TOKYO, June 30, 2019—If an old Chinese proverb, “It is no use crying over spilt milk,’ is applied Trump’s claim that China is stealing U.S. intellectual properties came much too late and sanction threats are futile in the long run. Because ‘Stream runs only from high to low levels,’ as a Japanese saying goes, as the United States, Japan and other rich countries already have given China advanced technologies and patents enabling Beijing to plan sending manned spacecraft to the Mars.
There’s no doubt that China has been copying and counterfeiting American and other foreign products and technologies: Toys, hand tools (not quite yet power tools), kitchen ware, solar power panels, telecom protocols… And of course PCs and smart phones that China has become global manufacturing leaders. The Chinese now are gearing to launch 5G telecom and motor vehicles to the world market from the early 2020s.
How the Chinese have become the global manufacturing platform for wide arrays of industrial and consumer products in just over a decade that other countries toiled for stardom for decades? Unlike Japan, which hobbled out of World War II rubbles in 1945 and struggled literally ‘manually’ for global positions for their electronics and autos for several decades, China had lucked out with the help of computer and information technology that exploded with the global Internet use in the 1990s.
China’s global reach simultaneously was accelerated by its accession to the WTO in 2001. Having been denied formal access to the world market until then, Chinese manufacturers produced at full throttle what were asked them by foreign businesses thirsty for cheap Chinese labor and in a matter of a few years, the country became the second largest trade economy in 2014.
WTO accession meant a lot more for China: Its researchers and students entered U.S. and foreign universities, research labs, companies and so on, enabling China as a whole to acquire foreign technologies and intellectual properties with ease, as William J. Holstein writes in his new book ‘The New Art of War.’
Sure, the United States has been naive about the Chinese penetration, blind-sided by its quarterly earnings performances. U.S. government entities and businesses should have been more careful about trade and tech secret protection. Had they taken more proactive precautions two decades ago before China’s WTO accession, China might not have been as technology-savvy as now – but it is now and it is took late to cry over spilt milk. But even with extra precautions, China eventually should acquire same levels of IP know-how as other countries because ‘the water cascades from high to low grounds.’
That was what happened to Japan from as far back as the 1970s, when Nippon Steel Corp., then the world’s largest steel mill, agreed to help build it in 1977 as part of Japan’s wartime compensation at Chinese premier Den Xiaoping’s request. Banking on the legally transferred steelmaking technology it has now become a much larger mill than Nippon Steel to be one of the largest in the world.
In the 2000s, China began modernizing its railway network by tapping Japanese and German high-speed train technology inviting Japan Rail in 2003 to offer details but ultimately calling the offer off only making off the JR technologies. China also invited German Rail but Germany was known to have begged off for fear of IP theft. China built the high speed rail system and has not only become the world’s longest network but also began exporting the infrastructure technology and also become the world’s leader.
Solar power panels once was Japan’s dominant technology with Sharp Corp. (now owned by Taiwan’s Foxcom) standing out as the world leader through the early 2000s. Chinese engineers and researchers had frequented Japan for PV technology, including Sharp, and succeeding at making off the know-how, they started manufacturing their proprietary PV panels and in a matter of a few years, became the world’s largest commanding more than 85 percent of global PV demand.
U.S. companies are no innocent as Chinese about exploiting other countries’ IPs: Apple Inc.’s Steve Jobs had visited the late Sony CEO Akio Morita to learn about designs, technologies, management and many other corporate issues back in the 1980s, so, while Apple had counterfeited Sony designs and technology might be debatable, the basic concept has similarities. And now, American companies are using Emoji as standard tools of email exchanges, the Japanese technology developed centuries ago.
Retracing history, Japanese businesses were trying to learn how to make automobile engines, transmissions, and other parts by disassembling the components after importing GM and For cars in the 1940s. The next result is that those efforts helped elevate Japan as a top auto manufacturing country.
So IPs – patents, designs, production methods, and so on – are like water streaming downward and only downward from high ground.
Toshio Aritake