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How China Systematically Pries Technology from U.S. Companies
- friedman23 8y agoWhataboutism. edit: If someone is using whataboutism (as the person I'm responding to is) there is no real argument to respond to. Any modern day atrocity can be justified by saying that it was done in the past by a different nation. Saying that the US had done something in the past to justify a different countries' present day actions is intellectually lazy and dishonest and is meant to shut down discussion. I was just not trying to waste my time typing this entire statement out but apparently some of you don't understand why `whatabout x` isn't a real argument.
- ionised 8y agoInvoking whataboutism is not a defense against hypocrisy.
- aurailious 8y agoInvoking whataboutism is an attempt to shut down conversation.
- deleted 8y ago[deleted]
- friedman23 8y agoWell I was never trying to defend against hypocrisy and no hypocrisy is present in the actions of the US considering these international norms were developed by the US more than a century after the supposed IP theft by the US took place. Using the argument that some country did the same thing 100 or 200 years before is a child's argument and holds no weight. The Chinese government by taking advantage of the international order developed by the US has sown the seeds for the trade retaliation that is taking place today (to the detriment of everyone).
- bduerst 8y agoPointing out someone else's hypocrisy is not a defense of bad behavior.
- wu-ikkyu 8y agoIt does delegitimize the complaint
- jessaustin 8y agoIt is a proof that the behavior in question isn't "bad" in the first place.
- deleted 8y ago[deleted]
- bduerst 8y agoThe tu quoque fallacy [1] is not proof. Stealing IP without contributing to creation costs is bad behavior on several levels. [1] https://en.wikipedia.org/wiki/Tu_quoque#The_fallacy https://en.wikipedia.org/wiki/Tu_quoque#The_fallacy
- jessaustin 8y agoYou assume that "IP" is a real thing. It is an invented concept. Those who insist on its reality do so for their own benefit. Those who deny it, do so for their own. How are disinterested parties to decide? Well, they might examine how genuine the two positions are... There is a difference between "I can do this bad thing, because you have already done it" and "this thing is not bad, otherwise you wouldn't have done it". Tu quoque addresses the former situation, not the latter.
- bduerst 8y agoWhether or not IP is "real" is a red herring from hypocrisy being a valid defense for bad behavior. You can split hairs on the definition of IP, but the general consensus in economics is that you need to ensure coverage of the fixed creation costs of intellectual property to ensure robust investment in your society. And no, tu quoque definitively intends to discredit the opponent's argument by asserting the opponent's failure to act consistently in accordance with its conclusion. This applies to whataboutism, and exactly what we're talking about in this thread of deflecting back to the U.S.'s inconsistent behavior in the past.
- deleted 8y ago[deleted]
- dang 8y agoWe detached this subthread from https://news.ycombinator.com/item?id=18076906 https://news.ycombinator.com/item?id=18076906 and marked it off-topic.
- YorkshireSeason 8y agoThere's a gentlemen's agreement between nations that this is permissible for poor nations. China is no longer poor and now must act like a wealthy nation and accept IP laws.
- kome 8y agoThere is no law at the international level. China can do whatever it wants. But, other countries can do whatever they want as well: they can stop trading with China. But China's labor is so cheap. Exploitation is a sweet sweet drug for the west. So, it's complicated.
- Fjolsvith 8y agoExactly. We got rid of our "re-education" employment centers long ago.
- getmoheb 8y agoi can't tell if you're joking but there is no such thing as a 'gentlemen's agreement' in international relations. nations go as far as they can and do what they feel they can get away with to advance their interests. hence, you know, espionage.
- Leary 8y agoFrancis Cabot Lowell, who was instrumental behind the industrialization of the US, visited textile plants in the UK and committed their designs to memory, which were later introduced to the famed Lowell textile plants in Massachusetts. At the time (1826), America's per capita GDP was $2,460, which is 68% of the UK's per capita GDP of $3,600. Today, China's per capita GDP is $16,000, or 29% of of the US's per capita GDP of $55,000.
- fhood 8y agoFair enough, but as I recall, respect for patent law at the time was very limited, particularly where other countries were concerned.
- 8y ago
- gonmf 8y agoAh poor DuPont, who will think of the little and weak most powerful chemical company in the world. Oh the humanity.
- Leary 8y agoTechnology transfer is not coerced if a company enters into a a contract to transfer technology in exchange for a payment, income that's related to sales, or licensing fees. Listen to what the Qualcomm CEO said when a CNBC reporter asked whether China was stealing its technology: https://youtu.be/rAV2y23jHaM?t=2m20s https://youtu.be/rAV2y23jHaM?t=2m20s
- coliveira 8y agoThe behavior they describe is exactly how every industrialized nation has become industrialized (except for UK). There is no way to develop a technologically advanced nation if you respect artificially imposed barriers such as patents, which by their very nature cannot be effectively enforced in foreign countries.
- sangnoir 8y ago> The behavior they describe is exactly how every industrialized nation has become industrialized (except for UK). Not even the UK is exempt- Robert Fortune stole tea production IP (and samples) from China(!) in a covert mission[1] for Britain[2]. Now tea is quintessentially british 1. https://www.smithsonianmag.com/history/the-great-british-tea-heist-9866709/ https://www.smithsonianmag.com/history/the-great-british-tea... 2. I know Britain and the UK are not the same thing. Bear with me, NI.
- pjc50 8y agoThere's a rather surprising attitude in this discussion that the IP belongs to a country (e.g. "Allowing non-citizens to get access to the IP should be illegal."), as if it were some sort of nationalised asset in common ownership. It's a privately owned asset for private benefit. It's not a form of property that pays property tax.
- gaius 8y agoYes and no. Nothing happens in a vacuum. If person X develops something that they could not have developed without certain institutional and social and physical infrastructure around them then it’s by no means as clear cut. For example I think most people in the UK would say if the taxpayer has directly or indirectly underwritten something then it’s not unreasonable for a portion of the profit on that thing to be taxed and spend on the NHS, roads, education, whatever the inventor leveraged and benefitted from along the way. That’s not to say that the inventor can’t or shouldn’t get rich themselves, but it is only fair that they give something back.
- Zeebrommer 8y agoSee also: tax evasion scandals.
- ip26 8y agoKeeping IP within the borders of a country, or within a group of countries with mutual patent agreements, is certainly in the interests of the patent holder. IP is only meaningful if enforced. So, containing IP within the countries that have agreed to respect the patent is a rational part of the institution of patents.
- sdinsn 8y agoIt sounds like you are just criticizing Americans who believe this, and not the Chinese who believe and strongly enforce this in the other direction.
- mistermann 8y ago> It's a privately owned asset for private benefit. It's not a form of property that pays property tax. Philosophically, could one not make the same argument that there are strong similarities between these two items? Indeed, it isn't currently strongly codified in law, but you don't seem to be arguing from that perspective.
- analognoise 8y agoI don't get it: why not just not do business with China? If they're going to take your IP, just don't go there.
- ndesaulniers 8y agoThen how do you complete when your competitors already have and their costs are now significantly reduced?
- lotsofpulp 8y agoYou can't, because the consumers are OK (either knowingly or unknowingly) with the costs resulting from allowing China to obtain the IP (and manufacturing facilities and knowledge, etc).
- analognoise 8y agoIf you absolutely require lower wages to make a profit (your business plan has already failed, but let's go with it): Go to any one of a number of other countries that don't expect you to partner with a communist dictatorship and give up IP in order to have goods produced there? Vietnam, Thailand, Malaysia, Mexico, India? It seems like a pretty obvious "AVOID" signal for me, but I'm not running a multinational that's cut corners to keep profit margins high while exporting all of the manufacturing work.
- hungryhobo 8y agobut the countries you listed also require local partnership.
- mrdoops 8y agoI think I'd rather technology be dispersed without regulatory impedance. There's still the problem of how to reward/incentivize innovation and development of new technology, but maybe the benefits outweigh the costs or there's ways we haven't thought about how to reward and incentivize innovation.
- infinity0 8y agoAnyone got the text from behind the paywall?
- thrownblown 8y agoforced ip transfer
- wpasc 8y agoI very much appreciated this comment.
- mtgx 8y agohttps://archive.fo/q3bG5 https://archive.fo/q3bG5
- nerdkid93 8y agoThank you!
- xvf22 8y agohttps://outline.com/9yP5Mk https://outline.com/9yP5Mk
- mtgx 8y agoEvery time you see a news post about a tech company "partnering" with a Chinese company, you should be thinking they were forced to do that. This has been going on for many years, but it became much more of a "rule" in China since a couple of years ago. It's when most of the large American tech companies started announcing "joint ventures" with Chinese firms almost in unison. However, tech companies seem to be more than happy to give 50%+ of their business in China away, as well as 100% of the tech IP that will be stolen once the partnership happens. And then they whine about how restrictive the GDPR or a similar law in the US would be.
- rocketflumes 8y agoI understand that the scope and scale of the technology transfer agreements may be unreasonable, but surely these foreign companies aren't "forced" to oblige? I'm not sure if it's on China that many companies find it more profitable to have access to the Chinese market than to hold on to their IPs.
- HillaryBriss 8y agoWhen China was admitted to the WTO, manufacturers in China gained access to other WTO member markets on better terms than they had before. And, in theory, in exchange for that access, outside companies gained new access to the Chinese market - to investing in factories there and selling products and services there. That was supposed to be part of the WTO deal. But, the requirement in China that state owned companies had to be partners, that IP had to be transferred to these state partners as an additional condition of doing business -- that's what is unusual, that's where the word "forced" enters the conversation. Someone correct me if I'm wrong, but I don't think WTO rules reallly allow for that sort of required government involvement.
- fspeech 8y agoNo WTO is about trade and it is fairly silent on investment. See https://www.wto.org/english/tratop_e/invest_e/invest_info_e.htm https://www.wto.org/english/tratop_e/invest_e/invest_info_e.... "As an agreement that is based on existing GATT disciplines on trade in goods, the Agreement is not concerned with the regulation of foreign investment. The disciplines of the TRIMs Agreement focus on investment measures that infringe GATT Articles III and XI, in other words, that discriminate between imported and exported products and/or create import or export restrictions."
- diego_moita 8y agoAnd so what??? The US pried the textile and locomotives industries from the UK, check the history of Samuel Slater[1]. Same happened for Japan under Meiji restoration. India and Brazil do the same for pharmaceutical patents, because they're too poor to afford paying them. Stealing IP will happen, no matter what treaties and governments try to do. For poor countries it is a path they just don't have the luxury of giving up. [1] https://en.wikipedia.org/wiki/Samuel_Slater https://en.wikipedia.org/wiki/Samuel_Slater Edit: over-patriotic Americans seem to think this is just about them and call my argument whataboutism. It isn't both. I am stressing the fact that protectionism and stealing IP is a path almost every industrialized nation took. Even the UK did protectionism against India textiles to help their beginning textile industry. The industrialized countries are trying to close the gates they used to get into their rich garden. My point is that right or wrong, moral or not, it simply won't work.
- reaperducer 8y agoThe US pried the textile and locomotives industries from the UK This is the sort of argument that an eight-year-old makes to his mother, and the mother responds, "If Jimmy jumped off a bridge, would you?" I don't know if you're an American or not, but there's an very common expression: Two wrongs don't make a right.
- aurailious 8y agoIsn't this "whataboutism"? You shut down a conversation by trying to deflect about how others have also done something? Like you said, two wrongs don't make a right. Just by pointing out this has happened elsewhere doesn't make the conversation about China doing it any less important or relevant. Why shut down this conversation?
- chillacy 8y agoTo call what we call “IP infringement” as wrong presumes IP monopolies are right, and that there’s no objective reason why it’s so . In the US patent law doesn’t cover everything, there are alternate forms of IP like copyright which has let open source software and fashion thrive. Then there’s the open hardware system in China called GongKai: https://www.techdirt.com/articles/20141230/09362929550/how-gongkai-innovation-could-allow-china-to-leapfrog-west.shtml https://www.techdirt.com/articles/20141230/09362929550/how-g...
- misabon 8y agoAMD has to license their stuff to Hygon too. I think it’s great. IP laws are stifling innovation and the fact that there is an escape hatch in China is a good thing.
- zeroname 8y agoIP laws also support innovation. Nobody would invest millions into figuring out the right arrangement of atoms that cures some disease, if there wasn't a way to profit from that. At the other end of the spectrum is protecting the "invention" of buying something with a single mouse click. There should be a healthy middle somewhere.
- schiffern 8y ago>Nobody would invest millions into figuring out the right arrangement of atoms that cures some disease Sure they would. It's called public research, most of which is promptly handed to private companies to profit from. Pharmaceutical research is hugely taxpayer subsidized.[1] Let me be clear: I think the funding is a good thing, but the privatization (read: theft) of subsequent profits is bad. [1] https://other98.com/taxpayers-fund-pharma-research-development/ https://other98.com/taxpayers-fund-pharma-research-developme...
- zeroname 8y agoObviously I'm talking about private investment, not public funding. Of course these companies use information obtained through public research, they're supposed to, because there's a long process from research to an approved product, which is what the research institutions do not do. Public and private research goes hand in hand, just like in other industries. The study quotes a hundred billion in public funding over six years, compare that to private R&D budgets of well over 50 billion per year: https://en.wikipedia.org/wiki/Pharmaceutical_industry#The_cost_of_innovation https://en.wikipedia.org/wiki/Pharmaceutical_industry#The_co... It's not "a scam", as that article wants you to believe. You should stop reading that website, it's making you more uneducated.
- natvert 8y agoIt's hard for me to believe that all the smart, capable company executives involved in planning and execution of operations in and around China are oblivious to IP risks. There is an obvious upside of operating in Asia, both cheap labor (though now decreasing) and strong work ethic coupled with access to a huge market. It seems to me that execs understand and take a calculated risk when they choose to do business in various parts of the world. If they cannot make this calculation, they should not be running a company. More than anything else, the attitude displayed in this article appears to me as an attempt to defer (or pass to the public) the consequences of the above calculated choices. If not directly, through a trade war that will hurt all Americans. All the while, these companies keep their financial gain private, in the pockets of execs and shareholders. There is something to be said for protecting IP in the interest of a country's defense, but the technology that qualifies for this type of protection should be the subject of public debate, not a president's whim. Furthermore, unless the companies that own this IP are taken over by the state, company execs will always be free to make the decision re. operating in Asia and between the associated IP risks and capital gain.
- true_religion 8y agoOh for sure, companies are aware but what can they do about it? For all that we talk about all powerful mega corps, they still have to bow down to actual governmental power. The only appropriate way for them to fight this is by requesting diplomatic intervention from their home state.
- alehul 8y agoBy the same logic, I'm aware there likely isn't a prince in Nigeria who will send me a boatload of money if I send them .1% of that money over the internet. We nonetheless, as a society, choose to shame and fight the action of the scammer, though many capable people fall for it. What I mean to say is that just because I'm taking a calculated risk does not remove the other party of moral and legal liability for their theft of some kind. In fact, the only argument I remember hearing (I think it was Marc Andreessen?) against the shaming of the scammer in the prince analogy is that they sometimes have no other option to feed their family. I doubt that justification applies to Chinese IP theft.
- subtlefart 8y agoState sponsored stealing will get state sponsored slapping
- mc32 8y agoWell, at least the cat’s out of the bag and the media aren’t pretending it doesn’t exist or that people are exaggerating, etc. Of course now people are going to normalize it and say it’s no big deal after years of saying it was an exaggeration. But that’s what you get when you get blinded by the lure of 1-billion potential consumers... along with an unfavorable trade agreement wich allowed for assymetrical tariffs, etc.
- zeroname 8y ago> ...unfavorable trade agreement wich allowed for assymetrical tariffs, etc. Assymmetrical tariffs are more favorable than symmetrical tariffs, something practically every economist agrees on. Also, why insist on exporting more valuable goods to China, when China remains perfectly content with green pieces of paper instead?
- mc32 8y agoSo unfathomably China is against an inverse assymetrical tariff regime which on paper would benefit US but economists would insist actually would counterintuitively benefit China.
- zeroname 8y agoIt's economically beneficial, but not politically expedient.
- mistermann 8y agoWould it be more accurate to say: "Assymmetrical tariffs are more favorable than symmetrical tariffs, something practically every economist agrees on, for certain situations"? Does there ever come a point where they should be normalized? From most of what I've read in mainstream news coverage, this topic seems to be considered not valid for discussion, as if the answer is self-evident (despite very few of the reporters, or readers, having any serious depth in the subject).
- 8y ago
- amluto 8y agoI think it wouldn’t be so bad if everyone forced their major contractors to share IP. Sure, it would be harder for a vendor to own a market for decades, but is that really a bad thing?
- standerman 8y agoI've seen some recent pushes for "right to repair" legislation. I can see how this is great for consumers. I can also see how this forces companies to be more open about their components and interfaces, which weakens their ability to keep trade secrets. It also increases the attack surfaces for people and organizations attempting to compromise the device. I suspect the end result is more system on a chip design styles that are basically impossible to repair.
- Nasrudith 8y agoThat is already the status quo really from other forces. Repairing usually doesn't scale, automation allows for very fine details to join cheaper faster and better like soldering instead of ribbom connectors. Security by obscurity isn't. Trade secrets are bullshit as a doctrine. Why is the rest of society obligated to protect not advancing at their own expense for the sake of private greed? The proper response to breech of trade secrets in a court of law should be "You never registered it for any sort of protection in exchange for disclosure and chose to keep it secret. Go to hell."
- zekevermillion 8y agoChina doesn't need the technology per se. China is now an advanced technological country in its own right, even if the fruits of that may still be unevenly distributed -- as, to be fair, they are in the rest of the world as well. The behaviors described are primarily about control and power over strategic industries at a macro level.
- jarym 8y agoUS companies go into China eyes wide open - they can extract a few quarters of profit from their products and services but that's it; the Chinese will then expect to do it themselves and keep all the profits to themselves. To most its not a good deal. To US companies, that are driven by quarterly targets then it is very much a case of sacrificing the future for the present. And if they stay out of China then the odds are that hackers will either steal the info anyway or another western competitor will play ball. There's just no way to stop this happening as I see it. The best non-US companies can do is negotiate an equity stake in their local partners and hope the government doesn't pass laws to take it away.
- StreamBright 8y agoReminds me of Goolgle and Facebook comes to my country takes all the ad revenue and the country gets nothing.
- jarym 8y agoWhoever bought the ads probably get some decent marketing don't they? And any local affiliates probably get a chunk in commissions. The lions share of course go to the likes of Google/Facebook but its not totally correct to say the country gets nothing.
- Aunche 8y agoThey get Google and Facebook.
- pwaivers 8y ago> To US companies, that are driven by quarterly targets then it is very much a case of sacrificing the future for the present. This comment comes off as trite and naive. Multi-billion dollar companies like DuPont and AMD Inc do not only think a few quarters ahead. They think years or decades ahead.
- Tloewald 8y agoOf course America got all its technology fair and square.
- zeroname 8y agoSome of your ancestors stole something from someone, would you like to: A) give up some of your property to an entirely unrelated person B) not do that Choose wisely!
- anon92612 8y agoIt’s interesting the vast difference in reporting the media has on China’s IP issues vs India’s and even Canada’s. I wonder if China only remade pharmaceutical IP while India remade technological, the reports would be different? Or is it because China is a rival?
- misabon 8y agoIt’s the last thing. India and Canada are globally irrelevant. China is a waking titan.
- ccnafr 8y agotl;dr: It steals it
- anon92612 8y agopiracy != theft
- jessaustin 8y agoActually piracy is a particular kind of theft. Piracy is robbery on the high seas. Robbery is a type of theft that takes place in conjunction with violence, force, and intimidation. Nothing that happens on land is piracy, so I'm not sure why it comes up so often in these discussions.
- morpheuskafka 8y agoI'm not one to agree with the right wing of US politics very often at all, but our country needs to sanction and tariff Chinese goods until US rightholders are reimbursed for their stolen technology AND the PRC greatly reforms its absymal human rights records. People are literally living in a modern version of 1984, complete with re-education camps and stolen Western surveillance technology. No American can in good conscience send their technology to be stolen by a country that wants to imprison and torture entire states of its citizens. If the PRC government merely didn't follow IP law, that would be a calculated risk. When the PRC steals our technology to power a global game of persecution, corruption, and espionage, it's morally wrong.
- mzs 8y agojust yesterday in Chicago https://www.npr.org/2018/09/26/651689220/u-s-army-reservist-arrested-in-chicago-on-charges-of-spying-for-china https://www.npr.org/2018/09/26/651689220/u-s-army-reservist-...
- naruvimama 8y agoThe western markets has already peaked and is therefore "forced" to go to China. While from a western point of view it feels alarming to loose their edge. From a Chinese point of view, why would they let anyone share a piece of their growth with nothing in return. A source of cheap labour, raw materials and a huge market, is something that people from ex-colonies are all too familiar with. One should also acknowledge the high tech cartels that exists. In a way it is a free market, because people can not claim to not know what they were getting themselves into.