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You left out the biggest cost of all: technology theft. The Chinese government wants its manufacturers to watch for technologies that could be of economic or mi

by SiVal 11y ago

You left out the biggest cost of all: technology theft. The Chinese government wants its manufacturers to watch for technologies that could be of economic or military value and to pass them on to relevant Chinese organizations for use. When the local Party leader's son starts producing your "specialty machine vision systems" in his factory down the road, are you going to go to the Party-controlled court and sue him? If I had a "technology" that was immediately discernible by any buyer (a plastic cup, a game board with an image printed on paper and glued to cardboard), I might make it in China, but for any non-obvious technology, I would assume that any money I saved on COST by making it in China, I would lose on PRICE when my manufacturer's brother-in-law started competing with me.

rjdagost 11y ago
You are correct, IP is a bit of a joke in China (oh, the stories I wish I could tell...). You can't rely on the Chinese legal system to protect your IP so you have to take a number of technical precautions to ensure that it is extremely difficult to knock off your product even with inside the factory knowledge. My company has gotten burned about this in the past. Needless to say, this all adds cost to your product.
rgbrenner 11y ago
Brother-in-law? Sometimes the link isn't so indirect. For example, GM has a partnership (since foreign manufacturers aren't permitted to have majority ownership (last I checked)) with Chery Motors. Chery has access to everything produced in that plant, including tooling, tech, designs, etc. Chery takes this and uses it in their own plants to produce cars that compete directly with GM (and they export these cars too). This is why many manufacturers use last-gen tech in their products within China.
mistermann 11y ago
> You left out the biggest cost of all: technology theft. Or plain old fashioned outright theft. I did business for a few years with a Chinese supplier, the contact was made from a (local Chinese) reliable friend of many years who did international business so had contacts. After two years of a pretty seamless business relationship, one day the supplier decided to simply disappear with the $45k deposit on an order.
- icelancer 11y ago
  We are pretty sure that a previous supplier of ours was running their machines on a competitor's (of mine) dime and billing them for materials/goods and burying it in the sales sheets, while shipping us the product that was near-identical to theirs but with our logos and branding on it. I understand this is fairly common when making knockoff goods, too.
icelancer 11y ago
>You left out the biggest cost of all: technology theft. Absolutely. The factories I deal with OPENLY DISCLOSE what contracts they have (not price, but brands) with other companies in my line of business. This is unbelievable. I didn't even ask for this information - and never would want it, given the implications - but they VOLUNTEERED it as part of their sales pitch. And what are those companies - many of them multimillion dollar entities - going to do about it? Switch factories? Certainly not file a lawsuit. It's crazy.

by SiVal 11y ago

rjdagost 11y ago

You are correct, IP is a bit of a joke in China (oh, the stories I wish I could tell...). You can't rely on the Chinese legal system to protect your IP so you have to take a number of technical precautions to ensure that it is extremely difficult to knock off your product even with inside the factory knowledge. My company has gotten burned about this in the past. Needless to say, this all adds cost to your product.

rgbrenner 11y ago

Brother-in-law? Sometimes the link isn't so indirect. For example, GM has a partnership (since foreign manufacturers aren't permitted to have majority ownership (last I checked)) with Chery Motors. Chery has access to everything produced in that plant, including tooling, tech, designs, etc. Chery takes this and uses it in their own plants to produce cars that compete directly with GM (and they export these cars too). This is why many manufacturers use last-gen tech in their products within China.

mistermann 11y ago

> You left out the biggest cost of all: technology theft. Or plain old fashioned outright theft. I did business for a few years with a Chinese supplier, the contact was made from a (local Chinese) reliable friend of many years who did international business so had contacts. After two years of a pretty seamless business relationship, one day the supplier decided to simply disappear with the $45k deposit on an order.

icelancer 11y ago
We are pretty sure that a previous supplier of ours was running their machines on a competitor's (of mine) dime and billing them for materials/goods and burying it in the sales sheets, while shipping us the product that was near-identical to theirs but with our logos and branding on it. I understand this is fairly common when making knockoff goods, too.

icelancer 11y ago

>You left out the biggest cost of all: technology theft. Absolutely. The factories I deal with OPENLY DISCLOSE what contracts they have (not price, but brands) with other companies in my line of business. This is unbelievable. I didn't even ask for this information - and never would want it, given the implications - but they VOLUNTEERED it as part of their sales pitch. And what are those companies - many of them multimillion dollar entities - going to do about it? Switch factories? Certainly not file a lawsuit. It's crazy.