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American here. I own two different companies in China.

“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.

Do you speak Chinese fluently? I'm guessing this would be difficult to do if not...

My Chinese is still pretty basic. Yes, learning some conversational Chinese and a few hundred Chinese characters pretty quickly, is required, if only to keep sane. But, my Chinese communication skill wasn’t/isn’t/hasn’t been a critical key success factor for business success. More important has been, utilizing employees well and having the sense to recognize and call “bullshit” when needed. Like, if a process seems illogical from a good business practices or efficiency point of view. And someone is telling you something that seems wrong. It’s probably wrong, and they don’t know what they are talking about. And, learning quick, most of what you see here in China, is not as it appears on the surface. Underneath, it’s probably a rats nest. Being a good detective is required to survive.

How easy is it to get your money out of China?

Not very easy. The best structure seems to be, to setup a parent company in Hong Kong. Then, setup a wholly owned subsidiary in China. Then, just send enough money every month to keep the China operations going. It is easy to get your money in and out of Hong Kong.

I went to Hong Kong earlier this year, and I was amused by how there were luxury watch shops seemingly everywhere. My first assumption was that they were for laundering money out of the mainland.

There are likely more than enough rich people living in and traveling to Hong Kong to organically keep these watch shops solvent.

Yup. Flying with hard currency or equivalents is difficult. Just don't bring the receipts or boxes for your new watch, bracelet, ear rings, and neck chain.

I've seen that chocolate and baby powder smuggling is big in Hong Kong.

https://www.youtube.com/watch?v=YQm5FZMforg

To think about going to China, you're going to have to think about how to LEAVE china first

"once the news goes out that you will be leaving China, alleged creditors will come out of the woodwork. The tax authorities will come up with taxes that you owe. Your landlord will explain why you owe it way more than you thought you did. Your suppliers will send you bills for items they never actually gave you. Your employees will demand all sorts of severance."

https://www.chinalawblog.com/2018/09/how-to-terminate-your-c...

That’s because China now homegrows its IP. The right time to control this would have been 1978, not 2018.

When these great and venerable "International companies" you speak of exploited cheap Chinese sweat shop labor for decades, it wasn't a problem. Now that the Chinese want foreign companies who made (and continue to make) absurd profits from access to the Chinese market to share some benefits, it becomes a problem. Hopefully you had some moral outrage with regard to buying cheap consumer goods made in China during the former phase as well.

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.

China is the world’s second largest economy. The decision to develop polluting industries and manufacture low cost goods was China’s to make. The subsequent (and likely ongoing) exploitation of Chinese labor was done by China’s system of government and capital. The same system has raised astounding Chinese numbers of people out of poverty and created enormous wealth for Chinese capital. Now that China is moving beyond the “emerging market” stage, it is entering the realm of great power conflicts. What we know is that most past great power conflicts have been terribly violent (Cold War, WW2/WW1, Napoleanic wars, etc). What we see so far is China waging a low intensity war in the Cyber warfare realm. This has the added bonus of paying for itself many times over, e.g. stealing billions of dollars worth intellectual property, eg semiconductor manufacturing trade secrets. The US has started responding with a trade war. I guess the next logical step in this escalation would be for China to become involved in violent proxy war (eg another Vietnam War or Korean War). Full scale warfare (ie nuclear war) is of course the worst-case scenario, which is always one button away from occurring.

> In order to do business in China, non-Chinese companies must partner with a Chinese company.

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.

And car manufacturing.

> When will people stop droning the same tune over and over?

I have learned to accept that the average HN user turns into a complete idiot when anything China-related gets posted. It's basically "hurt durr dem evil commies".

Even when it's something like "Chinese researchers discovered X" you can be sure the top comment is someone pointing out how evil their government is, adding nothing to the actual topic. Imagine that anytime something about an american company gets posted, people start commenting on Guantanamo bay, drone bombings etc.

What's bad about sharing IP with China? That's the companies' choice. They must have done a cost benefit analysis and deemed it positive to share their IP. Did China force them to make that decision? There is nothing immoral about this arrangement.

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.

They actually just laxened the rules and a non-Chinese can own 51% of the company now. In a few yesrs they plan on refucing the ownership restrictions even more.

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

> What's worse is that International companies have been just giving their technology to the Chinese for years and years.

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.

> International companies in a rush to get access to the largest single market in the world

and relatively cheap labor.

Why wasn’t it until 2016 until we actually started hearing tough trade rhetoric against China? It seems like they know the game is up and are doubling down on the theft.

What game? they already won. The US makes nothing and now it is isolating itself, great move.

I don't think this is borne out by the data on manufacturing output: https://fred.stlouisfed.org/series/OUTMS

I agree, but the current situation in the US is more nuanced than the graph suggests. A lot of the growth is driven by the energy industry, like fracking, not building products like phones, computers, clothes, furniture, etc. We import 3 tons of steel for every ton we produce. Cars we manufacture in the US are dependent on imported components.

Whatever you feel about it, the primary point of the TPP deal was China containment by isolating it from the rest of East Asia.