Home > Analysis > “China & Industrial Espionage: When Will It End?” – a wrong mindset

“China & Industrial Espionage: When Will It End?” – a wrong mindset

I can accept this being an honest attempt at objectivity in talking about China, but invariably, this is a fallacy in the “Western” mindset I frequently see in the English language “China” blogs. Stan Abrams at China Hearsay recently published an article, “China & Industrial Espionage: When Will It End?” where he explains the Renault disputes are likely overblown and China thus unfairly accused.

Agreed.

However, he “justifies” these false Renault accusations by arguing a rise in Chinese espionage in recent years:

Let’s face it, the reason why it was easy for Renault to point the finger at China is that the number of industrial espionage cases has been on the rise, not to mention the related problem of IP infringement. China’s aggressive industrial policy, either directly or indirectly, includes this sort of information gathering and has negatively influenced the attitudes of folks in the West.

The problem I have with this technique is on the surface, the article seems to be “objective.” Take a stand when it is clear cut, as in the Renault controversy. But, Abrams in the same breath pushes this broader narrative of “Chinese espionage,” which in my opinion is already a very charged and one dimension view in the “West.”

(By the way, some people get bent out of shape when others use the term “West.” In most cases that usually means they cannot debate further and have to resort to technicality to carry on. My point is I agree with Abrams there is indeed this attitude in the “West.” You can go here if you are interested in seeing how I defined “the Western media.”)

Now, I have done some homework trying to pull up a list of Chinese espionage cases in the “West.” Perhaps Abrams should make a list for us, because for those of us obsessed with “China” reporting in the West, we have seen tons of anecdotal materials and insinuations. Wen Ho Lee comes to mind. Rarely do we see anything concrete.

I think it’d be foolish for anyone to argue there is no espionage. It is probably “rampant” too. But, bear in mind though, this is absolutely not a one way street (as Abrams article have largely left out, though to his credit he says military competition with U.S. fosters this on “both sides.”). What I object to is this mindset in the “West” constantly thinking others are lurking around to steal from them.

Abrams said:

Japan was still developing its technology sector, and some of its companies engaged in industrial espionage to get ahead of their competitors. Like general IP theft, that’s one of the things that developing countries do. Chinese companies are doing this for the same reason — it’s faster and cheaper than developing that technology yourself.

I would say though, it is generally true that developed countries have greater technological know-how. Certainly some truth in what Abrams said. But this is a very weak and shallow way to look at the issue. The developing countries do not need to always “steal” as the primary way to catch up. As I have discussed here, “The Open CourseWare Consortium: Help Make Education Free” the Chinese are spending tremendous efforts in tapping materials they can get their hands on in the public domain.

For example, in the Open CourseWare, MIT’s lectures on the latest Artificial Intelligence research are being absorbed by people within China. Is there a doubt Baidu not applying some of those theories on natural langugage searches into their search engine? This is a HUGE technology transfer that is occuring very broadly.

Let’s face it, poorer people determined tend to work harder than their richer counter-parts. This is yet another factor helping accelerating their inventiveness. Certainly, the economic climate has to be there to reward such activities, and in China’s case is there.

I have anecdotally heard many Chinese and Indian nationals working for Western firms, and their ideas often become properties of their Western counter-parts simply because the Western natives end up doing the patent filings. Sure, within the umbrella of such corporations, the inventions belong to the said corporations.

Is there due diligence those nationals are not stealing ideas from their home countries? I personally know of Nike sending their designers to Shanghai looking for “inspirations” at retail stores on what is “hot.” This is a very complicated two way street.

As Abrams suggests early on in the article, China’s trade policy is to acquire technology. Very true. Absolutely nothing wrong with that as a policy. But I have a problem with how he puts it:

I know this is extremely familiar territory for this blog, so I’ll try not to simply repeat what I’ve already said countless times about China’s industrial policy, forced technology transfer, and so on.

Emphasis above is mine. Why must China’s trade with her partners on technology be a “forced transfer?” This is a typical sick mindset I frequently see as if China is automatically doing something unfairly. No, China’s partners can simply say no if they do not want to sell technology to China. End of story. China cannot force a technology transfer.

Developing countries have a unnatural disadvantage, because this whole idea of Patents is also a concoction of rich nations to protect their inventions. For countries having been colonized and didn’t get to embark on this mad dash to “discover” so that they can “exclude” others from using such discoveries, they are at a disadvantage, especially in a globalized world.

Finally, while talking about espionage, think about this. I’d be willing to wager a chunk of money that many of this planet’s inhabitants are filmed by U.S. spy satellites and are in some CIA databases. Think twice before you peepee outdoors, because some perverts may end up looking at your genitals!

And I’ll leave this comment from a reader:

“African economist Dambisa Moyo, when asked about what is wrong with Western investments in the developing world, gave her answer as one word. Mindset.”

And it is not limited to just investments. It’s just about everything. Well, I’ll just leave it at that.

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  1. JJ
    March 9th, 2011 at 23:06 | #1

    Excellent article! In my opinion, this type of thinking goes back to the stereotype that, “while Asians might have the technical skills, they lack true innovation.”

    Of course one thing most people seem to forget is all the Asian movies that have been “remade” by Hollywood. Something most people seem to be comfortable with by saying the studios are merely localizing the film to fit their audience’s tastes.

    So these days when I hear people accusing some Chinese company of “stealing” I gently correct them and suggest that it could just be a remake…to fit local tastes 🙂

  2. March 10th, 2011 at 00:21 | #2

    I intend to write a post criticizing the tiring mindset of IP piracy in light of the Supreme Court’s agreeing to take cert on Golan, et al., v. Holder (Attorney General), et al. (10-545).

    The issue presented concerns Congress’ scope of power to reinstate copyright: whether Congress has the power to take what is already in the public domain out of the public domain to give back to private parties.

    The emotional disgust people have against this corporate favoritism is the same as many (such as me) have against IP in general. Ideas are non-rivalrous and non-exclusive and hence in the public domain in the natural state. IP regimes creates artificial walls around the use of ideas for limited times on ground of a delicate balance between giving private incentives to “create” and ensuring public access to knowledge. But this balance is merely policy, not a natural rule or right. If you don’t subscribe to it, all ideas once known are in the public domain (it’s your responsibility to keep them secret if you don’t want them to be used) . Propertizing any idea in general is as disgusting as taking what is in the public domain out of the public domain for the interests of the few.

  3. March 10th, 2011 at 05:56 | #3

    Freedom of Information, so championed by so many in the West, is the antithesis to the notion of IP ownership and Western Technology export control.

    Afterall, why claim “ownership” on the most VALUABLE of modern knowledge, in terms of technologies that can feed billions and cure diseases?

    What’s left for “Freedom of Information” other than vaunted empty talks of “democracy”?

    So, let the Poor starving sick billions have “democracy” cake, but let them not touch the monopolistic information of the rich West, not even if they want to learn them or buy them?

    *
    I say this is also censorship, and it censors the most valuable of information from those who MOST need it, for nothing more than pure greed and monopoly of technological domination.

    Give me censored news any day, but damned if I can’t buy good medicine for my people, I will pay someone to steal it, to save lives.

    And to someone who claims ownership on knowledge, (and the Western governments):

    Knowledge is meant to be shared. Know that you hold knowledge for the benefit of all man kind, not just your kind. If you relinquish your responsibilities to your fellow man for money, safety, security, or power, you shall have nothing at all.

    Knowledge cannot be contained, cannot be owned.

  4. March 10th, 2011 at 10:02 | #4

    @YinYang, we need to definitely take parts of rv’s #3 and put it in our quoting you section.

  5. TonyP4
    March 10th, 2011 at 10:17 | #5

    The ones whose intelligent properties have been stolen should be blamed for not protecting them too. Should we blame the US government too relaxed in protecting their secrets like the one that made Chinese submarines sound proof?

    The richest man Lee Ka Shing in Hong Kong started his empire in stealing secret in making plastic flowers. It is funny that no one blamed him.

    I wrote the following comment not too long ago:
    http://tonyp4idea.blogspot.com/2011/03/defending-china-on-intelligent-property.html

  6. March 10th, 2011 at 15:14 | #6
  7. March 10th, 2011 at 15:45 | #7

    JJ, thx for the compliments.
    Allen #4, RV #3 – check our new post.
    TonyP4, your wish came true (regarding the edit). 😉

  8. March 10th, 2011 at 18:44 | #8

    @YinYang #6,

    I typically don’t think it’s worthwhile engaging in nit-pick back and forth – so I’ll leave it there. But I didn’t see anything there that I need to reply for now.

  9. March 10th, 2011 at 23:27 | #9

    Allen – yeah, no substance.

  10. March 11th, 2011 at 06:01 | #10

    I just wrote comment in another thread:

    RE: China’s Forced IP transfer scheme. I think it is entirely justified, and far less destructive, in light of US Technology Export Control.

    If US government can impose laws to ban US companies from selling some technologies to mostly poor nations, including India (a Democracy), then Chinese government can IMPOSE laws to condition US companies doing business in China to transfer/sell technologies within a certain time period.

    It’s a direct proportional response.

    Additionally, the Chinese laws are not absolutely compulsory. If a US companies doesn’t want to transfer, it doesn’t have to do business in China. Whereas a US company in US, has no option but to comply with US Export control, or risk criminal liability. (Of course, US companies don’t have to do business in US either, but they can’t take their technology out of US either).

    *Therefore, I am convinced that China’s Force IP transfer scheme is entirely justified, and other nations will soon follow China’s lead, just as now many nations follow China’s lead on currency pegging to stabilize their economy in light of US printing money and flooding the world with cheap dollar.

    Another justification is simply that US Export Control scheme has already delayed reasonable technology transfer period, and there is no reason why China should allow further delays in technology transfers.

    US IP owners could have had a reasonable period to sell and profit from their innovation in China, if not for the US export control laws. Thus, the damage to their economic benefits is already done by US. Why should Chinese people be further burdened by more delays.

    Forced IP transfer in China ensures a reasonable profit for the IP owners, AND a speedy transfer of technology to the Chinese economy.

    I see no need to increase US companies’ IP monopolies, when the majority of the delay was caused by US government’s export control scheme.

  11. March 11th, 2011 at 06:42 | #11

    http://www.cpu-world.com/news_2011/2011031001_China_to_use_Godson_processors_in_supercomputers.html

    China to build supercomputer using domestic “Godson” Processors.

  12. xian
    March 12th, 2011 at 00:58 | #12

    Ugh… I’d say you guys are saying pretty much the same thing with tiny differences.

    What he means by forced IP transfer is obviously forced if you wish to do business in China. That leaves foreign companies with the choice of skipping out on a huge market or losing some IP to potential competitors. But hey, a deal is a deal. Having a large population counts towards a civilization’s strength.

    Us vs Them bs aside, the simple truth throughout history is this: Those that don’t have will try to take from those that do have. It could be through trade, sharing or theft. What is most important is that China protects its own intellectual property as much as possible once it becomes a technologically leading country. Should the situation be reversed in 50 years and the world is trying to copy Chinese IP, we don’t want to seem like huge hypocrites. Let’s keep the issue low for now, as the Americans can’t really do anything about it anyway.

  13. TonyP4
    March 12th, 2011 at 06:05 | #13

    @raventhorn2000
    China could build a super computer with Godson processors, but it will never achieve the same performance and usefulness in world’s top 20. The critical processors and the graphic processor are made in USA. US has a stupid rule that they will not sell China technology stuffs that can be used in weapons unless China has the same technology. Godson processors fits into the argument to sell micro processors to China.

  14. March 12th, 2011 at 09:22 | #14

    @xian #12,

    I think there is a significant difference.

    I don’t think China’s development of technology is based on some implied heavy stealing. If you use “forced” that way, then every time we have an agreement, we can essentially say at least one party is forced, no? That’d be bizarre.

    And, why must we assume that China will leverage some sort of IP advantage in the future to unreasonably demonize others around the world?

    China is not making any fuss. It is precisely those in the West who are that I am responding to.

  15. March 14th, 2011 at 05:16 | #15

    Thank you for nice web

  16. March 14th, 2011 at 06:30 | #16

    Xian,

    I think protecting IP is a silly game. If China eventually does try to protect its IP, using the same strategies as the West does right now, it WILL be hypocritical, and it will be pointless.

    I think that’s a self-defeating policy of the West, that it cannot compete on the basis of business and production, and had to resort to using “export control” and IP laws to prevent competitors from getting the latest technologies.

    This policy regime has done a huge disservice to Western industrial capabilities. It has made them weak and unable to withstand hard competition.

    Innovation is ONLY 1 aspect of economic development. A great nation cannot rest its laurels upon ONLY innovation.

    China must remember, we invented Gunpowder, movable type printing, etc., but we did not develop our inventions in the past.

    We must remember, that never again, should we become complacent with our great inventions, and let others develop our inventions to benefit their economies FIRST. We must INVENT and DEVELOP FIRST. And that means, we must never depend on IP protection to withstand the competition.

  17. Charles Liu
    March 17th, 2011 at 23:54 | #17

    The Renault allegation has turned out to be false:

    http://www.straitstimes.com/BreakingNews/Asia/Story/STIStory_646185.html

  18. Black Pheonix
    September 9th, 2013 at 13:16 | #18

    Recently, I stumbled onto several law firm blogs that discussed “Chinese espionage” and theft of “trade secrets” as increasing.

    Justifying such assertions as “non-racist”, the blogs often point to the number of cases and say, “see, they are increasing.”

    To such silly justification, I only have to say, some “racists” used to use the disproportionally high number of African Americans in US prisons as justification for their racism.

    And the “numbers”? Do the high numbers indicate actual high instances of “IP theft”, or merely “racist selective prosecution”??

    The thing is, I worked in high tech in California. People change jobs and companies all the time. Knowledge and ideas flow all the time between companies. Most companies don’t bother to complain about “trade secret theft” because it’s hard to prove and domestic competitors steal from each other and no one make much head ways.

    But when it comes to Chinese employees and Chinese companies, it’s just so much easier to pile the blame on a political target and racist stereotype, whereas if a US native non-Asian person is involved, they are just portrayed as some victims or even tools.

    http://www.law360.com/ip/articles/470173?nl_pk=042fa8e6-a2b9-492a-a8a0-84e5098bdd58&utm_source=newsletter&utm_medium=email&utm_campaign=ip

    In this case, 2 US engineers (both worked for US government in some ways), buy pirated software from a Chinese middle man.

    Chinese guy get 12 years in prison. 1 of the US buyer get “probation”.

    You know what these numbers tell me? “Racism”.

  19. Black Pheonix
    September 9th, 2013 at 13:18 | #19

    Chinese firm sues US company of “trade secret theft”.

    http://wombletradesecrets.blogspot.com/2013/04/man-bites-dog.html

    …plus the rather overtly racist title.

  20. Zack
    September 11th, 2013 at 04:45 | #20

    i can’t help but feel an immense sense of satisfaction and closure at the prospect that NSA spying and USA crying wolf over Huawei are coming to bite the US on the arse, as bloomberg, the mouthpiece of the Washington elite is forced to admit:
    http://www.bloomberg.com/news/2013-09-10/nsa-spying-seen-risking-billions-in-u-s-technology-sales.html

    Just as the Shenzhen, China-based Huawei lost business after the report urged U.S. companies not to use its equipment, the NSA disclosures may reduce U.S. technology sales overseas by as much as $180 billion, or 25 percent of information technology services, by 2016, according to Forrester Research Inc., a research group in Cambridge, Massachusetts.

    The revelations have some overseas governments questioning their reliance on U.S. technology.
    Germany’s government has called for home-grown Internet and e-mail companies. Brazil is analyzing whether privacy laws were violated by foreign companies. India may ban e-mail services from Google Inc. and Yahoo Inc., the Wall Street Journal reported. In June, China Daily labeled U.S. companies, including Cisco, a “terrible security threat.”
    “One year ago we had the same concern about Huawei,” James Staten, an analyst at Forrester, said in an interview. “Now this is the exact flipping of that circumstance.”

    let these hypocritical motherfuckers eat dirt

  21. Black Pheonix
    September 11th, 2013 at 06:52 | #21

    Upon a brief review of “Trade Secret Theft” cases, I found that majority of such cases involving ethnic Chinese are alleged using the “Intend to pass” stolen trade secret information legal theory.

    In contrast, majority of cases involving non-Chinese are alleged based upon ACTUAL information passed onto a company, and that the receiving company is named as defendant as well.

    What does that mean?

    It means, the US trade secret law is actually applied very broadly against Chinese.

    Here is the rub: If someone “takes” the information, but actually never passed it on to any company, (or the company receiving it didn’t have any use for the information), then where is the “theft”???

    Hence, the rather flimsy accusation of “intend to pass on”.

    I mean, how do you prove someone intended to pass on the information, if they haven’t actually done it?

    Numerous cases involve the mere suggestion that someone had a “disk drive”, a laptop with the information on it.

    (Right, so, if you forgot to wipe your hard drive after you quit a job, you stole information. And I guess non-Chinese people out there don’t keep files from their previous jobs??!! BS! I recall distinctly a former US official who downloaded files onto his home computer.)

    See, the broad overuse of the “intend to pass on” legal theory in the Chinese espionage case rather proves ONLY 1 thing:

    RACISM.

  22. Black Pheonix
    September 11th, 2013 at 07:01 | #22

    @Zack

    Yes, quite.

    On the note of US “national security” logic, China needs to demand more Western companies to hand over more technical spec’s, to prove that they are not violating Chinese national security.

    For example, Boeing facilities need to be inspected, because they put a bug on Chinese President’s plane.

    And if CISCO wants to sell in China, they shouldn’t expect any more trade secrets. They have proven that they worked secretly for US government in cyber espionage. They need to turn over all their internal emails to prove that they are not spying on China for US government.

    Alternatively, CISCO China can maintain its completely separate business supply chain, and submit to Chinese government oversight and control.

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