Framing detector is on. I have an issue with the word "forced". Nobody is forcing you with a gun to your head. Don't want to be "forced" - don't go do business in China.
eg. in 2019, nobody is ‘forced’ to give their data to Google/Apple/Facebook, but actually avoiding those companies entirely is extremely difficult/nigh impossible.
Not engaging with China as a market or producer is practically impossible for many companies. When the choice is (a) give up your business by handing your IP over to Chinese competitors or (b) give up your business by losing access to critical supply chain/logistics, then that can be correctly characterised as ‘being forced’.
Going forward China is going for broke... so though your comment is true, it's also true that China will try to best the West in everything as a final grasp at power as the West attempts to contain it. The result of these actions will determine this century. So right now is a very good time to figure out other places to get your products made. And stop trying to enter their market. They are capable and very motivated for control all of their market at the cost of the world.
> Nobody is forcing you with a gun to your head. Don't want to be "forced" - don't go do business in China.
What if the gun is economic?
Ok - I'm gonna say this is not my element or knowledge - so I'm pulling everything from my nether regions...
But what if the only option - because you need to increase your profit for your shareholders - is either this (play in China by their rules) or "go out of business"; that is, the "gun" here is the choice between staying solvent and maybe even profiting (short term), or shooting yourself in the head (figuratively)?
Do your shareholders care if the IP is transferred, so long as they make money? Maybe they don't understand that continually creating IP to transfer isn't a long-term plan, but maybe they don't care - they're just as parasitical, and when you're dried up, they've moved on or will move on to the next host?
You are right that nobody has to do business in China, but how do you expect them to do business elsewhere?
Let's say a company in Europe wants to manufacture widgets for sale - worldwide or at home, no matter. They have to build a factory to make those widgets, but to do that, they need quick, fast, and cheap access to say, plastics, screws, molds, electronic parts, PCB manufacture, and the list goes on and on and on.
Where do they get that? None of that exists nearby; maybe at one time it did, but not any more. Some or all of that stuff they can get in China, but now they have all the costs of getting the materials to them (import/export), then quality assurance (if they don't have someone in China checking for them), etc. At a certain point, they are now spending a ton of money as overhead just to get the parts to make the widgets, because that infrastructure is no longer available nearby. That cost will be passed along to the consumer - but as soon as that widget, or something similar, can be purchased cheaper closer to the source of those components, to eliminate those extra costs...well, they're not going to go with the local guy any longer.
You (that is, the government) could try to tariff their way out of it, but unless the country and citizens are willing to completely obliterate their environment to make manufacturing of those components as cheap as they are in China (and China, btw, is experiencing this, and I believe this is what is driving their investment in countries in Africa and elsewhere - they are essentially offshoring what was offshored to them; externalizing the environmental deficits to another country - maybe also cheaper labor?)...
I'm not going to belabor this any longer; I just think it's not as simple as saying "well, don't make stuff in China"...
> Ironically, there are aircraft carriers moving around the oceans forcing some countries regarding some agenda.
What irony are you referencing specifically? The United States' usage of carriers to threaten the PRC? The PRC's usage of carriers to threaten the ROC? Some other countries?
Epitome of lemming syndrome: OMG we have to setup shop in China so we can produce goods more cheaply. But if we do we're forced to give up the tech. Can we just not do that? But all our competitors are going to do it.
If by "lemming syndrome" you mean "tragedy of the commons", you're entirely right. This is exactly why either a concerted US government push-back is needed (as is occurring now) or an acceptance of the tech transference (as occurred before).
No not tragedy of the commons, it's that businesses are so focused on growing short term profits they'll enter into efforts that yield profits in the three year timeframe that are long term losers (giving up IP) in the medium to long term. It's madness.
> No not tragedy of the commons, it's that businesses are so focused on growing short term profits they'll enter into efforts that yield profits in the three year timeframe that are long term losers (giving up IP) in the medium to long term. It's madness.
Okay sure it's a combination of searching for short-term profits and tragedy of the commons. Individuals acting in their own self-interest against an overall greater good.
IMHO, government has little real power to pragmatically curtail this as a formal trade issue. If it's legally not allowed, it's not like employees in China can't walk away with the tech anyway. The question is where you want to build your technology base and where short term greed drives you to build.
Private IP of companies isn't any sort of public commons. By deciding to build stuff in China, they've already left the only arguable commons part of that - the common labor knowledge base that forms naturally where you put your actual build operations.
Well the US could for example put up trade barriers that are costly enough for China to change. Of course it might not work due to lack of US political will, or strong Chinese political will, or any number of reasons, but it's not like nothing is possible. I'm not necessarily saying this is a good idea, but it's not like this is some magically impossible problem to solve.
It's not 'tragedy of the commons', its a company assessing the value of their intellectual property, assessing the value of the China market/savings from manufacturing there and deciding 'the cost is worth it'.
I think a unique problem with China (and India too in the future) is that it is so big that the consequences of transfer materialize faster and and in bigger ways. Unlike smaller developing nations, China seems to be pretty good at learning and implementing, either as a matter of policy or through the sheer size of its markets and burgeoning professional class. Siemens and Kawasaki probably didn't expect China to internalize their high speed rail tech in a few short years, and proceed to compete internationally against them. Where do you draw the line from acceptable transfer? Is stealing a retroactively-applied term when someone exceeds the teacher or can the terms of transfer be done better upfront?
In other words, I wonder if there's a way to adjust tech transfers to developing countries based on not just the level of development, but also how 'dynamic' the developing country is? Is it fair to punish a country having a population and policies in place that focus on learning and development?
What is it about China that allowed them to so quickly internalize that high speed rail tech so they could compete with Siemens or Kawasaki?
Meanwhile, in the US, our government is on the verge of shutdown every year because we have to raise some artificial debt ceiling to keep the federal government operating.
Why are the Chinese so much more efficient? Americans, even progressive Americans, often think of government being large, inefficient, and bloated. What’s the disconnect?
I would say the difference is that Chinese political leaders are very concerned with improving their country while lining their own pockets, while American politicians are mostly concerned with lining their own pockets. Sure, they say all the right words to inspire people and get re-elected, but it's 90% about the $$$ for them personally.
Not being an expert or qualified on this, my speculation is size, as in a reasonably-educated population and resources to support them, not necessarily government efficiency or competency. The size is what enables a complex supply chain and network that high tech companies need. You can transfer tech to a smaller country like Vietnam all you want, but it will be forced to specialize into only a few industries as it matures
if it wants to keep an edge (like with Korea, Taiwan, etc.).
Edit: Maybe another thing is that value in technology is a mix of design and process. It's one thing to give the other side a blueprint, but it's another to force a joint-venture and teach people on the ground how to do things hands-on.
I think that greed is easier to manage when expanding into underserved & undercapitalized markets - in that environment most capital increase becomes an easily spread general improvement in life quality.
When trying to balance inequality in well-capitalized, mature markets, you fundamentally have to trade one set of ownership against another on a much more frequent basis. To replace one set of capital investments with another (even when the new investments are an improvement), requires displacement of the old owners and old industry; see fossil fuels and climate crisis as a major example. Government becomes a battleground between the capital interests and is often where progress is neutralized.
it helps to avoid a problem that existed since colonial times where colonial powers buy raw materials cheaply, manufactures in home country then exports processed/manufactured goods to colonies at orders of magnitude higher prices
If negative pressure is sustained long enough, alternatives will be developed. How long has China held a dominant position in electronics assembly? Less than 20 years...and that would be generous.
So things can change, definitely not overnight, but in a few years.
Well, before China, it was Japan. They dominated the 80s and a good chunk of the 90s. They still have a lead in markets such as cameras and are fairly competitive for technologies like Flash, which they actually invented. Samsung passed Toshiba a decade ago or so.
Yeah, those have been displacing Japan along with China. I mentioned Samsung, but was mostly focusing on Japan as an example of a country whose star can and did dim, as a potential parallel for future China. It has taken longer than the few years the parent poster cited.
It's also worth noting that China still has a long way to go when you look at particular markets such as semiconductors, where export controls have slowed them down.
I agree, if there is a region with the labor force and good policy for investment plus infra and a few other things. Vietnam is a close enough option, but other options are not abundant, so more than just a few years would be a plausible answer for me.
China for long was a phenomenal combination of size, quality, and a price for workforce you can't find anywhere.
Eastern Europe - mass higher education check, everything else no
India - size yes, but nothing else, and there is "license raj" on top of that. One sweetener is the future domestic market appeal
Vietnam - mini-China, good primary and vocational education check, size OK, industry, some leftovers from pre-privatisation era, check - pretty much same as China was in that regard.
Pakistan... very cheap for sure, existing industry is nonexistent, (though Pakistan once had a backend FAB in late eighties!) and with Rupee hitting the bottom now, you can overlook how poor the logistics will be.
I frequently think that the China is not actually the bad guy here. To me, tech transfer sounds like a good business practice. If I were going to spend billions of dollars buying something, I would seriously consider demanding the IP and know-how to make more of it myself in the future. That way I would have some assurance that my purchase wouldn’t become unsupported and this worthless and that I won’t get price-gauged once I’m locked in. Cough, Oracle, cough. And having one’s major purchases translate to economic growth seems entirely reasonable.
It seems to me that people mostly have problems with tech transfer because it appears to be the government mandating it. Maybe the right solution is for everyone else to start doing tech transfer, too.
Tech transfer to a limited extent for drugs in particular sound like a pretty good idea.
Of course technology transfer is good for the transferee. I would like a pony too.
What the article is talking about is the forced joint-ventures. Do you want to open up a factory to make your product in China? In many industries, that is not legal. You have to find a Chinese partner to do a joint venture with. You can't just pick any company to do the joint venture with either. Practically it needs to be one that has politically connected owners, so that you don't have endless problems with permits and inspections.
Even though the law states that technology transfer is not a condition of the JV, any politically connected JV partner is going to do what politicians ask of them, which is demand technology transfer. Therefore to do business in China, you're forced to transfer your tech.
Meanwhile in the U.S. if you want to start a business, you fire up Stripe Atlas and you're done in ten minutes.
Why is forcing a joint venture a bad deal? Isn’t that choice? You don’t have to do business in China.
Some of my friends that are the most angry about this topic, will on the other hand, defend American companies who pay low wages saying no one is forcing the workers to take those low paying jobs.
The problem is that China insists they don't do forced technology transfers, and gets angry themselves when e.g. the US cuts off Huawei. If the government openly said "you can't do business in China if you don't want to give us your tech", I don't think anyone would get angry about that, but it would put them in a substantially worse market position than they currently enjoy.
Having things stamped and signed on fancy paper is absolutely relevant. As the article describes, not having that fancy paper enables the government to brazenly lie, saying forced tech transfers are being stopped when they're actually being ramped up.
There's a happy middle ground here. Patents expire after 20 years and that's a form of tech transfer. Maybe China's 1 year is too short and the US' 20 years is too long?
Well, they should put tariffs and sanctions, sounds quite reasonable. EU and US is the only economic factor in the world after all. Whos gonna China sell to after that? Africa? Russia? :D
Not sure if that was sarcasm, but surely there's South America, South and Southeast Asia, and Australia. Though, obviously not all these places are on good terms with China either.
Forget politics, let's just see how well Huawei's Androids sell outside without Play infrastructure. My bet that people will only choose China's consumer software offerings is if they have absolutely no choice.
Given that having the source code to a system is a necessary part of modern security practice, it would actually be a very good precedent.
This assumption that it's alright for communications infrastructure to rely on trusting black boxes as long as those black boxes were designed by "allied" companies is madness. It doesn't particularly matter whether the gear is made by Qualcomm, Cisco, or Huawei - it's all suspect.
The ultimate path forward is for mobile nodes to stop trusting the network, entirely. But that's a long row to hoe with regards to access authorization without leaking identifiers.
> I wouldn’t go into China with any proprietary tech as a foreigner.
How about if you didn't own the company outright but were only a senior executive, and your pay was directly linked to YOY profit increases, ignoring the risk of having that technology stolen and used against you 5-10 years down the road?
