Comment by nickpinkston | Hacker News Reader

Comment by nickpinkston | Hacker News Reader

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This thread focuses on Russian oligarchs hiding money, but doesn't mention what I think is likely a bigger long term issue here, ie Chinese private equity IP raids.

For a long time, Chinese companies have been buying controlling / major interest in European companies and then sucking out the IP, etc. back to China, and often fully killing the European entity. [1]

It's very common for a core technology to just be a firm with a few hundred people doing a very specific thing, which is useful in itself, but also has access to big portions of the specs/designs/IP of which it's being integrated into.

Think: Advanced aircraft engines, ASML's EUV machines, weapon systems, etc.

The same actually happens in reverse too with aggressively one-sided joint "partnerships" like when China essentially played the world's high speed rail manufacturers against each other to steal their IP. [2]

[1] https://www.npr.org/2018/10/03/639636532/chinese-companies-g...

[2] http://www.ipbrief.net/2011/08/07/digestion-and-re-innovatio...

It’s not even nation states that do this. Companies like Amazon and Starlink have been known to do this. For example, talk to a smaller company about either making an investment or using their tech, but use the diligence just so they can figure out their IP and build internally. It’s pretty messed up if you ask me.

> use the diligence just so they can figure out their IP and build internally

Colloquially (and colorfully) called "brain rape".

This has a long and highly profitable history in Silicon Valley.

Anyone involved in M&A discussions needs to be taught how to work in this environment.

It happened to me! I had a crypto startup around 2014 and we were hiring. One “candidate” asked if we could meet at his office. So I walked into an IBM office off of Market in SF and he had me explain our product and draw detailed diagrams on a whiteboard.

The joke was on them. It was a terrible idea!

But seriously, what kind of scumbags are these people?

Microsoft has been known to do this since the 90s based on discovery from the antitrust case. I don't doubt AT&T / IBM did this in their heyday also.

is that the extend or extinguish part?

What do nation states have anything to do here? It's just companies from China. At the end, to protect IP, you have to strengthen regulation locally (the EU, exactly what happens here). Those Chinese companies operate on your soil after all.

What is the purpose of this China narrative? Is it to blame others and appear childish or to provoke more racism?

Considering I've seen both Indian and American companies brain rape organisations, it's a bit rich to be pointing out only the Chinese.

I think it's cool to be so rich and big and powerful you can let this sort of thing happen and not even worry about it. Didn't even make the news (first I'm hearing of it).

It is an interesting situation where capitalism makes certain operations against it really, really cheap for an adversary. Can markets price in this sort of thing? Is there some sort of "tag" a company can/should get to make it vastly more expensive to an adversary nation to acquire? Kind of like a reverse carbon credit.

Regarding the private IP holder who sold. It was certainly in the financial interest of the IP holder to do the deal! But are we not allowed to criticize the sellers of these companies, who sold to China of their own free will, with some knowledge, presumably, of what would happen? But it was a good exit! Most people aren't so lucky. Is that the correct way to look at it? Do individuals who engage in deals like this deserve criticism for an ethical breach, if not a legal one?

Yea, I think it's less helpful to criticize the individuals involved, and more that they shouldn't be the ones making the decision. It should be blocked by regulators.

The problem is that for too long the bankers/C-suite crowd have lobbied their gov'ts to turn a blind eye to this behavior, but now we're realizing that this order cannot hold, and we must finally begin defending ourselves.

Europe is under more pressure than the US because they're more export driven, and their biggest partner is usually China. They buy a lot of German cars, French/Italian luxury goods, etc.

Whereas the US is actually China's biggest demand source, so it's flipped, and slowly firms I'm seeing are diversifying production throughout Asia and beyond to reduce Chinese risk from their supply chains.

> Whereas the US is actually China's biggest demand source

> China Exports to United States was US$577.13 Billion during 2021

> European Union Imports from China was US$557.31 Billion during 2021

I believe this is pretty even so invalidates a bit your point.

> European Union Exports to China was US$260.61 Billion during 2021

> In 2021, the value of the U.S. exports to China amounted to approximately 151.07 billion U.S. dollars

This one holds more truth, it's a US$ 90B difference between exports from the USA and the EU into China.

I don't count the EU as a single trading block because it doesn't have the internal coherence compared to the US.

This makes it easier for the US to make a consistent policy to China compared to the high variance of interests in European countries, which consistently are used by outsiders to drive wedges in between the major EU states. The US doesn't allow (in theory...) states/cities to be able to conduct foreign policy, so they don't have as much leverage.

TL;DR: I stand by my statements on US being China's largest trade partner.

> I don't count the EU as a single trading block because it doesn't have the internal coherence compared to the US.

I don't understand what you mean by this, it's a single trading block, if required the EU as a whole will implement tariffs because if each country could pick and choose then the whole free-trade thing would be pointless, it'd be an eternal race to the bottom for which country would offer a better agreement to trade with China.

Or do you mean that because the EU as a bloc has different interests in foreign policy that then it can't take a single unified decision if needed?

In that case, the USA surely has states influencing its foreign policy depending on their economy of exports to foreign countries, it's normal politics to defend the interests of your voting base and if those are dependent on exports to a specific country of course there's pressure on the Federal government's foreign policy...

More the latter, re: the EU's governance structure + higher member diversity (econ, military, culture, etc.) leads to a less coherent foreign policy than for the US.

So while there are plenty of state-based influence games being played in the US, they aren't as big an issue for the US vs. the EU.

TL;DR: There are some similarities, but on balance Europe is less united and countries like China/Russia make use of them well.

If this has been happening "for a long time" then it doesn't seem like open company registers were doing much good.

I think the causality is inverted - ie we weren't paying attention, so the registers could be open, now that we're seriously starting to pay attention, the people benefiting (bankers / China) are trying to decrease transparency for the party to keep going.

article says registers only started in 2018

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