Chinese Intellectual Property Acquisition Tactics Exposed 398
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."
Savvy business dealings (Score:5, Insightful)
This sounds to me more like savvy business wheeling and dealing. It's no different than what the Indians, Japanese or Koreans would do.
This is news? (Score:5, Insightful)
Fail (Score:3, Insightful)
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.
Re:Fail (Score:5, Insightful)
Re:Savvy business dealings (Score:3, Insightful)
capitalists take note (Score:2, Insightful)
the greatest enemy capitalism has ever known throughout the history of economics is not communism or socialism, but corporatism. a corporation is a top down autocratic organization that seeks nothing but more profit, be damned any other concerns, like fairness or egaltarianism. when they get large enough, corporations dominate their marketplace by dirty tricks like undercutting competitors prices to destroy them, and rent seeking agreements once they own the whole marketplace by colluding with other large players. ideally, a government would regulate the marketplace and even the playing field for smaller competitors against larger players (oh, you believe no government regulation results in a cleaner more perfect capitalist marketplace? you're a naive idiot). unfortunately, in the west now, corporations corrupt the government and use the government's rules and regulatory powers to not bind them, but instead entrench their marketplace positions and their powers even more
so it is in the west: democracy corrupted by corporatism. but this is but a prelude for the coming truly insidious game. see, us silly westerners have championed capitalism for a long time, but us silly westerners also have this silly anchor around our neck called democracy, respect for the individual. the chinese have no such silly limitations: the citizens have no rights, they are slaves to the autocratic system. you know, autocracy: the corporate model of governance. the future is clear: the chinese autocracy will face the world as one monolithic internally cooperating perfect autocratic corporate behemoth. and it will simply devour the rest of the world. no one can compete with them in size, leverage, production capacity, capital reserves, anything: the chinese will dominate in all regards, and just destroy all else by dominating all marketplaces all over the world
and now that our oh-so-wise supreme court has made corporate donations perfectly legal (justice roberts, you are an asshole and the most anti-american person who has ever lived: protect citizens rights, not corporation rights, you scumbag), and now that there is no need for pesky inquiries like: where the source of the money comes form, the chinese will just buy our democracy outright. multinational corporations now gleefully use chinese workers without rights to make cheap crap. the chinese autocracy will simply buy these multinational eventually and those multinationals to do their bidding in the usa instead, in reverse. the professional prostitutes on the right who will spin anything for their corporate masters (scare us with government death panels when we talk about healthcare or government censorship when we talk about net neutrality): they'll just shill for the chinese owned mutlinationals by finding the right words to spin the complete sublimation of our democracy into corporatocracy as being a Real American (tm). and if the usa has no power against this, why and how would any smaller weaker country fare in the face of the ultimate corporate behemoth known as chinese autocracy?
http://en.wikipedia.org/wiki/Citizens_United_v._Federal_Election_Commission [wikipedia.org]
welcome to the new world. chinese autocracy+capitalism=the ultimate corporate domination of the entire world
soon we will all be slaves to the power structure in beijing. soon we will all be like the typical chinese citizen: workers without rights, chattel to work the mines and factories, nothing more. our democracy flat out bought, sold, and desecrated by multimationals following orders form beijing
that's the future folks. isn't unregulated capitalism grand?
Re:I suppose (Score:4, Insightful)
Think of it like european scholars rediscovering ancient works from the muslims and eventually doing their own major works again.
Re:Like college and grad school (Score:0, Insightful)
How is that cheating? They're working by the philosophy of not putting all their eggs in one basket. That's just basic common sense.
The US uses governmental intelligence agencies to support corporations. That IS cheating.
Re:Yep, and look at the Airbus A320 (Score:4, Insightful)
Re:Savvy business dealings (Score:4, Insightful)
It really seems no different to how other industrialized countries work. Except we do it under the guise of "free market". I thought the whole idea of capitalism is to divide and conquer, modern colonialisation.
Re:Yep, and look at the Airbus A320 (Score:5, Insightful)
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.
Re:Savvy business dealings (Score:4, Insightful)
The key part not explained is whether the tech sellers asked for and obtained a licensing fee.
Just because China wanted to build in-country, doesn't mean anyone was ripped off.
Re:capitalists take note (Score:5, Insightful)
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.
Re:Savvy business dealings (Score:5, Insightful)
You're right about the benefits to the US having a rival that makes the US recognize some limits. But you ignore the problems that come from the rival being a country like China, which is a mafia state. Especially when China gets its way instead of the US getting its way. While the US can be pretty bad, China can be much worse.
You also somehow ignore that Westerners have been fucking with China for at least 600 years, which until the last few decades effectively set China back about 600 years. And even China's rise has been through Westerners fucking with China, which has left China a polluted, exploited wasteland atop which some rich and powerful Chinese people hold total power in partnership with the Westerners who moved their manufacturing and banking there.
When Kipling wrote the lines you quote, the West was at the peak of fucking with China. There are far more Easterners buried wherever Westerners hustled, or invaded, the East. Don't be so complacent about the harmlessness of either China or the West.
Re:Like college and grad school (Score:1, Insightful)
The way I see it, the elephant in the room is xenophobia and racism (or, at the very least, rabid nationalism). The US companies subvert patents when they can. So do the Chinese. The only difference is the level to which they can get away with violations, not the goals or methods employed.
Give a man a fish, teach a man to fish (Score:4, Insightful)
Re:I suppose (Score:4, Insightful)
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.
Re:Yep, and look at the Airbus A320 (Score:5, Insightful)
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.
Re:capitalists take note (Score:4, Insightful)
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.
Re:capitalists take note (Score:5, Insightful)
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.
Consumers have very little power (Score:4, Insightful)
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.
Re:Like college and grad school (Score:5, Insightful)
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.
Re:Like college and grad school (Score:2, Insightful)
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.
and what respect for human rights has the US government shown? Iraq war crimes, Afghanistan, Guantanimo, water-boarding of POW's, not to mention the level of spying on it's own citizens as well as now the mainstream humiliation of it's own citizens by the TSA and agent provocateur methods used by the FBI against muslim citizens. AK Marc is right. The elephant in the room is just a mix of xenophobia, rabid nationalism and a hatred of opposing political ideals.
The USA has nothing and never has had any right to boast about it's human rights record. It's bathed in the blood of other nations from it's birth. Sheesh the country can't even get it together enough to care for it's own poor, sick and elderly.
Gotta Appreciate People Who Learn (Score:4, Insightful)
The colonialists ate Chinese lunch. The current regime isn't serving.
Guess there's not going to be a sequel to the Opium Wars.
Re:Like college and grad school (Score:5, Insightful)
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.
Re:I suppose (Score:4, Insightful)
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.
Re:Savvy business dealings (Score:3, Insightful)
Just a heads up...
China already owns most of the US economy. (This next bit has been mushed around a bit in my memory, so the facts are incorrect. But the idea is still correct.) In fact recently when a reporter asked a Chinese official if they were planning an attack on Wall Street she received the reply "Why should we. We already own most of it."
China could sink any US policy it cared enough about by calling in some of it's foreign debt. This would cause the US economy to tank as much as China cared to. If they called in all their foreign debt the US would have the choice of either repudiating it's foreign debts, or hyper-inflating the dollar. A few thousand percent in one month should solve the problem of the Chinese debt...of course either of these choices would cause many other problems... Then there's all the property owned outright by China and other foreign countries. China owns enough already that this is another major area where they can exert economic control, either by hiring people, and thus causing prosperity, or by laying people off, causing a depression.
Currently China seems to be supporting our economy. Probably not out of good wishes, but out of rational self-interest. But still, supporting it. Just imagine what the economic downturn would be like if they just stopped. Not actively tried to cause harm, but just stopped offering support. All they'd need to do is allow their currency to rise a bit against the dollar.
If this is economic warfare, then China won a few decades ago. I'll admit that they probably speak using those metaphors. They don't play american football over there, so they aren't going to use those metaphors. But it's a metaphor. The object of this game is to win, not to destroy. And China has won.
People talk about china's lack of respect for human rights. It's true. They don't really have any choice about that. They've GOT to keep the population growth under control. And when you give a government power, it practically never gives it up. (The occasions that I can think of where that happened are all more mythological than historical. Cincinnatus giving up dictatorial power over Rome when the war had been won is one example.) OTOH, the Soviet Union breaking apart (almost) peacefully shows that it *CAN* happen. And the current China is less autocratic than it was under Mao. (Still, China has a long history of switching between Emperors and WarLords. One shouldn't be surprised to see it continue. But improved transportation and communication may change things. A part of the reason used to be that the country was just too large to be centrally controlled, so the Emperor had to "trust" his provincial governors.)
Re:Savvy business dealings (Score:4, Insightful)
Marx's economic notions were wonky, but Marxism had a pretty huge influence on historical analysis. I'm sure this is a new concept for you, but there's this idea floating around that because a guy was wrong about one thing doesn't necessarily mean he's wrong about everything.