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.And then there is the illegal form of knowledge transfer, whichthe West has been particularly reluctant to combat.The modusoperandi of many young Chinese engineers is simple: better trythan buy.China today is the world s epicenter of product piracy.Acompany in Shenzhen was recently caught making exact duplicatesof network technology by Cisco Systems, a California-based com-pany that designs and sells networking and communications tech-nology and services.A company in Inner Mongolia produces aknockoff of Procter & Gamble s top-selling Head & Shouldersshampoo.Not content with printing black-market copies of Britishauthor J.K.Rowling s Harry Potter series, the Chinese have comeup with their own version of the fictional character except thatthe Chinese Harry Potter has nothing more in common with theoriginal than his name and a number of key personality traits.This illegal knowledge transfer is incredibly damaging to theWest.According to the United States Patent and TrademarkTHE WAR FOR WEALTH 165Office, Western automobile manufacturers could employ an addi-tional 210,000 people if China would stop making illegal copiesof auto parts.Eighty percent of the motorcycles sold in China areimitations, say officials at Japanese motorcycle manufacturerYamaha.About 90 percent of music CDs sold in China arebelieved to be pirated versions.The structure of many intellectual property laws actually pro-motes piracy.For example, it can take up to two years from thetime a patent application is filed before the corresponding patentis granted.Chinese companies know how to use this time to theiradvantage, and even those who continue to copy or imitate aftera patent has been granted are unlikely to face any serious conse-quences.Chinese officials do conduct raids occasionally, but atirregular intervals and mainly to appease Western companies.Inthe worst of cases, the offending Chinese company faces the threatof confiscation of its goods.Because the government has notimposed any production bans or significant fines in recent years,a certain sense of shamelessness has developed, so much so thatdenouncing such activities is seen as impolite in China.The practice is so widespread that entire steel mills or individ-ual production lines are copies, sometimes even within view of thejoint-venture companies that provided the knowledge in the firstplace.Even such high-profile projects as the construction of amaglev railway in Shanghai are not immune.The Chinese part-ners of Siemens and ThyssenKrupp the inventors and licenseholders of magnetic levitation technology through their joint ven-ture company, Transrapid had long urged these companies todisclose the details of the system s control and propulsion tech-nology.When the executives refused, the Chinese apparentlyopted for a less-than-savory way of gaining access to the technol-ogy they wanted.On a Friday night, Chinese engineers broke into the Trans-rapid s maintenance station to measure parts used in its propul-sion system.Their activity was recorded by a security camera,which led to a discussion with Wu Xiangming, the head of theShanghai Transrapid project.But Wu reacted coolly, refusing to166 GABOR STEINGARTadmit that the nocturnal break-in had been a mistake.Instead, hetold his joint-venture partners, the purpose of the nocturnalescapade was to promote research and development.The Chinese are essentially fueling the innermost core of theireconomy with energy generated elsewhere.They buy time byacquiring Western companies and, more importantly, they stealtime by demanding free use of the concepts others have devel-oped. A problem of this magnitude can only exist as a result ofthe direct or indirect participation of the state, says Daniel Chow,a professor at the University of Ohio and one of the United Statesleading legal experts on intellectual property.China s accession tothe World Trade Organization and the corresponding obligationto comply with the rules of free trade have done little to changethe country s practices.According to a study by consulting firm Booz Allen Hamilton,countries like China now are able to use the knowledge they haveacquired, legally and illegally, to stage  successful attacks. PhilippVorndran, senior investment strategist at Credit Suisse FirstBoston, says,  The Western industrialized nations have trans-ferred much of their know-how to China, thereby fulfilling theirpurpose.They won t be needed much longer [ Pobierz całość w formacie PDF ]