Friday, February 4, 2011

A New Type of Foreign Competition


Though I have many Chinese friends, I must state that this is an extremely interesting and somewhat frightening article (below), which appeared in the WSJ several days ago. It is frightening because in my own experience I know the assertions in the article to be true.

Bussey, John, 2011. U.S. firms, china are locked in a major war over technology. The Wall Street Journal, Feb. 2.

These are two important paragraphs from the article:

"The new initiatives—shaped by rising nationalism and a belief that foreign companies unfairly dominate key technologies—range from big investments in national industries to patent laws that favor Chinese companies and mandates that essentially require foreign companies to transfer technology to China if they hope to sell in that market.

To hear U.S. business executives describe it, Beijing's mammoth new industrial policy is like the Borg in 'Star Trek'—an enormous organic machine assimilating everything in its path, in this case the inventions of other nations. Notably, China's road map, which is enshrined in the 'National Medium- and Long-Term Plan for the Development of Science and Technology (2006-2020),' talks in those terms. China will build its dominance by 'enhancing original innovation through co-innovation and re-innovation based on the assimilation of imported technologies.'" bold added

In the case I know, people in the US openly told me they were transferring technology to a Chinese science park in spite of several signed agreements. I found this behavior to be incredible! The entire episode has soured me on future so called win-win deals.

This report, mentioned in the WSJ article, is well worth reading:

China's Drive for "indigenous Innovation": A Web of Industrial Policies

It is published by the U.S. Chamber of Commerce. The WSJ article goes on to state that the report "found what it calls, in sometimes sparky language, an 'intricate web' of new rules 'considered by many international technology companies to be a blueprint for technology theft on a scale the world has never seen before.'" bold added

In a state industrial economy like China's, the extent of control appears the be pervasive. Toward the end of the article, the WSJ reports, "They worry, for example, that China's new approval process is holding up products at the border as technicians examine designs with the intent of doing a little early 'assimilating.'"

As things develop, I will have more to write based on my own experience. The WSJ correctly states that this ranks as perhaps the top technology issue for the US.

This behavior represents a new type of foreign competition; advancement via theft!

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