?
This is the same as pharmaceutical companies entering India and knowingly agreeing to generics being produced so EpiPens don't cost 600$. You can't have it both ways, agree to pay for a burger, eat the burger then scream you've been robbed.
and relatively cheap labor.
Put simply, the Chinese understand why American companies outsource their labor to China. Chinese labor is cheaper, and they are under no illusions - this outsourcing means that their own country experiences many of the negative externalities of Western consumption, including pollution.
It's fair for American businesses to distrust Chinese companies and distrust the Chinese government, but can't we all agree that they brought it on themselves?
Which multinational corporation reasonably expects that the Chinese government cares about their bottom line at all? And why do many ordinary Americans experience such outrage on behalf of these multinationals? Of course, I understand why their shareholders (and thus, many Americans) may be upset.
If anything, I'm angry they jumped at the opportunity to eradicate their domestic workforce to a point where China has the opportunity to steal in the first place.
There’s the official transfer of technology that happens in some circumstances when a western company wishes to do business in China, that is known and each company makes its own decisions on if this short term trade off is worthwhile.
Americans should be angered that the Chinese, years after joining the WTO, still restrict their markets in this way while enjoying open access to other markets.
This article does not touch the above. It’s about illegal, state sponsored theft of intellectual property. Are you asking why people should be upset another country is attacking companies based in the US and stealing their technology?
My confusion stems from the American companies who readily jumped at the opportunity to heavily depend on supply chains inside of a country with 1) a relatively short history in the WTO 2) a previous history of market manipulation and 3) rampant human rights abuses
And let's not mention that the entry into the WTO itself constituted a major overhaul of the Chinese economy, which should in itself be considered an experiment.
I'm disappointed that the risks of trade in China have been understated for so long. And systematically underestimated by American firms.
Or to put it a different way: how surprising is this situation? And does it belie a lack of proper enforcement and a lack of understanding of the risks of doing trade with China?
It feels silly to only examine the narrative where the Chinese government is at fault because that narrative is obvious. What about the culpability of our own government for advocating for China's entry in the WTO? Or the immediate handoff of trade by American corporations when the decision produced short-term gains without examining how many rapid changes China was making to its economy?
It is state sponsored appropriation of knowledge not "illegal state sponsored theft of intellectual property". The USA government sponsors this kind of appropriation of knowledge all the time, so why is anyone upset when the Chinese government (or any other government for that matter) does this?
This is simply a fact of life and has been the action of governments and other organisations for millennia.
This is like you and me playing a game, and I find out you're a cheater.. and you say, 'what are you upset about? You invited me here'
Before you call me jingoistic I have worked and lived in China and they just have a different outlook on "scam" business there.
Which outsourcing destination has the same environmental and worker safety protections as the in the West?
A western factory polluting rivers and freely harming employees could compete quite well on the world stage.
And what a coincidence, the US decides what fair is. Bombing other countries and occupying them for their oil and other resources is totally fair.
Perhaps that's exactly why China feels the need to cheat? From their point of view, the deck was stacked against them. They need to even the odds.
So, if America fails to find a way to win, the game is rigged? I mean, if this über country doesn't find a way to win, game being rigged is the only explanation... Where did I hear this before?
> This is like you and me playing a game, and I find out you're a cheater...
No, this is like you and me playing a game and if you don't win, you accuse me of being a cheater.
Devil's advocate: the only disadvantage of US companies in China is FCPA.
Google failed in China because Kaifulee can not gift one iPad to a high rank communist party official. iPad were considered luxury at that time. Every other competitors do.
In other industries, some European joint adventures do govn't lobbying and media manipulation. Since media is controlled by the Chinese govn't, you must have "connections" or "guanxi" to pull things off.
If US can have exemption allowing companies have "convenient" business strategies in China, Chinese govn't and domestic copycats do not stand a chance.
In the meantime, we're gradually building up a world community so that there isn't a sense of injustice or inequality on anyone's part. If your primary identity is human — rather than Chinese or American — then priorities are simpler. Do what's right for the world as a whole, and for humanity.
That change is too disruptive to do all at once, but it's gradually coming, generation by generation.
That pollution is their own choice. Companies will take advantage but its certainly a choice of the Chinese.
As for why China is treated differently...they act differently. America trades with many countries and China is unique in many ways.
These are companies we all helped build in one way or another.
Their revenues boost our economy and pay for a lot of our govt services
NAFTA, which was heavily pushed by wall street and also welcomed by certain corporations, snuck in through NAFTA-friendly advisors that Clinton surrounded himself with. By establishing the principle that U.S. corporations could relocate production elsewhere and sell back into the United States, NAFTA undercut the bargaining power of American workers. Also by letting China into WTO in the 90s, China has been abusing the rules ever since, destroying manufacturing jobs in democratic countries around the world. Bush escalated the suffering by giving China most preferred status. Obama didn't do much to contest except some stern warnings against China.
And now we have a belligerent China, lead by a dictator, that is more powerful than USSR in its heydays, with signs of third-reich behaviors (muslim concentration camps, technology-thought controls), vastly increasing its military and technological weapons to confront and attack US and its allies. And technology companies are still transferring technologies to China, either willingly, unwillingly or unknowingly.
WALL STREET did this. Some corporations were complicit. Then most of them were. Bill Clinton destroyed the American workers. Every other presidents that followed didn't stand up. Trump actually confronted China.
And now WALL STREET is trying to stop the full $600B trade tariffs against China.
And do you hold the same belief in reverse? That the Chinese have brought on this retaliation themselves? Your argument and assertion are pointless.
It almost feels like there is a concerted effort to confront China.
Now it could be that these articles are coming out organically from bottom to top. Meaning ordinary journalists are seeing the potential threat of China economically and technologically and are becoming more vocal about it.
Alternatively, it could be a top-down "agenda" to confront China and the media is gradually setting the zeitgeist to confront China.
What are your thoughts?
Previous discussion of an Economist article positing this: https://news.ycombinator.com/item?id=16499939
If this is the case, it shouldn't be a surprise that reporting reflects this broader shift in outlook. However, this isn't mutually exclusive with a top-down edict, especially if the timeframe you're referring to is shorter than that implied by the broader perceptual shift argument.
Not only has there been zero democratization, it has gone rapidly backwards during the Xi era. Nearly all human rights - the few that had been tangibly acquired post Deng - have been revoked in China. In the decade prior to Xi there was actually some limited freedom of speech occuring online, that is mostly gone at this point. They've cracked down on pretty much everyone and everything, even disappearing Marxist students protesting for better worker protections recently.
It was a very foolish premise by the West, to think that all nations want the same things culturally. That you can prod and shape the direction of nations/cultures in such a manner.
While there are undoubtedly some forces from "above" pushing for this change, I think that government and corporate interest is still largely aligned with China. Both out parties are fairly comfortable with Chinese investment and lobbying despite a couple of scandals in the last three years. Sam Dastyari is on of the few cases where a politician was burned for it.
The bottom up forces include several University Chinese student clubs being ousted as both funded and influenced by the Chinese government. The Australian (centre right paper) is also focussing some of its limited investigative resources on this now too. Scholarship is also showing signs of changing directions, with many of the students I know working on the soft power and sharp power tactics of the chinese government. Things like Chinese Pacific Island nation investment and debt and the influence of Confucious centres in Universities.
I'm sorry that I can't provide sources—I am at work at the moment.
Now more people know about it, more people care about it, or are unhappy about it, so it gets more clicks. Plus the government is going to encourage this stuff instead of try to sweep it under the rug like they might have done in other situations when trying to smooth out relations. So yea, I think the zeitgeist is definitely heading towards a confrontation with China, whether that is by design or not. There also seems to be a sense of urgency as people are realizing (too late) that the longer this lopsided relationship goes the less chance the US has to salvage anything short of actually going to war, which would probably be a near world-ending situation.
I think the only difference is that more and more of the American public are now on the receiving end of the media rhetorics so people have more of an eye for these kinds of things now.
There is always anti-[something] "reporting". The russia hysteria has died down so now it's time for the china hysteria. After that, it'll be back to terrorism or something else.
We've always been at war with eurasia, or is it eastasia? Propaganda is ubiquitous and ever present. Has to be to maintain control over a gigantic country. What's true for china, russia and the EU is also true for us.
> Alternatively, it could be a top-down "agenda" to confront China and the media is gradually setting the zeitgeist to confront China.
There is definitely a battle between the pro- and anti- china factions amongst the elites. Seems like the anti-china group is gaining momentum.
> What are your thoughts?
It's obvious top-down agenda for sure. Just like with the constant anti-facebook spam in the media. But with china, the top doesn't seem united yet.
When we see start seeing anti-china spam from recode, theverge, businessinsider, dailybeast and the rest of the second rate propaganda outfits, then we can be sure it's a solid unified top-down agenda. Another dead giveaway is anti-china propaganda comments. If we see a sudden increase of those, then we can be sure that the top has unified. Until then, all we can do is wait.
Of course, the US government can go all in, and require something similar to the "Top Secret" classification for all employees working in sensitive high-tech fields. This will certainly reduce trade theft, but that benefit is likely to be dwarved by the damage to the economy from the loss in efficiency, loss of access to foreign labor, and the change in culture: the smartest, most creative and most energetic people often shy away from working in organizations with military-grade security.
Foreign labor is often mentioned as the root cause. Removing all foreign workers from sensitive areas will certainly make state-sponsored industrial espionage more difficult. However, history and common sense suggests there are plenty of US citizens perfectly willing to sell their corporate data to outsiders. So the benefits are unlikely to be dramatic. On the other hand, the economic cost to the US economy would be very high. Moreover, there's a chance this will backfire really badly. Today, it's hard for many countries to keep their best students from leaving for the US. If we solve that problem for them, it may be the very thing they need to close the technological gap with the US.
In general, it seems that state-sponsored espionage can only be controlled with an agreement between states, which ultimately comes down to skillfully negotiating the terms.
I'd say it's the arrogance of American leads to the situation.
>> The Yinhe incident (Chinese: 银河号事件) was a false claim made in 1993 by the United States government that the China-based regular container ship Yinhe (银河; "Milky Way") was carrying chemical weapon materials to Iran. The US Navy forced the Yinhe to stop in the international waters of the Indian Ocean for a month. The final inspection report signed by the U.S., concluded that there was no chemical weapon materials at all. However, the U.S. government refused to apologize "because the United States had acted in good faith on intelligence", even though the Chinese were proven innocent.
What's not mentioned in the wikipedia page, is that US cut off the GPS of Yinhe container ship to force the search. It has been a wake up call for Chinese government.
Countries realise that US acts as bully when they can. China just is acting in its own interest. Though as an Indian, I have my own problems with China policies, the US companies crying about IP theft is just them not owning upto their previous actions(of shifting major IP to china due to cheap labour).
If we return to your example, we find India prosecuting a war with the use of American military technology. How exactly is it "bullying" for the U.S. to deny India access to this advanced capability? India is free to fund, launch, and maintain their own GPS alternative for Indian military purposes.
You're just making excuses.
The Chinese government is an authoritarian state that is completely and totally ruthless, anything thing the US has done is just a pretense for this behavior.
We're talking about a government that grounded up their own citizens with tanks and washed their remains down the drain: https://www.independent.co.uk/news/world/asia/tiananmen-squa...
>> The Chinese government was and is an authoritarian state that is completely and totally ruthless.
I don't see any value in your last line.
About the headline... the US and its allies have stolen from and taken advantage of colonial countries like China for hundreds of years, and that is directly responsible for the technological and economic advantage currently enjoyed by the US - not western rationalism, "democracy" or some other warmed-over, quietly racist answer like that. American companies can pay Chinese people shit for grueling tasks and bring home superprofits from their labor and have been doing exactly that for decades and decades. The Chinese state sometimes goes along with this and sometimes does not and "steals" technology back.
Stop buying into this nationalistic nonsense of us vs them. You are all going to get us sucked into a world war. Instead, consider asking if the interests of the billionaires who "own" these technologies that are being "stolen" align with yours. Spoiler alert: if you're not a billionaire, you have less interests in common with US billionaires than with Chinese workers.
Class struggle is heating up in the United States and in China and competing companies have less room to continue exploiting people without violent resistance, so they need to distract people by telling them to go to war with Eastasia again. Please don't fall for it.
Furthermore:
1) China is stealing technology from everyone, not just the US.
2) They're also doing some hobby colonialism of their own in Africa.
Not to mention bullying anyone that dares call them out for their concentration camps. So China seems to be one more bully on the international stage. There's enough of those already.
Also, ask for reparations? Like all the other times the US has happily granted those??
And finally, at least you are seemingly frank about believing that the US should be able to exploit other countries as the supreme "bully".
What do they mean by an "effort that pilfered as much as $8.75 billion in patented American technology"?
It's like building a nuclear bomb. Any high school physics nerd knows perfectly well how it works, but the US performed over a thousand nuclear tests for a reason. The fine tuning is important.
Of course, the soviets and chinese are unhappy, because they are self-proclaim themselves as being no less "great" and capable, while, in fact, they have nothing even vaguely comparable with the US R&D machine, fueled with top talent and endless investment bank's money from all over the world (Saudis, Softbank, Norwegian sovereign fund, etc).
And, of course, being an R&D hub of the world is absolute win in the long run.
The tiny Swiss being the world leaders of R&D in industrial robotics is another great example. And soviets and chinese have nothing but propaganda, false claims and unsupported imperial ambitions.
Because genuinely, the human race as a whole is benefiting from that R&D — and also from China's appropriation of it — by getting cheaply produced implementations!
The alleged "stealing" of 900 files on premises of Micron Taiwan was the famed incident with loss of USB flash with "keys to the kingdom."
The biggest counterargument to US version is the fact that the alleged spy was the very person who sounded the alarm that he lost the USB flash. The only uncertainty here is about whether it was USB flash or a phone. News sources differ on that.
https://news.ycombinator.com/item?id=17375406
>An employee from mainland who previously worked at a competitor company accidentally put coworker's phone into her bag along with papers on the table. They guy thought that his phone was stolen and called police, police found his phone in a locker of a coworker.
>During investigation of that theft, they stumbled on some company docs on the phone, and opened an espionage case based on that. Why a defector would file a police report on his accomplice?
The Micron story makes me think when the other shoe will drop for another company: AMD. They are (possibly, debatably) laundering X86 IP to China through a joint venture. I guess it’s hard to steal what’s being given away?
I don't know on what level AMD is cooperating with those folks, do you? And even if they did sell the top-level design details, that's not Intel's implementation.
Bad behavior goes unpunished, and good behavior isn't rewarded. What incentive do they have not to steal from us? Our handling of their transgressions is naive to a fault.
In light of all the "bad" things the US does with little oversight, ensuring US Technology is still top must be a major priority, and probably has droves of covert operations to help US companies be competitive if needed. It's just likely that the US doesn't have many sources to steal from.
I also have to believe this anger is cultural as well. As Americans, we're brainwashed into black and white thinking, and to attach very high weight to moral and ethical implications of decisions. "Always pay back your debts. If you take out a mortgage, if you go bankrupt, you are a bad American."
I expect that Chinese culture has a different take regarding what we consider "cheating."
I find it very strange that you are effectively calling culture “brainwashing”. Would you prefer we have no cultural values at all? How do you think that would even play out? Without a shared value system, you cannot have civilization.
That said, your overall point is correct: Sometimes cultural value systems differ in incompatible ways, unless reconciled somehow. Often, this means being faced with the cold, hard reality of weighing the cost vs benefit of “acting out” against a law or moral code expected of you by the other party (whether or not your culture agrees with those laws or morals is irrelevant, when we’re purely talking about tangible consequences).
If there are no consequences from us, I don’t think it’s fair we “play the victim”. If we (the US) don’t want this behavior to continue, we must specify and enforce a policy of tangible consequences that will occur in retaliation for every single instance of IP theft that occurs.
That's an extreme conclusion from my argument--that we (as Americans) are indoctrinated into moral and ethical thinking even if such decisions aren't in our best interest, while other Americans avoid such thinking and are able to find success because they're not constrained by such beliefs.
There is much more to American values than blind obedience wrt paying back debts.
American's can have a shared sense of moral and ethical standards without creating an extreme adherence to such beliefs.
Why, pray tell, if its patented did they have to steal it?
Surely they just had to download and read the patent from the chinese patent office, in Chinese no less?
1. The Chinese company paid close to $300 million to UMC, a Taiwanese fab, for DRAM technology. The deal is reportedly structured highly favorable to UMC with larger future milestone payments upon delivery.
2. The transfer was approved by the Taiwan government. Taiwan is highly sensitive about technology transfer to China. It is at the 32nm node, a relatively dated technology node.
3. UMC is the 3rd largest fab in the world capable of 14nm logic fabs. Logic fabs used to be much more technologically sophisticated than DRAM fabs. Indeed before the great DRAM price war Taiwan had quite a few small DRAM fabs surviving on second hand equipment from logic fabs and logic fabs often tested their fab startup by making DRAMs (with their density DRAMs are a great way to flush out bugs in the manufacturing process). However DRAMs are very price sensitive commodities -- being capable of making DRAMs and capable of making profits from making DRAMs are two entirely different things.
4. Micron bought Rexchip of Taiwan, which was one of those standalone DRAM manufacturers that didn't survive. All the employees accused of theft are Taiwanese and former employees of Rexchip.
5. The Chinese company, Jinhua, had earlier out-muscled Micron in Chinese court, using patents transferred from UMC to ban some Micron products for sale in China.
6. LA Times started with: "It was the great microchip heist — a stunning Chinese-backed effort that pilfered as much as $8.75 billion in patented American technology." But it later said: "Prosecutors estimate the information was worth between $400 million and $8.75 billion."
Once stopped acting as the trash can and labor cost becomes higher, China becomes useless and a threat?
Wot? Surely a reasonably decent bunch of journos should have got to grips with GDPR by now.
TL;DR: the reason is business, not necessarily incompetence.
This is just rich people whining about someone else being able to make their products much cheaper. The whole world benefits from this, just not already super rich patent & trademark holders who are anti-competitive & hurt consumers.
Can anyone even tell me a negative that isn't just capital?
What real negative effect does the OP article have on society? None, it's actually likely beneficial, just again not for the already super wealthy.
Stealing is stealing though, isn't it? Regardless of who benefits.
Say you own the Batmobile from a particular Batman movie and all rights to its reproduction. If make an exact copy of your Batmobile you would still have it in your garage. The value might be undermined some because it is a substitute good but only one was involved in the filming.
Infringement may still be wrong (it varies by circumstances just like how breaking a baptismal font to save a boy from drowning isn't simple sacrilegious vandalism) but it isn't theft.
China has learnt from japan and india that just open up and even prosper is not a oath to independence. It cunning do what it does, so when the population age and the money war started it still goes a substantiable “empire”. After all it is a Hans empire of the Middle Kingdom.
Now, the partnership and getting ip is not new. Look at the airplane espeically military one you sense they have a long plan. Just America does not. And it is just awaking.
To be honest if china is a democracy and basic human rights (which may destroy the communist but may be a even greater power), it is another japan and Eu raise up vs American scenario. And china learn those two lessons. And hence it may win. It Open to get and close up key part so that yours are mine and Mine mine. Some part like e-wall, e-market etc. are closed. They have certain market segment (antibiotics, rare metal) and some weakness like argiculture (too many mouth - 1/4 population ; not sure how this play out) and oil (but shift to electricity like car and if wind/solar/nuclear/... work it can be mediated)
But it does not have democracy and human rights. Cannot be on its side. But what if it has.
We are all Hans or we can have a Tripolar world - right wing America, middle Eu and left wing china for anyone to choose. But we are not. And the Hans may want a empire of the world. We live in a sphere and middle meant nothing and a Middle Kingdom means conquering the world.
