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Is there still a rule that foreing companies can operate in China only if they are joint ventures with Chinese partners? If so then the Chinese partners can g

Is there still a rule that foreing companies can operate in China only if they are joint ventures with Chinese partners? If so then the Chinese partners can get to know all the foreign IP. I'm sure there will be show punishments under the new law, but through the joint ventures China can still get all the foreign tech knowledge it wants.

educationdata 8y ago
I have heard in many areas the official rule on the book has already been changed. Foreign companies are longer required to joint ventures with Chinese partners. However, in reality it could be extremely difficult to operate without a Chinese partner. Local government agencies will just give you so much trouble that you will eventually find out that it is much easier to have a Chinese partner to deal with those issues.
- westiseast 8y ago
  I think this is the correct answer. State sponsored theft of highly secret commercial/military information is one issue, rampant intellectual property abuse is another (eg. in fashion or entertainment industries). However potentially larger problems are the 100% legal barriers to entry for foreign companies - censorship, onerous and expensive company formation, trademark registration, inability to operate in a hopelessly corrupt political environment, opaque legal system, legal requirements to have CCP ‘agents’ operating inside your company, local government fiefdoms that often operate beyond the law etc etc.
  - baybal2 8y ago
    I can't say that being iron clad. I will not put America in ranks with them, but I think that the biggest upside of China is that it has no such insanely convoluted tax system as in America.
    - bilbo0s 8y ago
      It's not as convoluted, but it's just as expensive. That said, it's their right. I get it. Their nation, their tax rules. If I don't like the rules, I'm free NOT to start a business in China. That I understand, but to intimate that it's somehow "better" than the US is just being a little disingenuous. When it's all said and done, you'll likely pay more to do business in China. (But there's more potential upside too, so you need to take all these things into account.)
      - baybal2 8y ago
        > It's not as convoluted, but it's just as expensive. No running away from that, but you can't also run away from the fact that it is not humanly possible to profitably run a mainstream consumer electronics company outside of China. China stole the market not because it was making stuff cheaper than others, but because it was making it better than others. In the end, you end up with lower net cost of running business. > That I understand, but to intimate that it's somehow "better" than the US is just being a little disingenuous. It is better to run business in China today, and that is nothing disingenuous. I myself been in and out of electronics industry since 2007, and I can tell that not a single city ever came close in those 12 years to take the crown from Shenzhen. You can't compare USA and PRC apples to apples, but China has advantages that America has no analogues for, or just anything to compare. USA plainly can't compete with China for the overall state of business climate in any real world industry. Saying that plainly, I feel the attitude in USA is like "industry - bad, business - good." American bourgeois class has a collective psychosis, a delusion that you can somehow run a productive economy solely on stuff like banking, lawyering, consulting, and random "creative industries" that don't create anything. American bourgeois class is heading into nowhere following that path.
        bilbo0s 8y ago
        China does have a better overall business environment. You're correct when you assert that cities in the US can't compete as far as raw abilities. But the original comment was about China's tax system, and that's all I was talking about. I was comparing only the tax systems. To say that China's TAX SYSTEM is better than that of the US is disingenuous.
  - gonvaled 8y ago
    That is a consequence of the cultural supremacy of the US: the US is used to the world adapting to it, and fails miserably at adapting to the world.
    - friedman23 8y ago
      We are watching it adapt, the adaptation is to cut off trade with China. Trade reciprocity should've been enacted 2 decades ago.
- mips_avatar 8y ago
  If the local government is going to deny you the services that a business requires. Then you are being mandated to join a joint venture.
- outworlder 8y ago
  > Foreign companies are longer required to joint ventures with Chinese partners. Is that the case? If so, can we have the Real AWS back there?
  - deathhand 8y ago
    And Microsoft/Azure as well? http://www.21vianet.com/ http://www.21vianet.com/
baybal2 8y ago
Please check that list yourself. Effectively, only 16 of any much substantial industries is left on that list, and that was the case for quite some time, a decade or more. If people venture on to criticise China, can they do so with something more that Internet meme level evidence?
- vageli 8y ago
  > Please check that list yourself. Effectively, only 16 of any much substantial industries is left on that list, and that was the case for quite some time, a decade or more. > If people venture on to criticise China, can they do so with something more that Internet meme level evidence? Could you share a link to the list you're referring to?
  - fspeech 8y ago
    See http://www.ndrc.gov.cn/zcfb/zcfbl/201706/W020170628553266458339.pdf http://www.ndrc.gov.cn/zcfb/zcfbl/201706/W020170628553266458... Restricted list on foreign investments starts on page 22, forbidden list on page 24. The first twenty pages are encouraged.
seanmcdirmid 8y ago
JV has only ever been for some industries. Microsoft, for example, has always operated in China as a completely owned foreign branch. The government even gave them cheap land to build their headquarters.
- deathhand 8y ago
  That is not entirely true. 21Vianet is the only Microsoft cloud provider allowed by the CCP. They are not Microsoft in anyway, shape, or form. In fact if you are a subscriber of their services there is a lag in updates.(presumably so the CCP can review first)
  - seanmcdirmid 8y ago
    That is not Microsoft though, and it is not a JV. Rather, Microsoft has decided to outsource its Azure cloud operations in China completely due to government regulation. It wasn't that they had to have a partner, it was that they couldn't do it at all. Microsoft still exists in China, they still have a few thousand employees there in sales and R&D that are entirely paid by Microsoft.
nosleeptill 8y ago
Yes, China doesn't need to steal much of anything, because in order to manufacture in China you need to hand over your IP to your Chinese partner company. Your Chinese partner company has another partner, the Chinese Government, so in effect when you manufacture in China you need to share your IP with the Chinese government, and they share the information you gave them with any Chinese company that could benefit. Passing all the laws won't matter, because western companies are just handing their IP to the Chinese government.
- withhighprod 8y ago
  You could almost substitute Chinese with USA above
- metacritic12 8y ago
  The nature of "laws" are also different in China versus a rule-based society like the USA (heck even Europe is less rule-based than the US). Even if China nominally had a law against IP theft, on the ground in it can be very different. They could (and do as the stories below show) ask companies to "voluntarily share their methods" and when they don',t, towns can delay permits, throw up selective barriers, and put in all sorts of disadvantages that are not officially codified. The west would be smart to wait to see how easy it really is to do business in China without giving over IP before giving China credit. China has been playing the "we passed a new law/speech" game to buy time for a long time, but the walk is far from following the talk. I hope China is serious, but only time will tell, not the law.
  - shard972 8y ago
    > The west would be smart to wait to see how easy it really is to do business in China without giving over IP before giving China credit. Has this not already happened? HPE is majority owned Chinese company now isn't it?
    - outworlder 8y ago
      What are you talking about?
stretchwithme 8y ago
It was ended for automakers in April 2018. https://www.nytimes.com/2018/04/17/business/china-auto-electric-cars-joint-venture.html https://www.nytimes.com/2018/04/17/business/china-auto-elect...
kennxfl 8y ago
Remember when as a kid eating vegetables at dinner, you kept excusing yourself to go to the bathroom and consequently vegetables disappeared from your plate and in your mind you were like "this is a fool proof plan. No one will notice"? Well, China hopes you will only see its nothing but a solid business strategy for everyone yet...
solatic 8y ago
This isn't the only issue. China has a long laundry list of laws which are on the books and rarely enforced, because the central government's power is effectively limited to making sure that local enforcement toes the Party line, and not whether local enforcement is effective and uncorrupted. There may be laws forbidden IP theft, but good luck getting any of them to mean anything when dealing with local enforcement and courts.

educationdata 8y ago

I have heard in many areas the official rule on the book has already been changed. Foreign companies are longer required to joint ventures with Chinese partners. However, in reality it could be extremely difficult to operate without a Chinese partner. Local government agencies will just give you so much trouble that you will eventually find out that it is much easier to have a Chinese partner to deal with those issues.

westiseast 8y ago
I think this is the correct answer. State sponsored theft of highly secret commercial/military information is one issue, rampant intellectual property abuse is another (eg. in fashion or entertainment industries). However potentially larger problems are the 100% legal barriers to entry for foreign companies - censorship, onerous and expensive company formation, trademark registration, inability to operate in a hopelessly corrupt political environment, opaque legal system, legal requirements to have CCP ‘agents’ operating inside your company, local government fiefdoms that often operate beyond the law etc etc.
- baybal2 8y ago
  I can't say that being iron clad. I will not put America in ranks with them, but I think that the biggest upside of China is that it has no such insanely convoluted tax system as in America.
  - bilbo0s 8y ago
    It's not as convoluted, but it's just as expensive. That said, it's their right. I get it. Their nation, their tax rules. If I don't like the rules, I'm free NOT to start a business in China. That I understand, but to intimate that it's somehow "better" than the US is just being a little disingenuous. When it's all said and done, you'll likely pay more to do business in China. (But there's more potential upside too, so you need to take all these things into account.)
    - baybal2 8y ago
      > It's not as convoluted, but it's just as expensive. No running away from that, but you can't also run away from the fact that it is not humanly possible to profitably run a mainstream consumer electronics company outside of China. China stole the market not because it was making stuff cheaper than others, but because it was making it better than others. In the end, you end up with lower net cost of running business. > That I understand, but to intimate that it's somehow "better" than the US is just being a little disingenuous. It is better to run business in China today, and that is nothing disingenuous. I myself been in and out of electronics industry since 2007, and I can tell that not a single city ever came close in those 12 years to take the crown from Shenzhen. You can't compare USA and PRC apples to apples, but China has advantages that America has no analogues for, or just anything to compare. USA plainly can't compete with China for the overall state of business climate in any real world industry. Saying that plainly, I feel the attitude in USA is like "industry - bad, business - good." American bourgeois class has a collective psychosis, a delusion that you can somehow run a productive economy solely on stuff like banking, lawyering, consulting, and random "creative industries" that don't create anything. American bourgeois class is heading into nowhere following that path.
      - bilbo0s 8y ago
        China does have a better overall business environment. You're correct when you assert that cities in the US can't compete as far as raw abilities. But the original comment was about China's tax system, and that's all I was talking about. I was comparing only the tax systems. To say that China's TAX SYSTEM is better than that of the US is disingenuous.
- gonvaled 8y ago
  That is a consequence of the cultural supremacy of the US: the US is used to the world adapting to it, and fails miserably at adapting to the world.
  - friedman23 8y ago
    We are watching it adapt, the adaptation is to cut off trade with China. Trade reciprocity should've been enacted 2 decades ago.
mips_avatar 8y ago
If the local government is going to deny you the services that a business requires. Then you are being mandated to join a joint venture.
outworlder 8y ago
> Foreign companies are longer required to joint ventures with Chinese partners. Is that the case? If so, can we have the Real AWS back there?
- deathhand 8y ago
  And Microsoft/Azure as well? http://www.21vianet.com/ http://www.21vianet.com/

baybal2 8y ago

Please check that list yourself. Effectively, only 16 of any much substantial industries is left on that list, and that was the case for quite some time, a decade or more. If people venture on to criticise China, can they do so with something more that Internet meme level evidence?

vageli 8y ago
> Please check that list yourself. Effectively, only 16 of any much substantial industries is left on that list, and that was the case for quite some time, a decade or more. > If people venture on to criticise China, can they do so with something more that Internet meme level evidence? Could you share a link to the list you're referring to?
- fspeech 8y ago
  See http://www.ndrc.gov.cn/zcfb/zcfbl/201706/W020170628553266458339.pdf http://www.ndrc.gov.cn/zcfb/zcfbl/201706/W020170628553266458... Restricted list on foreign investments starts on page 22, forbidden list on page 24. The first twenty pages are encouraged.

seanmcdirmid 8y ago

JV has only ever been for some industries. Microsoft, for example, has always operated in China as a completely owned foreign branch. The government even gave them cheap land to build their headquarters.

deathhand 8y ago
That is not entirely true. 21Vianet is the only Microsoft cloud provider allowed by the CCP. They are not Microsoft in anyway, shape, or form. In fact if you are a subscriber of their services there is a lag in updates.(presumably so the CCP can review first)
- seanmcdirmid 8y ago
  That is not Microsoft though, and it is not a JV. Rather, Microsoft has decided to outsource its Azure cloud operations in China completely due to government regulation. It wasn't that they had to have a partner, it was that they couldn't do it at all. Microsoft still exists in China, they still have a few thousand employees there in sales and R&D that are entirely paid by Microsoft.

nosleeptill 8y ago

Yes, China doesn't need to steal much of anything, because in order to manufacture in China you need to hand over your IP to your Chinese partner company. Your Chinese partner company has another partner, the Chinese Government, so in effect when you manufacture in China you need to share your IP with the Chinese government, and they share the information you gave them with any Chinese company that could benefit. Passing all the laws won't matter, because western companies are just handing their IP to the Chinese government.

withhighprod 8y ago
You could almost substitute Chinese with USA above
metacritic12 8y ago
The nature of "laws" are also different in China versus a rule-based society like the USA (heck even Europe is less rule-based than the US). Even if China nominally had a law against IP theft, on the ground in it can be very different. They could (and do as the stories below show) ask companies to "voluntarily share their methods" and when they don',t, towns can delay permits, throw up selective barriers, and put in all sorts of disadvantages that are not officially codified. The west would be smart to wait to see how easy it really is to do business in China without giving over IP before giving China credit. China has been playing the "we passed a new law/speech" game to buy time for a long time, but the walk is far from following the talk. I hope China is serious, but only time will tell, not the law.
- shard972 8y ago
  > The west would be smart to wait to see how easy it really is to do business in China without giving over IP before giving China credit. Has this not already happened? HPE is majority owned Chinese company now isn't it?
  - outworlder 8y ago
    What are you talking about?

stretchwithme 8y ago

It was ended for automakers in April 2018. https://www.nytimes.com/2018/04/17/business/china-auto-electric-cars-joint-venture.html https://www.nytimes.com/2018/04/17/business/china-auto-elect...

kennxfl 8y ago

Remember when as a kid eating vegetables at dinner, you kept excusing yourself to go to the bathroom and consequently vegetables disappeared from your plate and in your mind you were like "this is a fool proof plan. No one will notice"? Well, China hopes you will only see its nothing but a solid business strategy for everyone yet...

solatic 8y ago

This isn't the only issue. China has a long laundry list of laws which are on the books and rarely enforced, because the central government's power is effectively limited to making sure that local enforcement toes the Party line, and not whether local enforcement is effective and uncorrupted. There may be laws forbidden IP theft, but good luck getting any of them to mean anything when dealing with local enforcement and courts.