Posted on 05/24/2019 9:13:47 PM PDT by SeekAndFind
Most Americans have never thought twice about intellectual property. But they should.
The US Patent & Trade Office estimates that the intellectual property associated with 81 industries added $6.6 trillion to global GDP in 2014, the last year there’s data. That same year, IP-intensive industries accounted for a staggering 38% of U.S. GDP, a figure that may approach 50% today thanks to the speed at which technology is advancing.
Our nation depends on it.
So does your investment portfolio.
A recent CNBC poll found that 1 in 5 American companies have reported that the Chinese have stolen intellectual property from them over the past year.
Damages are hard to calculate but estimates range from $225 billion to $600 billion annually.
Not total.
Not over time.
A year.
That’s why this is so critical and why – love him or hate him – the President must be tough on China when it comes to this issue.
Chinese officials don’t see it this way, of course.
They want the party to continue because accessing valuable intellectual property is what’s allowed that nation to come so far and grow so fast over the past 60 years. It’s also why China’s economy now threatens to overtake our own as the world’s most valuable.
Many Americans understand this instinctively because the concept of protecting innovation is as natural to us as watching the sun rise each day. Many Chinese, on the other hand, view the concept of intellectual property as a foreign imposition symbolic of Chinese exploitation in the early part of the 20th century.
Most intellectual property theft occurs in one of two ways – a) via dirty tricks like espionage or spying and b) forced technology transfer via tremendously one-sided partnerships favoring Chinese corporations, especially those acting in concert with the government.
The situation is so bad that more than half of all technology owned by Chinese firms came from or was obtained directly from foreign companies according to a 2015 paper on the matter by the Minneapolis Fed.
I think, incidentally, that’s conservative and the figure may be as high as 70%, especially if we’re talking about military or industrial property used in highly specialized processes and materials.
Remember Blackberry?
Here’s the “Redberry”, a Chinese knockoff fielded by Unicom on eve of RIM’s long-delayed 2006 Chinese debut there…
Figure 1 China Unicom, RIM, Michael Bissell
Here’s a BMW X5 and the Shuanghuan CEO…
What makes this so challenging is that “intellectual property” can be anything from manuscripts to engineering specs, from car parts to electronic parts, from graphic arts to digital code and more.
Some of the funnier knockoffs I’ve seen over the years include Tids laundry detergent, people wearing Mike shoes, Pizza Huh and, one of my personal favorites, Dolce & Banana.
Figure 2 Canyouactually.com
Effectively, intellectual property – “IP” for short – broadly includes anything resulting from uniquely applied creativity. It can be tangible – meaning you can touch it – or intangible – meaning you can’t.
Broadly speaking, there are four types of intellectual property:
Interestingly, China is beginning to get the message.
Beijing issued a memo last year – the first and most detailed on protecting intellectual property to date – highlighting 38 different punishments for companies stealing IP or otherwise appropriating it ranging from a cutoff in government funding to restricted access to foreign companies and even a “blackmark” in official databases.
There’s also the “Rover case.”
This one’s a big deal.
Jaguar Land Rover won a landmark legal decision in Chinese court earlier this year that will force Landwind to stop selling a $22,000 knockoff of Land Rover’s $60,000 Evoque. And, importantly, pay damages.
Now for the tough part.
It’s easy to view China as the aggressor here in terms of who stole what from whom but that’s a matter of perspective. Many people are surprised to learn that the Chinese invented paper in 105 AD, gun powder in 1,000 AD, the crossbow as early as 2000 BC, umbrellas from around 2,500 BC, and booze almost 9,000 years ago. Same, too, with the compass, movable type, silk… centuries before that knowledge would show up in the west.
China could’ve easily smeared the West with the same allegations of intellectual theft centuries ago.
What’s next?
I’ve spent decades in the Far East, as a businessman, a father, an investor, and as student of history so I like to think that I’ve got the tiniest bit of insight here.
Confucian thought plays a huge part in Chinese culture. And that, by its very definition includes concepts related to mutual responsibility, natural harmony and moral uprightness.
China is waking up to these things. Perhaps not fast enough for Westerners, but the notion that strong intellectual property protection is essential for China’s ongoing development.
Forget about the government and, instead, concentrate on the rise of Chinese consumerism. My favorite choice – albeit a very controversial one at the moment – is Alibaba Group Holdings Inc. (NYSE:BABA).
Top line revenues are growing by 56% a year on average with cloud computing and digital media coming in at 70%+. Amazon.com Inc. (NasdaqGS:AMZN), by comparison, delivered just 25% fiscal year over year.
China’s Alibaba retail marketplace accounts for 654 million outlets, roughly twice the US population and an increase of more than 102 million. Mobile users are now 721 million and rising.
This is a numbers game pure and simple.
By 2020 – less than a year from now – the Chinese e-commerce market may be worth more than all the e-commerce markets of the United States, France, the United Kingdom, Japan, and Germany combined.
Trade war or not, buying Alibaba now is like getting the best of Twitter Inc. (NYSE:TWTR), Netflix Inc. (NasdaqGS:NFLX), Paypal Holdings Inc. (NasdaqGS:PYPL), Amazon.com Inc. (NasdaqGS:AMZN), Alphabet Inc. (NasdaqGS:GOOG) and even eBay Inc. (NasdaqGS:EBAY) in a single stock worth nearly one-half trillion dollars.
BABA is trading at $164.05 a share as I type Tuesday morning and clearly under trade-related pressure. But I think that’s actually your opening.
I believe shares will rocket higher to $200+ dollars a share when a trade deal ultimately does get announced.
Likely before the ink’s even dry.
Until next time,
Remember those Seagway upright two-wheeled electric vehicles?
Invented here, knocked off by Chinese thieves.
They finally were going bankrupt:
Guess WHO bought them?
The Chinese company that had been tormenting them all those years.
It was victory by the law BREAKER, the imitator.
China will never enforce intellectual property rights. Their economy is dependent on theft. If they don’t produce enough jobs to keep their young adults fully employed then they will face severe social unrest.
CBS News ^ | January 19, 2011 | Stephanie Condon
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We should NOT be doing any business with China, nor educating their students, or allowing any Chinese into the US. Kick them all out as it is hard and impossible to know who is a spy or a thief.
But if we fail, then the whole world, including the United States, including all that we have known and cared for, will sink into the abyss of a new Dark Age made more sinister, and perhaps more protracted, by the lights of perverted science.
In the nearly 8 decades since Churchill exhorted his nation to its finest hour by warning of the danger of "perverted science" we face a larger, richer and far more technologically advanced potential adversary in China.
The repression visited by the Nazis on their own people and upon occupied peoples will be as nothing compared to a dark age empowered by modern technology. All that stands between that technology and our serfdom in a new dark age is our economy which funds our military. Lose that and then we have nothing left but to fall upon the mercies of a nation historically capable of horrors and murders on an inconceivable scale.
The Chinese killed 60 million of their own in a great leap forward and they did it without technology. The madness of their cultural revolution exceeded even that of the French Revolution. For a quarter of a century we funded the stunning technological revolution of China presuming their good intentions. Their history, their repression of their own people and their aggression at strategic points around the globe makes that presumption mortally dangerous.
The Chinese will not wage actual war on us until we are economically or technologically defenseless. They are waging preemptive war now, a war which if lost promises repression that will equal a sci-fi movie. To those who are inclined to discount the danger described here as gross exaggeration or cheap fear mongering, I ask only that the advantage of passivity in this war be compared to the downside of losing it.
This is not a war for economic dominance, this is a war for survival.The trade war is our 1940.
Nevertheless, I want to hear what you have to say.
Sometimes it's deception like the HiPhone/iPhone game mentioned but as often as not, they will advertise a name brand and what arrives is a cheap knock off. There are no consumer protections out here so once they have your money you are screwed. They have no ethics, no scruples; they just want your money.
There is a problem in these parts with what they call "boiler room" operations, that is well spoken westerners who do telephone solicitation of retirees from responsive ads offering higher than average investment returns to the unsophisticated. Just like the Nigerian e-mails offering millions to someone who will help a tribal queen claim her inheritance, it is all about the numbers. Cast a thousands e-mails or baited hooks and they will find a fish who they can sweet talk into sending them a few dollars which they will never see again. With zero consumer protections in this part of the world any investment made by the unwary is gone forever.
The Chinese have their own version of the boiler room operations these days. Chicom nationals are lured to far away countries by deception or simple greed and put to work doing voice over internet protocol (VoiP)marketing of anything imaginable to Chinese back home: online gambling, drugs, online sex, extortion of all things imaginable. For every one that gets caught, six more emerge it seems.
"Government deports 235 Chinese scammers "
"...THE Immigration Department of the Ministry of Interior on Thursday deported 235 Chinese nationals, 35 of whom were female, via the Phnom Penh International Airport for their part in a Voice over Internet Protocol (VoIP) online money extortion scam...In a report by the ministry’s General Department of Immigration issued on Thursday, Cambodia has deported 755 Chinese nationals, of which 150 were women."
In Thailand, Cambodia, Vietnam or anywhere in the Pacific Rim the Chicom bosses will rent whole buildings for their VoiP operations.
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(In Malaysia)...Zahid said Malaysia has deported 416 Chinese nationals for their involvement in the so-called Macau Scam. "The deportations were conducted from 2014 to June this year," he told reporters at China World Hotel here, today (Wednesday). The scammers, he said, are currently serving time in Chinese prisons. Inspector-General of Police Tan Sri Mohamad Fuzi Harun, who was present, said the Macau scam victims, comprising both Malaysians and Chinese nationals, lost RM500 million in total."
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Sometimes what they are selling are people. That can be brides for lonely Chinese or for prostitution rings. There is a serious problem in the northern reaches of Vietnam in regard to abductions of teenage Viet girls for brides to middle and lower class Chinese men who would have little chance of ever finding a Chinese bride.
(In Pakistan)....FIA busts another Chinese human smuggling cell in Pakistan "Fifteen Chinese nationals including a woman were arrested by FIA Rawalpindi accused of trafficking Pakistani girls to China. The gang was led by a Chinese national Song Chuaoyang who was also arrested. Two Pakistani girls were recovered from the accused. A Christian and two Muslims girls were earlier sent back to their parents by the FIA authorities..."
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"Calls for screening as 77 Chinese nationals deported from Fiji"
Fiji's Opposition leader Ro Teimumu Kepa is calling on the government to screen everyone coming into the country following the deportation of 77 Chinese nationals for alleged telecom and online fraud cases.
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And the Thuggish are reaching the Americas as well.
(In Guyna)"Murder accused Chinese nationals jailed for illegal entry"
Three Chinese nationals recently arrested for illegal entry are wanted for murder in Brazil and China.....The charges against the three state that between December 1st, 2018 and December 31st, 2018, at Lethem, they entered Guyana illegally by crossing a land frontier and failed to present themselves to an immigration officer."
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Money is their God.
Anywhere in the world where there is a dishonest buck to be made the Chicoms will be neck deep in it.
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Having posted the reply #6 above it occurred to me that I should have sent you a heads up because I am interested in your reaction which I anticipate will not be entirely approving. Nevertheless, I want to hear what you have to say."
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Being retired in SE Asia for a decade now, I do not doubt your suggestion of their brutality for even a moment. The older generation which survived the political battles of the cultural revolution, the great purging of the impure revolutionaries, left only the tough nuts. Those who lived through it even as Xi did as a young boy are as determined as they are lacking a soul. And I agree the Chinese would not attempt a broad war against America at the present time, a war which they could not win even though it would be terribly bloody for all. I don't put it past them to made some play in a location of their choosing to win a symbolic battle. But a big push, one we could not back away from? Not now but at a later time perhaps.
If they do succeed in destroying us it will be death by a thousand cuts, at first economically and later in a very physical way.
My only reluctance to sign on completely to yours and perhaps my own idea of their road to world dominance has two parts:
1) For hundreds of years in modern history the Chinese have never been able to truly establish national rulers who could control the majority of the king makers. Mao won the war but always struggled to contain the populace. Xi has done a good job to date of decapitating, figuratively and otherwise, many of his upper power brokers. At the end of the day that is the only way to maintain power in China: through brute force. Xi may have had the constitution changed so he is now president for life but his reign is still young.
"...Xi Jinping is currently serving as General Secretary of the Communist Party of China, President of the People's Republic of China, and Chairman of the Central Military Commission. Often described as China's "paramount leader", in 2016 the CPC officially gave him the title of "core" leader."
If Xi fumbles the trade talks badly and if the economy tumbles, he could fall from grace and from the sky just as quickly as Lin Biao in 1971 "tragically died in a plane crash". Xi is firming up his control but I believe leadership in China is always a tenuous thing, subject to review by the "what have you done for me today?" crowd.
2) That batch of foot stomping, only child youth will be an even greater headache in the future without economic growth. The ones I see vacationing in the town where I am living in SE Asia are not the physically and mentally tough Chinese of the past. They are the new wannabe bourgeoisie, tough in a mob but not emotionally tough. They are nationalists through and through, but they are not the hardened communists willing to subsist on rice & turnips during the 1940's or the head in the clouds idealists ready to crash into each other in the streets of the cities during the cultural revolution. They have apartments and cars and televisions and smart phones and steadily rising incomes and their greatest worry is breaking a nail. They might answer a call to duty but like egg eatin' dogs, they aren't likely to give up their new attractions easily. They are self absorbed godless people who would put the typical American millennial to shame. It's gonna take a lot to get them off Weibo long enough to fight a war. The leadership tightly censors social media and controls the narrative but they will have their hands full if the economy stumbles badly. It is difficult to control an emerging consumer economy transitioning from an export based economy. They have long since given up any faith in god or Confucian rules of living. The Chinese younger generation is self-centered and volatile.
We owe China zero dollars.
China is the enemy of America.
Japan does not steal. They produce their own high quality products.
China steals, copies, and returns low quality trash.
Our Congressmen are cheap China copies.
China is Communist trash.
Sorry to disappoint you,but I agree with your #6 post
Japan stole in the 70’s, maybe later too. I had a Japanese knock-off Z-80 processor in my computer in the late 70’s. After advancing with theft they advanced on their own. China is already doing the same in some areas such as quantum communication.
china ping
Trump’s drawing of the line at this time is good and necessary, but it is only taking away China’s easiest money. China’s rapidly growing younger middle class is now hooked on consumerism and hedonism - they are better at it than our Millennials. They aren’t going to pick up rifles and march off to North Korea to fight the Yankee Imperialists. They’ll find a way to keep their lifestyles going, even if it means tossing the last of the Mao generation over the side of the boat. .
Thanks for the ping!
I completely agree with you and most FReepers on the "what", Which is that we should take a hard line on China to address several problems. Those being: (1) Intellectual property, (2) Environmental issues (pollution) and (3) Human rights abuses both through use of force and through technology (mass surveillance, etc.).
But, I disagree on the "why" and the "how"
First the "how". We have made a fundamental error in the way we are approaching these issues with China. Our direct threat posture won't work. In fact, the Communist party welcomes this behavior. They welcome it because China, and by China I mean the Party, needs an enemy to survive. They have to have a focused external threat that they can sell to the masses. They used to cast Japan in this role. Right now they are casting us in that role. Who plays the role doesn't really matter, they just need a workable villain. By playing their villain, we give them what they need most.
The most productive way to address issues With China (again, the Party) is to build a unified coalition of countries that deal directly with China that we can control. We actually had this machine built and ready to go, it was called The Trans Pacific Partnership (TPP) and included a dozen pacific rim countries. One of the main focus points of TPP was intellectual property. Using this approach would have given us the ability to set a world standard for IP (and other issues) that we could define and control and simultaneously denied the Party it's single focused external threat. Unfortunately, the President withdrew from TPP and for reasons that had more to do with our electoral map than what was most useful in the medium and long run.
Second, the "why". It's a mistake to deal with China like a western county. Westerners are outward looking. China is inward looking. This is why the Party needs it's external threat to survive. One half of China's military budget is devoted to internal security. The real threat to the Party isn't the United States, it's their own people. This is why a model like TPP is so important. I denies China military grade IP and protects our companies by using a standardized set of policies that we control. If China fragments in the next decade or so, the rift will most likely be between the wealthy maritime provinces and the interior (Beijing). If, and I think when that happens, we will be in a position to absorb the productive maritime provinces, and Taiwan, into our coalition and control them, while icing out Beijing, thereby neutralizing a military threat. But this can't happen if we use a singular external threat stance. I only happens if we cultivate internal divisions and let them express themselves organically.
In other words, is your objection that we scrapped the TPP, made ourselves a threatening target, and failed to enlist allies? Or, is your objection that considerations of national security are irrelevant and the war should be limited to obtaining treaty controls over China's cheating?
This latter question is not irrelevant. There are many posters here who believe that tariffs should be a way of life because a mercantilist nation is a prosperous and winning nation and the best route to that status is through tariffs. Subsumed within this point of view is the notion that there is no such thing as fair trade in a free-trade environment. All our trade treaties such as TPP have institutionalized cheating by the Chinese and attempts to litigate have uniformly failed. They would argue, the damage of a mercantilist society to the consumer is more than balanced by the benefits to the whole nation, to its national security, to the job sector overall etc.
So, if we could keep China on the straight and narrow, it is nevertheless in our best interest to restrict trading with them so that we can become a mercantilist nation, restoring manufacturing and high-tech and all these value-added industries.
The problem: Our thinking and our war aims become confused when one considers that punitive tariffs are the path to both mercantilism and to a more limited war aim, civilizing China.
I am trying to focus our war aims. Evidently we both agree there has to be an adjustment of China trade. If this is a trade war, is the war necessary? To achieve mercantilism? To achieve a fair playing field? What does victory look like?
Referring back to my original reply which I referred to you, what does defeat look like?
I am reading right now "Murder in the High Himalaya" by Jonathan Green, and it tell of the atrocities Chinese commit against the people of Tibet and their efforts to destroy that country.
The Chinese will use every perceived advantage they might have to distort markets and dominate world trade. Their saber rattling will drive up prices in the short term but cause further exploration in the Americas.
Mining and smelting has a bad image and is hated by all tree kissers. That is what drove most companies to halt or postpone development in many parts of the Americas. But this is the right time and the right president to get the job done. The Chinese will damage their own markets ultimately if threats create an incentive to find and develop other sources.
I've had personal experience with the loons who hate all mining from back in the 1990's. But technology has improved dramatically and the rewards will ultimately justify the front end costs here in America.
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