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China requires all industries, including aerospace, cars, energy, FMCG, and IT, to cough up IP for free in return for access to its markets. Yet we provide acce

China requires all industries, including aerospace, cars, energy, FMCG, and IT, to cough up IP for free in return for access to its markets. Yet we provide access to our huge markets, gratis. Even if Western access to Chinese markets is inevitably sporadic and subject to the whims of regulatory Chinese quangos who can withdraw it at any time they feel like it, equity markets encourage companies to play the game and cough the secrets, in the name of the next quarterly targets. Unlike the actual human beings involved, equities don't care if the IP moves from one society to the next. They can literally rebalance their portfolios from West to East in seconds. Yet much of the IP thus surrendered was created not directly by those Western companies, but by the societies which fostered the freedoms, intellectual, physical, and political, for such discoveries to be possible, encouraged and nurtured. Those freedoms cost dearly, often literally in blood. That we're selling this patrimony, hard-won by our forefathers, on the cheap, is criminal.

Pyxl101 11y ago
What you say might be going on, but I would not expect this source code sharing to constitute IP transfer. It's an audit or inspection. The government isn't allowed to use the code, and I doubt they intend to or have the ability to. I haven't been involved in government audits of source code, but I have been involved in private audits. We invite the third party into our offices, where we provide them access to a laptop that has the source code loaded onto it. The laptop's network access has been disabled. They're free to examine it for as long as they wish, but they're not allowed to copy it or remove it from the network. These kinds of mitigations are presumably what they're referring to when they say: “Strict procedures are in place within these technology demonstration centers to ensure that no software source code is released, copied or altered in any way.” Note the term technology demonstration center, that is, physical location. This kind of audit is fairly routine when an important customer is considering your product, for a number of reasons. After all of the security events in the news recently, any foreign government would be right to worry about backdoors in technology provided by US firms. Source code access is one way to mitigate those concerns. It's an audit, not a technology transfer. Last but not least: I could imagine a certain kind of software where it could be damaging, and could reveal IP, to allow anyone to see any part of the code. Imagine if I invent a better audio compression algorithm that's twice as good as typical MP3 compressors, while producing MP3 format. Then showing someone even a snippet of code could give away my trade secret of how it works. However, the source code of large software products like IBM's is unlikely to have any especially valuable secret sauce. The value of the IP comes from the whole, not of any one special part. In that circumstance, allowing someone to peruse the code at their leisure doesn't give much away.
- vegabook 11y ago
  Yes it's true that clients should have a right to inspect code for potential malevolence, especially when geopolitics are at play. However the article is peppered with qualifications: “As everybody knows, there’s a tacit understanding that if you want to do business in China, you need to show them how this stuff works,” "there’s definitely a little bit of: ‘Can we reverse engineer this?’" “For IBM to do this is a little ballsy.” I think in general we're far too willing, far too often, to dismiss Chinese business tactics as benevolent.
  - fredkbloggs 11y ago
    > I think in general we're far too willing, far too often, to dismiss Chinese business tactics as benevolent. Who are "we" in this context? I don't really think anyone in the western world seriously believes there is anything benevolent about China, full stop. What's happening here, and what IBM's statements clearly indicate, is that western CEOs think they might be able to goose their quarterly earnings for a year or two by kowtowing to whatever China demands. That means bigger bonuses and maybe more valuable stock for the CEOs, possibly (who are we kidding, certainly) lower profits in the long run as everyone knows China steals everything not bolted down and much of what is. But the CEO has no incentive to care about that.
    - deleted 11y ago
      [deleted]
    - vegabook 11y ago
      "We" = the vast majority of people whose short term consumption addiction is being financed by China, which conversely is investing in our long term economic serfdom.
      - fredkbloggs 11y ago
        I see. That's not assumption of benevolence, it's simple greed. The same "I'll be gone, you'll be gone" attitude that created the mortgage implosion and so much else that's gone wrong throughout human history. Xbox buyers don't really think China is benevolent, they just don't care because they figure most of the harm they do will be visited on others.
redahs 11y ago
Scaling import tariffs tied directly to public human rights data concerning each country of origin. No elections in past 10 years, +5% tariff, suppressing political parties, +5% tariff, imprisoning journalists, +5% tariff, internet censorship, +5% tariff, etc. If equities complain just repeatedly assert that they are anti-freedom and support human rights abuses, and can either lobby other nations to improve their records or have tariff free trade with existing democracies instead.
fredkbloggs 11y ago
I'll start by saying I agree 100% with everything you said, and it makes me as angry as it makes you. You are dead right in all respects. However... there is another subtle argument to be made here. The Han culture has no concept of integrity as we know it in the west. If it's easier or cheaper to steal something than to make it or earn it, they will, and there's no stigma for it. It's not surprising, then, that China steals from western corporations at every possible opportunity, and demands access to western inventions as a condition of market access. But suppose that instead we told them to go fuck themselves, accepted not having access to their "market" (such as it is), and let them invent the stuff themselves if they want it that badly. What then? There are only two possibilities: they go skill up and compete, or they go to war. They can't win a war with the US yet, but it's hard to imagine that such a war would be beneficial. And if they skill up and compete, they become much, much stronger. By giving away most of the store, China is kept fat, lazy, and stupid. They can copy, but they still can't actually do anything for themselves. Maybe, just maybe, that's better than either of the alternatives. I don't really believe this myself, but I've often contemplated it when this kind of stuff comes up. Is anyone in the US (or EU) government thinking this way? Do NATO military leaders think this way? My guess is no, but it's hard to come up with any other rationale for western behavior here. Personal gain notwithstanding, if you don't believe this at least a little, you'd have to argue for simply putting China on the sanctioned countries list and being done with it, right?
- chillacy 11y ago
  > has no concept of integrity as we know it in the west By west, do you mean Great Britain? > U.S. commentators complain that China's success has been predicated on chicanery (like the manipulation of the yuan), dubious business practices and wanton disregard for copyrights. In doing so, they echo things that British commentators once said about America's rise, back when New England factories used reverse engineering to mimic the latest Lancashire technological breakthroughs and Dickens complained of making no money from the pirated copies of his novels sold in the country. To use a line often attributed — probably inaccurately — to Mark Twain, history doesn't repeat itself, but it often rhymes. And this is one of those cases. http://content.time.com/time/magazine/article/0,9171,2029400,00.html http://content.time.com/time/magazine/article/0,9171,2029400... This is the exact same strategy that the US used to get ahead (including the high tariffs too). To chastise china for this is hypocrisy.

Pyxl101 11y ago

What you say might be going on, but I would not expect this source code sharing to constitute IP transfer. It's an audit or inspection. The government isn't allowed to use the code, and I doubt they intend to or have the ability to. I haven't been involved in government audits of source code, but I have been involved in private audits. We invite the third party into our offices, where we provide them access to a laptop that has the source code loaded onto it. The laptop's network access has been disabled. They're free to examine it for as long as they wish, but they're not allowed to copy it or remove it from the network. These kinds of mitigations are presumably what they're referring to when they say: “Strict procedures are in place within these technology demonstration centers to ensure that no software source code is released, copied or altered in any way.” Note the term technology demonstration center, that is, physical location. This kind of audit is fairly routine when an important customer is considering your product, for a number of reasons. After all of the security events in the news recently, any foreign government would be right to worry about backdoors in technology provided by US firms. Source code access is one way to mitigate those concerns. It's an audit, not a technology transfer. Last but not least: I could imagine a certain kind of software where it could be damaging, and could reveal IP, to allow anyone to see any part of the code. Imagine if I invent a better audio compression algorithm that's twice as good as typical MP3 compressors, while producing MP3 format. Then showing someone even a snippet of code could give away my trade secret of how it works. However, the source code of large software products like IBM's is unlikely to have any especially valuable secret sauce. The value of the IP comes from the whole, not of any one special part. In that circumstance, allowing someone to peruse the code at their leisure doesn't give much away.

vegabook 11y ago
Yes it's true that clients should have a right to inspect code for potential malevolence, especially when geopolitics are at play. However the article is peppered with qualifications: “As everybody knows, there’s a tacit understanding that if you want to do business in China, you need to show them how this stuff works,” "there’s definitely a little bit of: ‘Can we reverse engineer this?’" “For IBM to do this is a little ballsy.” I think in general we're far too willing, far too often, to dismiss Chinese business tactics as benevolent.
- fredkbloggs 11y ago
  > I think in general we're far too willing, far too often, to dismiss Chinese business tactics as benevolent. Who are "we" in this context? I don't really think anyone in the western world seriously believes there is anything benevolent about China, full stop. What's happening here, and what IBM's statements clearly indicate, is that western CEOs think they might be able to goose their quarterly earnings for a year or two by kowtowing to whatever China demands. That means bigger bonuses and maybe more valuable stock for the CEOs, possibly (who are we kidding, certainly) lower profits in the long run as everyone knows China steals everything not bolted down and much of what is. But the CEO has no incentive to care about that.
  - deleted 11y ago
    [deleted]
  - vegabook 11y ago
    "We" = the vast majority of people whose short term consumption addiction is being financed by China, which conversely is investing in our long term economic serfdom.
    - fredkbloggs 11y ago
      I see. That's not assumption of benevolence, it's simple greed. The same "I'll be gone, you'll be gone" attitude that created the mortgage implosion and so much else that's gone wrong throughout human history. Xbox buyers don't really think China is benevolent, they just don't care because they figure most of the harm they do will be visited on others.

redahs 11y ago

Scaling import tariffs tied directly to public human rights data concerning each country of origin. No elections in past 10 years, +5% tariff, suppressing political parties, +5% tariff, imprisoning journalists, +5% tariff, internet censorship, +5% tariff, etc. If equities complain just repeatedly assert that they are anti-freedom and support human rights abuses, and can either lobby other nations to improve their records or have tariff free trade with existing democracies instead.

fredkbloggs 11y ago

I'll start by saying I agree 100% with everything you said, and it makes me as angry as it makes you. You are dead right in all respects. However... there is another subtle argument to be made here. The Han culture has no concept of integrity as we know it in the west. If it's easier or cheaper to steal something than to make it or earn it, they will, and there's no stigma for it. It's not surprising, then, that China steals from western corporations at every possible opportunity, and demands access to western inventions as a condition of market access. But suppose that instead we told them to go fuck themselves, accepted not having access to their "market" (such as it is), and let them invent the stuff themselves if they want it that badly. What then? There are only two possibilities: they go skill up and compete, or they go to war. They can't win a war with the US yet, but it's hard to imagine that such a war would be beneficial. And if they skill up and compete, they become much, much stronger. By giving away most of the store, China is kept fat, lazy, and stupid. They can copy, but they still can't actually do anything for themselves. Maybe, just maybe, that's better than either of the alternatives. I don't really believe this myself, but I've often contemplated it when this kind of stuff comes up. Is anyone in the US (or EU) government thinking this way? Do NATO military leaders think this way? My guess is no, but it's hard to come up with any other rationale for western behavior here. Personal gain notwithstanding, if you don't believe this at least a little, you'd have to argue for simply putting China on the sanctioned countries list and being done with it, right?

chillacy 11y ago
> has no concept of integrity as we know it in the west By west, do you mean Great Britain? > U.S. commentators complain that China's success has been predicated on chicanery (like the manipulation of the yuan), dubious business practices and wanton disregard for copyrights. In doing so, they echo things that British commentators once said about America's rise, back when New England factories used reverse engineering to mimic the latest Lancashire technological breakthroughs and Dickens complained of making no money from the pirated copies of his novels sold in the country. To use a line often attributed — probably inaccurately — to Mark Twain, history doesn't repeat itself, but it often rhymes. And this is one of those cases. http://content.time.com/time/magazine/article/0,9171,2029400,00.html http://content.time.com/time/magazine/article/0,9171,2029400... This is the exact same strategy that the US used to get ahead (including the high tariffs too). To chastise china for this is hypocrisy.