I've watched key, core engineers and technical leaders work for US and European companies, develop their next generation products, then turn around and design and develop essentially the exact same thing for the Chinese market. They then build a company, in China, that makes essentially the same product, but for the Chinese Market, and with Chinese investors, etc.
Examples:
Thoratec/Abbot Heartmate III & CH Biomedical
Auris/Verb/J&J Robotic & Digital Solutions & Renovo Surgical
The ironic thing, is that some of these companies after success in China are working to sell and be competitive in the US and Europe.
It's not even secret or under the table anymore, it's overt and largely accepted as the way it is in our industry. A brave new world.
The other factor, is that it is very very difficult for a foreign company to do business and protect their assets in China, so often the wise companies don't even try. They often just license their stuff for the Chinese market to a Chinese company. That way they at least have a chance of not having it all just stolen.
This feels like the debate between tax evasion and tax avoidance. What the engineer did here going to an IP lawless place is more like tax avoidance. It has a bad smell but he legally exploited a loophole in the international IP system if I understood correctly. Sort of migrating to a tax haven to avoid taxes.
Unless there is something explicitly stated in your contract banning you from taking the "know-how" in your brains and use it elsewhere (so long as you don't breach any patent) then it sounds there is nothing technically wrong.
Which is why there are export bans on plenty of things to China, the US Gov (I'm not American) rightfully understands what's going on under the table and the easiest way to curb theft of high technology is an outright ban (Nvidia products, etc).
I think it's a cultural thing as well, some sort of hustle culture, as the Chinese citizens that moved to NZ when I grew up loved to flout rules & laws around things like the property markets etc - one big problem was Chinese nationals buying up as much NZ baby formula & milk poweder as they could get, hiking the price & selling/sending it to China, so much that NZ experienced shortages for Kiwi mothers trying to feed their babies, so much so that supermarkets had to instate a X per person policy. When I worked in one during 1st year uni I would get literally screamed at in Mandarin by angry and aggressive Chinese nationals with trolleys full of baby formula.
And keep in mind that all of that started only because of the big scare where Chinese baby formula was found to have melamine in it (https://en.wikipedia.org/wiki/2008_Chinese_milk_scandal) killing 6 babies, affecting hundreds of thousands. All because Sanlu's execs wanted more $$$ so they cut their product.
Am not a lawyer or even a tax expert, just was noting that for non-experts in these domains this scenario look similar (China is doing to IP what tax havens did for taxes).
> It's that I'm saying they design a very specific thing, a very specific way, for hire, then go make that exact specific thing, that same specific way.
I really doubt this unless all the inputs are commoditised. Industrial espionage usually fails because if you don’t have the know how to make the tools that make the tools it’s difficult to impossible to literally copy it. Not saying what you’re saying doesn’t happen, it does, all the time. But usually the engineering is substantially different if only because different things are cheap or expensive, or just unavailable.
> If it were in any other country but China, it wouldn't be allowed to happen.
Historically, the US, Japan, Korea, Taiwan all did it. No doubt Vietnam does it now too. Not like they have an excellent civil legal system. Joys of working in developing countries.
> if you don’t have the know how to make the tools that make the tools it’s difficult to impossible to literally copy it.
Smart and knowledgable people in a certain field, but who are slightly stuck, can be helped by a few tiny details. If someone can provide a specific manual or piece of documentation, or just a photo copy or image of some key detail then those smart and knowledgable people can pass the hurdle and continue.
Exactly, and now days you can buy most tools you would need on ebay. Need a huge cnc milling machine? Ebay, Need an injection molding machine? Packaging equipment, whatever. Even medical equipment
Even inside itself: filmmakers went to remote Los Angeles in the early 1900s because Thomas Edison, in NJ, held most of the patents on motion picture cameras and out west they were much more difficult to enforce.
What, should we let each country "have their turn" at morals, ethics and ideas from a hundred years ago or more?
I mean if that's the case the so be it, but they should expect protectionism in response - US already bans export of certain technologies to China, if we embrace the differences in views on IP theft, how are Western countries meant to protect the IP they invested money in nowadays?
Or do we just give it away for free? Who pays to develop this free IP then?
But was it state sponsored? My understanding is that it was mostly robber barrons doing their thing, which isn't really "The US", its more "People in the US".
I'll admit the failures of the US government just much as anyone, am and will always be a tough critic..
But let's not forget the greater context here.
We are talking about a communist country with very top down, state architected enterprises and actions with the USA, which is certainly not those things.
The US isn't perfect, by any means, I'm not trying to say that. Context, that's what I'm trying to have us remember here.
How is that context supposed to be relevant to the point? That China is doing a poorer job by trying to direct the process centrally rather than something more nimble?
I'm not trying to say anything in particular other than drawing conclusions by making comparisons the US from 100-200 years ago to China today isn't very relevant and therefore is not very useful.
My original comment that started this whole thread is similar. I'm not trying to communicate any kind of opinion on it. It's just an observation of things I've personally seen happen in the world. Others are putting their own opinions on if it's right or wrong. I'm not trying to say any of that, just share my honest observations on the world.
If you learn how to build a castel with a very specific era look and feel as an architect, would you not then be likely hired to build a similar castel elsewhere?
I Do this for a living, ave for 20 years. I've designed many "castles" with similar looks and feels, similar materials, they work similarly.
But I've never built the exact same castle, with the exact same Floorplan, with the exact same plans. That's what I'm highlighting that I've seen several times.
A cool aside, I love this song by Watsky called "cardboard castles". Having done this for 20 years (build "cardboard castles") I identify with it.
The espionage really is next level in China. It’s not just reconstructing software (that’s part of it) but stealing binaries (and source where they can) for everything along the way.
I worked at a large tech co with an assembly line in China and experienced this first hand. A routine scan of one of our calibration machines turned up a Trojan with a copy of all calibration software squirreled away. Fortunately nothing is network connected there, but it was obvious someone was planning to come back for it. The stash had our calibration software and the factory’s proprietary control software on it. Both companies sent security to watch the machine for 48 hours straight until a hard drive shredder could be procured to mutually assure each party no software would leak. It was nuts, but apparently common.
Just Google "Chinese protectionist" and then any industry. The Chinese government has been actively targeting everything from CNC machine tools to medical devices and semiconductors for decades. Some industries with more success than others. Anything they import, especially industrial equipment like textile looms, cnc machines, semiconductor equipment, etc. There are big, long term, well funded pushes to manufacture indigenous versions of just about everything. Airplanes, jet engines, computer chips, industrial equipment, on and on
Mainand Chinese culture owes itself more to Stalin than to Confucius. If you lived in USSR stories like this have certain warmth of deep cultural connect.
That's not "the deal". It's illegal. No one on either side agreed to do this and had that been part of the negotiation, the offended party would have walked away or else agreed to a higher sale price in exchange for technology transfer.
According to who? Sovereign states have their own laws, that's what makes them sovereign.
You claim that companies wouldn't have done business in China (in the times before our current Second Cold War) had they known about the lack of IP law enforcement there. I think companies who outsourced to China knew very well what was going on, and calculated that they'd still come out ahead.
I agree with this. The executives that made the decision to outsource and offshore understood that near term gains would come with long term consequences, they always do. Those executives did very well by those short term gains.
According to international trade law and China itself. [1] People are making absolutely wild, misinformed claims that don't belong here. Claiming executives knew what they were getting into is pure conjecture.
> Sovereign states have their own laws, that's what makes them sovereign.
You're making a grossly misinformed claim here. Sovereign countries also participate outside their borders and are subject to the international agreements they participate in.
> Claiming executives knew what they were getting into is pure conjecture.
Schrodinger's executive - when things go well, it's because they meticulously planned every detail. When things go wrong, suddenly they know less about their business than my grandma does.
What is the cause of this habit of making up excuses for people that get massive compensation but never take any responsibility?
Do you understand that the side of this argument you're representing is making excuses for internationally illegal theft as, "well they sure had it coming?"
The side you are representing was trusted with safekeeping this information. They purposefully placed it into the jurisdiction where it is frequently, systematically stolen. They clearly did this to save a few bucks. Quite reasonably, some people are asking, why do they face no accountability for this decision.
You are coming up with excuses like "well they couldn't possibly be aware of information that was widely avaliable in mass media since 2010 at least.
Would you accept this sort of excuse if someone was in charge of safekeeping your child and they took your kid for a walk through an area known for violence and murder?
I can no longer follow your argument, sorry. This is blatantly moving goalposts to excuse theft and defend what exactly? Are you suggesting industrial theft at a mass scale is excusable because they knew the risks? That is the definition of victim-blaming.
Shareholders are victims, executives are their agents that acted against shareholder’s long term interests.
Here is a better example; you trust the bank with your money, bank gets robbed. The criminals are gonna be criminals. But why is the bank vault made of cardboard, and why is the password ‘1234’? Imagine the same bank keeps getting robbed for 10 years, and they make no attempt to fix things.
Should the management still get their bonus? Should they be help to account? At some point you have to start asking if the bank management is in on the crime.
This is so obnoxiously wrong. You could add qualifications to your statement to be less wrong but your statement as is is stupid. When I'm banging my wife is it my duty to start banging on the walls and bellow at my sleeping kids to let them know what I'm up to?
It "feels OK", stripped of context, but nevertheless results in your industries slowly withering and getting taken over by their new Chinese competitors in what used to be their home market.
If you remove uniforms from a soccer match, you can celebrate each individual player's goal. But the team that forgets they are (or should be) playing a team game will be obliterated.
Everyone should've seen what happened to Cisco and thought better, but short sighted execs focused only on next quarter gladly opened the gates and accepted the horse.
Everyone did see it coming. Interviews of experts on TV, talked about at the coffee table at every industry in the west. But since the stockmarket demands constant growth we have to move production to china. And when the move is done, the CEO has a nice rep-sheet showing how much profits went up while he was working at the company and gets hired by the next one.
How is that related? Are you actually saying that the US was being unfair to Germany by stepping on their IP? Of all the criticisms of that program I’ve never heard “but won’t somebody think of the Germans” lol.
Also, two wrongs don’t make a right, and 1945 was 2-3 scientific revolutions ago
I mean its still pretty hypocritical - the US is happy to take in literal Nazi war criminals to stay as a super power, yet they start clutching pearls if a developing country tries and poach some talent with IP knowledge.
Not to say I subscribe to the notion of intellectual property, but I would expect military secrets to be treated differently than trade secrets for purposes of IP.
Perhaps that is an American cultural tradition that China is unlikely to respect.
>it's overt and largely accepted as the way it is in our industry. A brave new world.
What alternative is there? The only protection there ever was for taking business secrets was patent enforcement, civil lawsuits or prison. If a foreign government won't cooperate on any of those things, what can you do?
The only answer humanity has ever come up with is something like a government intelligence agency, where everything is obfuscated by clearance levels and need to know compartmentalization, and any violations are handled criminally, with armies of full time counter espionage people. That just wouldn't work in the corporate world.
> some of these companies after success in China are working to sell and be competitive in the US and Europe.
Just out of curiosity: can't these companies be sued by the IP holding company when they try to sell outside of China, and be forbidden to sell their products in US and Europe?
Yes, but by the time all that happens the patent protection is likely to have run out.
Basically what I've seen is new tech is designed and released here, owns the market for 10 or so years, by then one of these companies in question has started to get momentum I the Chinese market, then 15 or so years after they start to think about coming back to this market, and by then the IP protection has run out.
I've watched key, core engineers and technical leaders work for US and European companies, develop their next generation products, then turn around and design and develop essentially the exact same thing for the Chinese market. They then build a company, in China, that makes essentially the same product, but for the Chinese Market, and with Chinese investors, etc.
Examples: Thoratec/Abbot Heartmate III & CH Biomedical
Auris/Verb/J&J Robotic & Digital Solutions & Renovo Surgical
The ironic thing, is that some of these companies after success in China are working to sell and be competitive in the US and Europe.
It's not even secret or under the table anymore, it's overt and largely accepted as the way it is in our industry. A brave new world.
The other factor, is that it is very very difficult for a foreign company to do business and protect their assets in China, so often the wise companies don't even try. They often just license their stuff for the Chinese market to a Chinese company. That way they at least have a chance of not having it all just stolen.