Trump Admin Hits China on Laws

This should come as a surprise to nobody, but China is stealing technology by passing laws that require the government to get proprietary technology, which they then pass along to state-owned companies to build competing products.  Then, they deny doing anything of the sort.  Of course their credibility is a little low, as a Wall Street Journal article shows today.  New tariffs are coming.

China does this in the name of national security.  They are so afraid that some company will field a product that steals information from Chinese citizens that they have to review these processes to protect their own people.  It has the sound of a reasonable program to protect national interests, when it is just a scam that puts Chinese interests above all others.  It is organized, nation-sponsored theft of proprietary technology on a scale rarely equaled by anyone other than Russia in the 1980s, and they were not nearly as good as China is now.  On the surface, that is the story.

But that really isn’t all there is to it, because some companies do not cooperate with this policy and openly resist turning over some of their technology.  Apple and Cisco did it for a long time.  Microsoft gave China its own version of Windows X to do with as they please.  It is the companies you do not hear about that bother me.  Plenty of companies have turned over technology without protest, saying “it’s the law”, not thinking about the future of their company products.  Those competing products, some with the same hardware and software as the originals are not exactly the same.  Those slight variations allow China to spy on the world, using the technology given to them by companies operating there.

Second, if they don’t give up this technology and do everything they can to avoid calls for it, the Chinese steal it outright.  One of the biggest manufacturers in China avoided giving over their operating system for many years by not allowing it to be housed in a building specified by local Chinese leaders.  They knew if it went into that building, it would be stolen by government officials.  They worked around it for a long time, but it was eventually stolen anyway.  They worked hard to make a new product that was better - and not in the hands of the Chinese.  Now they watch for those copies showing up on their own hardware.  It is a brutal game that is hard to win,, but it is a game that has finally met a government willing to call them on it.

Where are the Boards of Directors in all of this?  Some are silent;  some shrug it off;  some resist.  The ones who made the most money in China are more than happy to cry foul when tariffs are imposed.  They should have been looking out for the proprietary technology that allows them to make that money.