China Steps Up Trade Secret Theft from US Companies

and relatively cheap labor.

“In order to do business in China, non-Chinese companies must Partner with a Chinese company.”

These days, what you’ve asserted here, is only true in a very limited set of circumstances.

For example, one of my companies is an engineering/supply chain consulting firm and the other is a fully licensed CM factory. With our factory, I have the China government paying me VAT tax rebates on export. I don’t have a Chinese partner, for either of these companies.

That said, it is very difficult to get setup here, without a Chinese partner. It is a difficult convoluted process. And, the locals have no incentive to see a foreigner succeed.

But if Americans want to own a private factory here, and more fully control their own IP and what they allow Chinese nationals to see. From my view as an American that owns a factory in China. They can do it!

Get on a plane, come over here, stay a couple years getting it done, and voila, you own your own factory in China, without a Chinese partner.

International companies in a rush to get access to the largest single market in the world made their own bed with their rampant and unconstrained greed. They outsourced all of their pollution and their manufacturing jobs to China, and now they turnaround and breathlessly accuse China of ripping them off. I can't accept this kind of blatant hypocrisy.

But it’s not giving. Clesrly the international companies are still doing it and it’s because there’s still money to be made.

When will people stop droning the same tune over and over? Have you ever seen the situation on the ground? A foreign company can establish a wholely owned company in China with pretty much any business scope with 3 wide exception categories: mining strategic metals, news business (how Chinese editions of foreign media are done is a very long story,) seed stock (say thanks to Monsanto executive who was smart enough to thrown an insult on a Chinese official.) And this was true for at least a decade.

Shouldn't it be "What's better"? Or would you prefer the arrangement to not be done by 2 consenting parties?

> I try very, very, hard to avoid buying products made in China. I"m OK with every other country in the world, except China.

How does the first 3 paragraphs lead to your last paragraph?

This is the same as pharmaceutical companies entering India and knowingly agreeing to generics being produced so EpiPens don't cost 600$. You can't have it both ways, agree to pay for a burger, eat the burger then scream you've been robbed.

It think the problem is that you have a mistaken conception that those IP belongs to "You" and when the company shares it with Chinese companies, they are taking YOUR belonging and giving it to others. When in the very first place, you have nothing to do with the IP in the first place.

This is by the way, not against any WTO rules, or the US and other nations would have sued China long ago regarding this.

I honestly don't see it the way others do. China is having a lot of negative externalities imposed on it by manufacturing for multinationals. At least this transfer of IP does a bit to offset those externalities. No one wants to be a sweatshop forever.

Every major industrial nation rose by taking the IP of others by legal or illegal means. That includes Germany, Britain and the United States. Besides, IP as property is a very new concept historically and countries with IP will always believe it's immoral to "steal" IP as of course it is to their advantage for morality to be structured this way. Whereas countries without will always view IP in more flexible ways. Can ideas really be property? Humans are humans, we always try to rationalize and moralize the things we do even when the real underlying reason is stark naked self interest.

These are companies we all helped build in one way or another.

Their revenues boost our economy and pay for a lot of our govt services

There’s the official transfer of technology that happens in some circumstances when a western company wishes to do business in China, that is known and each company makes its own decisions on if this short term trade off is worthwhile.

Americans should be angered that the Chinese, years after joining the WTO, still restrict their markets in this way while enjoying open access to other markets.

This article does not touch the above. It’s about illegal, state sponsored theft of intellectual property. Are you asking why people should be upset another country is attacking companies based in the US and stealing their technology?

This is like you and me playing a game, and I find out you're a cheater.. and you say, 'what are you upset about? You invited me here'

That pollution is their own choice. Companies will take advantage but its certainly a choice of the Chinese.

As for why China is treated differently...they act differently. America trades with many countries and China is unique in many ways.

And do you hold the same belief in reverse? That the Chinese have brought on this retaliation themselves? Your argument and assertion are pointless.

NAFTA, which was heavily pushed by wall street and also welcomed by certain corporations, snuck in through NAFTA-friendly advisors that Clinton surrounded himself with. By establishing the principle that U.S. corporations could relocate production elsewhere and sell back into the United States, NAFTA undercut the bargaining power of American workers. Also by letting China into WTO in the 90s, China has been abusing the rules ever since, destroying manufacturing jobs in democratic countries around the world. Bush escalated the suffering by giving China most preferred status. Obama didn't do much to contest except some stern warnings against China.

And now we have a belligerent China, lead by a dictator, that is more powerful than USSR in its heydays, with signs of third-reich behaviors (muslim concentration camps, technology-thought controls), vastly increasing its military and technological weapons to confront and attack US and its allies. And technology companies are still transferring technologies to China, either willingly, unwillingly or unknowingly.

WALL STREET did this. Some corporations were complicit. Then most of them were. Bill Clinton destroyed the American workers. Every other presidents that followed didn't stand up. Trump actually confronted China.

And now WALL STREET is trying to stop the full $600B trade tariffs against China.

In the meantime, we're gradually building up a world community so that there isn't a sense of injustice or inequality on anyone's part. If your primary identity is human — rather than Chinese or American — then priorities are simpler. Do what's right for the world as a whole, and for humanity.

That change is too disruptive to do all at once, but it's gradually coming, generation by generation.

Now more people know about it, more people care about it, or are unhappy about it, so it gets more clicks. Plus the government is going to encourage this stuff instead of try to sweep it under the rug like they might have done in other situations when trying to smooth out relations. So yea, I think the zeitgeist is definitely heading towards a confrontation with China, whether that is by design or not. There also seems to be a sense of urgency as people are realizing (too late) that the longer this lopsided relationship goes the less chance the US has to salvage anything short of actually going to war, which would probably be a near world-ending situation.

While there are undoubtedly some forces from "above" pushing for this change, I think that government and corporate interest is still largely aligned with China. Both out parties are fairly comfortable with Chinese investment and lobbying despite a couple of scandals in the last three years. Sam Dastyari is on of the few cases where a politician was burned for it.

The bottom up forces include several University Chinese student clubs being ousted as both funded and influenced by the Chinese government. The Australian (centre right paper) is also focussing some of its limited investigative resources on this now too. Scholarship is also showing signs of changing directions, with many of the students I know working on the soft power and sharp power tactics of the chinese government. Things like Chinese Pacific Island nation investment and debt and the influence of Confucious centres in Universities.

I'm sorry that I can't provide sources—I am at work at the moment.

There is always anti-[something] "reporting". The russia hysteria has died down so now it's time for the china hysteria. After that, it'll be back to terrorism or something else.

We've always been at war with eurasia, or is it eastasia? Propaganda is ubiquitous and ever present. Has to be to maintain control over a gigantic country. What's true for china, russia and the EU is also true for us.

> Alternatively, it could be a top-down "agenda" to confront China and the media is gradually setting the zeitgeist to confront China.

There is definitely a battle between the pro- and anti- china factions amongst the elites. Seems like the anti-china group is gaining momentum.

> What are your thoughts?

It's obvious top-down agenda for sure. Just like with the constant anti-facebook spam in the media. But with china, the top doesn't seem united yet.

When we see start seeing anti-china spam from recode, theverge, businessinsider, dailybeast and the rest of the second rate propaganda outfits, then we can be sure it's a solid unified top-down agenda. Another dead giveaway is anti-china propaganda comments. If we see a sudden increase of those, then we can be sure that the top has unified. Until then, all we can do is wait.

Previous discussion of an Economist article positing this: https://news.ycombinator.com/item?id=16499939

If this is the case, it shouldn't be a surprise that reporting reflects this broader shift in outlook. However, this isn't mutually exclusive with a top-down edict, especially if the timeframe you're referring to is shorter than that implied by the broader perceptual shift argument.

I think the only difference is that more and more of the American public are now on the receiving end of the media rhetorics so people have more of an eye for these kinds of things now.

You're just making excuses.

The Chinese government is an authoritarian state that is completely and totally ruthless, anything thing the US has done is just a pretense for this behavior.

We're talking about a government that grounded up their own citizens with tanks and washed their remains down the drain: https://www.independent.co.uk/news/world/asia/tiananmen-squa...

Countries realise that US acts as bully when they can. China just is acting in its own interest. Though as an Indian, I have my own problems with China policies, the US companies crying about IP theft is just them not owning upto their previous actions(of shifting major IP to china due to cheap labour).

Furthermore:

1) China is stealing technology from everyone, not just the US.

2) They're also doing some hobby colonialism of their own in Africa.

Not to mention bullying anyone that dares call them out for their concentration camps. So China seems to be one more bully on the international stage. There's enough of those already.

It's like building a nuclear bomb. Any high school physics nerd knows perfectly well how it works, but the US performed over a thousand nuclear tests for a reason. The fine tuning is important.

Because genuinely, the human race as a whole is benefiting from that R&D — and also from China's appropriation of it — by getting cheaply produced implementations!

I don't know on what level AMD is cooperating with those folks, do you? And even if they did sell the top-level design details, that's not Intel's implementation.

I find it very strange that you are effectively calling culture “brainwashing”. Would you prefer we have no cultural values at all? How do you think that would even play out? Without a shared value system, you cannot have civilization.

That said, your overall point is correct: Sometimes cultural value systems differ in incompatible ways, unless reconciled somehow. Often, this means being faced with the cold, hard reality of weighing the cost vs benefit of “acting out” against a law or moral code expected of you by the other party (whether or not your culture agrees with those laws or morals is irrelevant, when we’re purely talking about tangible consequences).

If there are no consequences from us, I don’t think it’s fair we “play the victim”. If we (the US) don’t want this behavior to continue, we must specify and enforce a policy of tangible consequences that will occur in retaliation for every single instance of IP theft that occurs.

1. The Chinese company paid close to $300 million to UMC, a Taiwanese fab, for DRAM technology. The deal is reportedly structured highly favorable to UMC with larger future milestone payments upon delivery.

2. The transfer was approved by the Taiwan government. Taiwan is highly sensitive about technology transfer to China. It is at the 32nm node, a relatively dated technology node.

3. UMC is the 3rd largest fab in the world capable of 14nm logic fabs. Logic fabs used to be much more technologically sophisticated than DRAM fabs. Indeed before the great DRAM price war Taiwan had quite a few small DRAM fabs surviving on second hand equipment from logic fabs and logic fabs often tested their fab startup by making DRAMs (with their density DRAMs are a great way to flush out bugs in the manufacturing process). However DRAMs are very price sensitive commodities -- being capable of making DRAMs and capable of making profits from making DRAMs are two entirely different things.

4. Micron bought Rexchip of Taiwan, which was one of those standalone DRAM manufacturers that didn't survive. All the employees accused of theft are Taiwanese and former employees of Rexchip.

5. The Chinese company, Jinhua, had earlier out-muscled Micron in Chinese court, using patents transferred from UMC to ban some Micron products for sale in China.

6. LA Times started with: "It was the great microchip heist — a stunning Chinese-backed effort that pilfered as much as $8.75 billion in patented American technology." But it later said: "Prosecutors estimate the information was worth between $400 million and $8.75 billion."

TL;DR: the reason is business, not necessarily incompetence.

Stealing is stealing though, isn't it? Regardless of who benefits.