Ties That Bind - Bay Area Council Economic Institute

More documents

Recommendations

Info

132 Ties That Bind Technology transfer has set China up to become a global manufacturing and IP powerhouse. Ever since China opened its doors to foreign investment, the Chinese government has consistently demanded technology transfer to its own manufacturing sector from foreign companies that have a presence in the country. The goal is to continue China’s rapid economic growth, and eventually achieve independence from foreign investors, by appropriating commercially proven technology as well as creating new technology on its own. Much sponsored research in China is not dedicated to scientific discovery or true innovation. Rather, the focus, in many cases, is on developing derivations of patented products to circumvent royalty fees. China spent less than 6% of its total R&D budget on basic research in 2003, compared to 19% for the U.S. Stated economic development goals notwithstanding, government-sponsored R&D in China is primarily dedicated to developed and applied—rather than basic—research. Funding priorities continue to favor larger SOEs or former SOEs, and investment is largely focused on commercially-proven endproduct level innovations, cost reduction, and incremental improvements rather than more innovative and basic, higher risk IP. China continues to place the balance point more to the benefit of public good than to private owners. The country’s current position on public versus private needs is consistent with its ideological history and social and economic development philosophy. While official Chinese policy at the national level is to maintain a reasonable balance, recent publications by the National Standards Administration of China and draft language in the anti-monopoly laws confirm the emphasis on the public good, with the former requiring concessions from patent owners if their IP is to be included in an approved national standard. Commercial operations of state-funded companies continue to be unduly influenced by the requirements and directives of the State. Despite moves toward privatization and market-based corporate governance and decisionmaking, China’s 200 largest enterprises are experiencing more intense central government intervention than they have in many years through the recently established State Asset Supervisions and Administration Commission (SASAC). In November 2004
Investment: Building Global Businesses in a New China SASAC implemented an administrative order of the State Council to rotate the chairmen, chief executive officers, and other top executives of China’s four major telecom operators, side-stepping their “independent” boards of directors entirely. SASAC directs critical financial resources, appoints top managers, implements major state directives such as the “going global” campaign, and oversees restructuring of major players in the pillar sectors. Reverse engineering, counterfeiting, outright IP theft and other forms of IP misappropriation are widespread in China. Several factors contribute to this, beginning with a deeprooted ideological and social tenet that shared property takes precedence over private property. Provincial and local governments enjoy broad economic and legal autonomy to act to the “economic benefit” of their citizens. Aggressive local economic development initiatives often ignore or encourage IP abuses, beyond the central government’s enforcement reach. Global demand for low-cost products, coupled with highly efficient global distribution networks, favors the smooth flow of goods over customs IP enforcement in many import markets. The mixed motives of Chinese courts and law enforcement entities often result in outcomes unexpectedly adverse to the rights of IP owners. China’s courts have been receptive to legal challenges brought by Chinese companies and associations, arguing that foreign technology royalty agreements unfairly restricts the growth and competitiveness of Chinese domestic manufacturers. In general, the government has taken a view that maintaining political stability and increasing employment and living standards necessitates some tolerance toward illicit use of IP. High levels of IP transfer occur globally in many other ways that cannot be prevented by legal measures in any case. IP beyond patents, copyrighted material, trademarks and trade secrets are frequently transferred when skilled employees move from one company to another. Large numbers of retired technical specialists from U.S. and Europe find opportunities for second careers in China, passing on valuable scientific and engineering expertise to startups and established companies. Government funds and incentives support startups that in turn attract returning graduates and workers, as well as venture funding and expertise that value those startups’ government 133
Page 2 and 3:
The Bay Area Economic Forum wishes
Page 4 and 5:
Bay Area Economic Forum 201 Califor
Page 7 and 8:
Table of Contents Introduction ....
Page 9 and 10:
Introduction About This Report The
Page 11 and 12:
Introduction dollar-denominated ass
Page 13 and 14:
Introduction practices of their sup
Page 15 and 16:
Executive Summary The San Francisco
Page 17 and 18:
Executive Summary As Silicon Valley
Page 19 and 20:
Executive Summary 8. Establish regi
Page 21 and 22:
1 A Rich History of Work and Reward
Page 23 and 24:
A Rich History of Work and Reward m
Page 25 and 26:
A Rich History of Work and Reward t
Page 27 and 28:
A Rich History of Work and Reward T
Page 29 and 30:
2 New Networks Emerge The Bay Area
Page 31 and 32:
New Networks Emerge With scholarshi
Page 33 and 34:
New Networks Emerge nomic Law; the
Page 35 and 36:
New Networks Emerge and academics f
Page 37 and 38:
New Networks Emerge schools on the
Page 39 and 40:
New Networks Emerge Hong Kong and T
Page 41 and 42:
New Networks Emerge financing—ban
Page 43 and 44:
New Networks Emerge Since the mid-1
Page 45 and 46:
New Networks Emerge (R&D) innovatio
Page 47 and 48:
Hong Kong Seeks Its Role New Networ
Page 49 and 50:
New Networks Emerge In recent years
Page 51 and 52:
New Networks Emerge savings rates a
Page 53 and 54:
New Networks Emerge Two, featuring
Page 55 and 56:
New Networks Emerge All of the abov
Page 57 and 58:
3 Bay Area-China Trade: Behind the
Page 59 and 60:
Bay Area-China Trade: Behind the Nu
Page 61 and 62:
Page 63 and 64:
Page 65 and 66:
Page 67 and 68:
Page 69 and 70:
Page 71 and 72:
Page 73 and 74:
Page 75 and 76:
Page 77 and 78:
Page 79 and 80:
Page 81 and 82:
An Electronic Public Square Bay Are
Page 83 and 84:
%D\ $UHD &RQQH�WLRQV Bay Area-Chi
Page 85 and 86:
Page 87 and 88:
Page 89 and 90: Bay Area-China Trade: Behind the Nu
Page 113 and 114: 4 Investment: Building Global Busin
Page 115 and 116: Investment: Building Global Busines
Page 121 and 122: 14,000 12,000 10,000 8,000 6,000 4,
Page 139: Investment: Building Global Busines
Page 145 and 146: 5 Building Bridges, Leveraging Asse
Page 147 and 148: Building Bridges, Leveraging Assets
Page 149 and 150: Building Bridges, Leveraging Assets
Page 151 and 152: Acknowledgments This report was co-
Page 153 and 154: Walter Reichert Hewlett-Packard Co.
Page 155 and 156: Sources Introduction American Chamb
Page 157 and 158: Sources Hicks, John D. “The Ameri
Page 159 and 160: Financial Services Sources “A Gre
Page 161 and 162: Sources Schmitt, Kellie, “Lost Ho
Page 163 and 164: Sources “China-Based Worksoft Cre
Page 165 and 166: Sources Guerin, Didier, “Human Ca
Page 167 and 168: Sources Cooper, Chris, Ken DeWoskin
Page 169 and 170: Sources Liou, Fu Tai, “How Taiwan
Page 172: Bay Area Economic Forum 201 Califor
show all

Ties That Bind - Bay Area Council Economic Institute

You also want an ePaper? Increase the reach of your titles

Delete template?

Save as template?