China vs. Western companies: Best defense is a strong offense

[FairAndUnbiased]

I would love to see your numbers for these claims, because I cannot verify them. Here are the results from Contours of the World Economy, 1–2030 AD (by Angus Maddison, spreadsheet available here if you care to check the numbers for yourself):

Using a simple Excel formula to determine where a country's GDP/capita was < 0.5 of that of the US in 1900, and > 0.5 of the US in 2003, here are the results:

Finland
Italy
Norway
Spain
Japan

Also included, if one relaxes the year 1900 requirement due to lack of data:
South Korea (1911)
Taiwan (1912)

Edit: It gets worse for your case, I'm afraid. I'll add a few more, if we start from 1950:
Israel
Singapore
Hong Kong
Trinidad and Tobago

Honorable mention:
Equatorial Guinea went from 6% of US GDP/capita in 1950 to 47% of US GDP/capita in 2003.

Are you going to write off these countries because it doesn't fit your fixed conception, or will you acknowledge that just as it was possible for these countries to catch up to the US without stealing IP (with the possible exception of Japan), it is possible for China as well? Based on this data, your case doesn't hold up, so please provide the data you used.

This seems to contradict everything else you have said. I suppose one could classify stealing IP as "creativity, the willingness to have real learning and innovation (not just within the box you set) and sheer tenacity," in that it takes a lot of nerve to so blatantly engage in such acts, but that's not the mainstream definition. On the contrary, I would say independent R&D and the ability to pull oneself up by one's own bootstraps would better exemplify "creativity, the willingness to have real learning and innovation (not just within the box you set) and sheer tenacity."

And yet Samsung started out not so different from Foxconn, but succeeded. Why do you think Huawei is treated the way it is? We both know it's as simple as plugging in "Huawei" and "Cisco" into Google.

Never say never. Chinese companies will be treated fairly in the US when they treat our companies fairly in China. If China doesn't want to treat our companies fairly (by stealing their IP), how can China then complain that their companies are not treated fairly in the US? China doesn't even need to do anything proactive to change the situation. All it needs to do is stop doing what it's been doing.

1. sub 1/4th US GDP, not sub 1/2. sub 1/4 is low income, above 1/4 to 1/2 is mid income, above 1/2 is already high income. Norway and Equatorial Guinea had resources windfalls. Most of the others were recipients of foreign aid in the Marshall plan or bilateral foreign aid (South Korea), or have little domestic IP (Singapore, Hong Kong)

2. If Huawei was only copying Cisco, then it would be behind in technology and not be a top 5 WIPO patent holder, but it is. Indeed, if it was indeed copying Cisco, then this copying has increased market competition, created an innovator where there was not one previously, and reduced Cisco's monopoly, which is what your economic system welcomes. You should be *thankful* of Huawei for lowering global telecom prices so your industries feel competitive pressure and lower your phone bill as well.

3. It seems to me like we have different ideas of what innovation and creativity are. My idea of innovation and creativity is: solving a difficult puzzle independently and with no external help. That is it. Your ideas may differ.

 

[Edison Chen]

Finally, I am always taken aback by what I term China's "aggressive inferiority complex," in the sense that China must always remind the rest of the world how strong it is, while simultaneously proclaiming its own weakness, thus justifying further aggressiveness as a defensive measure.

Chinese are really good at tactics, or maybe Machiavellian, during daily social life. Chinese politicians are even better. By claiming century of humilation while secretly strengthening military build up simultaneously maybe one of the tactics, only through this way can we fend off western‘s sanction, so we always try to skirt a direct confrontation with all enemies or our rivals. This can be expressed as "being offensive by holding back with a humble gesture", which is one of the oldest and entrenched Chinese political and military strategy or wisdom.

In addition, it's difficult to understand how Chinese society holds itself together with this kind of zero-sum, raw-power mindset. What prevents people in Chinese society from murdering or stealing from each other, simply because they can? I realize now that I need to start studying Chinese ethics to see if I can find the answer to this, because the idea of unity as a nation seems to be in direct conflict with the idea of maximizing one's own power at the expense of everyone else, as applied internationally. (@Chinese-Dragon @Edison Chen Do you have any suggestions for English-language papers, articles, or case studies that might shed light on this and help me understand the issues involved? I would appreciate any guidance.)

I am not an expert of this, what kind of paper do you want exactly? The Chinese ethics?

The first instinct of a CEO is to protect the interest of the shareholders along with his own shares. He or she will not risk it. GM makes a ton of money in China, so does Apple by making its products in China.

Can't totally agree. What is protecting interest of shareholder exactly? If they give out too much dividend to shareholders, that could have a negative impact on net earnings, and will affect ROA or ther factors for external financial reporting purposes, which will cause interest conflicts to other parties. It also depends on the makeup of border of directors, if a board of directors come from entirely or primarily of management, to protect shareholder's value woudn't be a priority. The shareholders are not involved in day to day operations, so their demand and management's goal will conflict.

 

[Edison Chen]

Looky here...The Chinese members here can barely balance a checkbook, if they make enough money at all to have a checking account, a savings account, and at least one credit card. Despite your claim not to be an economist, it is clear to all by now that you know more than most here about high finances and economics from personal experience. Lay out your arguments in terms of mechanics of how things work in your world and watch the Chinese spin in confusion. When they have been bold enough to make claims about Chinese aviation that practically defied the laws of physics, there is no telling what they can do to your specialty, friend.

Save your ignorance. What made your illusion that Chinese posters on PDF even don't have a checking account? In China, we don't seprate checking and saving account. I work in the bank, I have quite many credit cards. Our Enligh language capabilities may not be enough qualified for us to get involve with some professional topics, but it doesn't necessarily mean we don't know anything.

 

[LeveragedBuyout]

1. sub 1/4th US GDP, not sub 1/2. sub 1/4 is low income, above 1/4 to 1/2 is mid income, above 1/2 is already high income. Norway and Equatorial Guinea had resources windfalls. Most of the others were recipients of foreign aid in the Marshall plan or bilateral foreign aid (South Korea), or have little domestic IP (Singapore, Hong Kong)

2. If Huawei was only copying Cisco, then it would be behind in technology and not be a top 5 WIPO patent holder, but it is. Indeed, if it was indeed copying Cisco, then this copying has increased market competition, created an innovator where there was not one previously, and reduced Cisco's monopoly, which is what your economic system welcomes. You should be *thankful* of Huawei for lowering global telecom prices so your industries feel competitive pressure and lower your phone bill as well.

3. It seems to me like we have different ideas of what innovation and creativity are. My idea of innovation and creativity is: solving a difficult puzzle independently and with no external help. That is it. Your ideas may differ.

1) My mistake, I misread your post. Even so, isn't 1/4 of GDP/capita to 1/2 of GDP/capita over a set period of time an aribtrary measure? If we examine the compound annual growth rate of GDP/capita over that period of time, we can see dozens of countries with CAGRs higher than the US, which means that they only require time to catch up. The US itself took 127 years to overtake the UK in GDP/capita. And yes, the US stole IP during the first half of that period, but there was also much less IP to steal, it took far longer to bring to market, and it was on a far more macroeconomic scale than corporate-level. I understand China's impatience to catch up, and the US has indeed tolerated IP theft for a long time. But now that China's economy is about to eclipse our own, it no longer seems reasonable to shift the metric to GDP/capita as a justification for these actions ad infinitum (or at least, several more decades).

2) I don't deny that Huawei innovates, but you don't deny that Huawei has also stolen IP. As much as I, the consumer, appreciate the lower prices this provides, I, the capitalist and investor, find it anathema. The US government and US market participants generally agree with me, which is why Huawei cannot make headway in the US at this time.

3) Where we differ is that I consider "no external help" to mean original work, and it seems you consider "no external help" to mean not paying for it. Where China does do original work, I cheer for it, but I will not stop condemning theft.

In any case, good discussion. Thanks for your perspective.

Chinese are really good at tactics, or maybe Machiavellian, during daily social life. Chinese politicians are even better. By claiming century of humilation while secretly strengthening military build up simultaneously maybe one of the tactics, only through this way can we fend off western‘s sanction, so we always try to skirt a direct confrontation with all enemies or our rivals. This can be expressed as "being offensive by holding back with a humble gesture", which is one of the oldest and entrenched Chinese political and military strategy or wisdom.



I am not an expert of this, what kind of paper do you want exactly? The Chinese ethics?

Yes, Chinese ethics would be a great place to start, if you have any recommendations. As far as Chinese tactics, I suppose I'll have to pull out my old copy of The Art of War and see if I can remember it this time.

 

[fallstuff]

Can't totally agree. What is protecting interest of shareholder exactly? If they give out too much dividend to shareholders, that could have a negative impact on net earnings, and will affect ROA or ther factors for external financial reporting purposes, which will cause interest conflicts to other parties. It also depends on the makeup of border of directors, if a board of directors come from entirely or primarily of management, to protect shareholder's value woudn't be a priority. The shareholders are not involved in day to day operations, so their demand and management's goal will conflict.

I was referring to the good old motive of profit. Typically a product is marked up 4-5 times from the manufacturer before it is displayed on the retailers shelf. Any increase in any cost generally will cause the retail price go up in the same rate.

The pay of the CEO is combo of salary, stocks, and options. Moving manufacturing back to the States without substantial cost savings will lower the value of the stock he and the shareholders hold. Additionally they don't have to deal with labor issues directly. A decent pair of jeans that normally cost $40 will cost around $80 if manufactured in the USA.

 

[kawaraj]

As someone in the business I applaud such moves.

China still need to set up its own Fair Trade Commission to deal with MNLs wrongdoings. These money grabbing gluts should be punished. China as the largest phone maker could be largest victim of Qualcom pricing.

(without Fair Trade Commisson, China still considered too good to foreign firms)

 

[Edison Chen]

@LeveragedBuyout

I will recommend this unprecedented masterpiece, everyone knows it, even little school kids know them. It's called Zizhi Tongjian in mandarin, the English name is History As A Mirror。

Zizhi Tongjian contains 294 volumes, about 3 million characters and chronologically narrates the history of China from the Warring States Period in 403 BC to the beginning of the Song Dynasty in 959 AD. With politics, military affairs and national relations as its main concerns, the book also comprises of economy, culture and appraisal of historical figures. The book was compiled with the purpose of providing historical references to the rulers by describing the rise and fall of previous empires.

Zizhi Tongjian adopts a realist approach and boasts comprehensive content, brilliant style and penetrating insight. The book has exerted significant influence on the historiography. As a classic of ancient annalistic historiographies the Zizhi Tongjian enjoys an unfading fame and has issued more than 70 versions since its appearance 900 years ago.

Zizhi Tongjian is not only a pearl of traditional Chinese culture but also a significant component of the world’s historical works.

Zizhi Tongjian (Comprehensive Mirror for Aid in Government)
Zizhi Tongjian - Wikipedia, the free encyclopedia

Another theory I will recommend is this one:

http://en.wikipedia.org/wiki/Thick_Black_Theory

 

[TaiShang]

My point is, why should Chinese leadership think about how Japan or US views them, and not about the benefits of the Chinese people and nation.

That sums up everything, sir. Thank you for the very well-thought line!

Let's keep everything in perspective without becoming naive about US extending a helping hand to China. I know majority of Americans do not share the extremist /nationalist views that are often expressed here in PDF. Many Americans in fact renounce their citizenship to become French, Russian or Cuban...

But, the reality remains unchanged (2012, BBC):

The fear is understandable to some extent:

I wonder who is hostile to whom...

China firm sues Obama over blocked US wind farm deal (BBC)

U.S. lawmakers seek to block China Huawei, ZTE (Reuters)

Failed U.S. Deals Stir Tensions With China - WSJ

Senator urges U.S. to block China's Nexen deal (CBC)


I urge the US members and their loyals to stop lecturing and playing the intelligent and cool guy here. Your sermon from a moral high ground won't fool anybody in China as we see the government does not give a jack about what you think what right and what wrong is. Did China care about US invocations during Syria voting at the UNSC? Did China care about the US when it regulated its monetary policy? You should learn to come to terms with the idea of China being an absolutely sovereign nation.

 

[LeveragedBuyout]

@LeveragedBuyout

I will recommend this unprecedented masterpiece, everyone knows it, even little school kids know them. It's called Zizhi Tongjian in mandarin, the English name is History As A Mirror。





Zizhi Tongjian (Comprehensive Mirror for Aid in Government)
Zizhi Tongjian - Wikipedia, the free encyclopedia

Another theory I will recommend is this one:

http://en.wikipedia.org/wiki/Thick_Black_Theory

Bookmarked. Thank you.

 

[FairAndUnbiased]

3) Where we differ is that I consider "no external help" to mean original work, and it seems you consider "no external help" to mean not paying for it.

I appreciate fair and unbiased discussion as well, instead of mindless insults.

Let me make clear what "no external help" means. It means you learn the tools, but no one guides you. When you copy a product, obviously the original owner will not help you rebuild it. This is different than having a teacher who guides you on how to do something.

 

[BoQ77]

How much is this car in China?

Toyota Innova Limited Edition 2014 launched at Rs 12.90 lakh ( US$ 21,400 )
Only 1500 units of the Innova Limited Edition 2014 will be made; comes equipped with a bit more kit.

Toyota Innova Limited Edition.

Sep 2, 2014
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The Innova Limited Edition 2014 is available at Toyota showrooms across select cities in India, while in the other cities, the Innova Limited Edition accessory package will be available. Toyota says that the bookings are currently open and deliveries are scheduled to start from today.