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May 31, 2005
Background to Danger
Eric Ambler describes in vivid color, in his suspense novel, "Background to Danger," the cross-cultural "copying" of which I wrote last week: that unfortunate species of simple replication that goes no further, creates nothing new:
“Mr. Hodgkin… was typical of that strange species of Englishman – the export travelers. You came across them in the most unexpected places; in remote Far Eastern towns, on local Continental trains, in the smaller hotels in cities all over Europe.
They spoke foreign languages fluently, grammatically, but with appalling accents, and were on excellent terms with whom they came in contact. They drank foreign drinks, ate foreign foods, listened to foreign points of view and remained completely incurious and indomitably English.
For them, the journey from Paris to Istanbul was different only from the journey from London to Manchester in that it was longer and punctuated at irregular intervals by baggage examinations. The cities of the earth were so many railway stations, distinguishable only by the language displayed on the advertisements and the kind of coinage expected by the porters."
[Paragraph breaks inserted for web readability.]
For all his international experience, the Mr. Hodgkin of the novel thinks viciously ill of his foreigner-acquaintances. “They’re like animals," he says, "and…I hate the sight and sound of them.”
While one is tempted to believe that such cruel sentiment was more typical of pre-World War II consciousness, there are those today who insert themselves culturally into the world of the other only to preserve a mere functionality. I speak not only of Americans or Englishmen, but Chinese and Japanese, as well.
Lacking the balanced consideration and deserved respect for that other world in which they circumnambulate, they may find some success at their work, and yet fail utterly at a larger purpose they may not see. The act of "copying" becomes to them no more than a gesture of utter cynicism.
Posted by Richard at 12:53 PM | Comments (0) | TrackBackMay 26, 2005
Fakes
One who deals daily in cross-cultural exchange, as do I, recognizes the propensity for mimetic behavior towards the subject of one’s ardor. Chinese often criticize – while hiding a secret admiration - those few westerners who’ve become more “Chinese” than the Chinese themselves.
But we all copy. Our ability to mimic is a valuable tool that allows us to understand and to learn. [I’m definitely not referring to this.] The greater value to oneself and to humanity, however, is in going beyond mere replication towards the creation of something new, characteristic of oneself and yet never before expressed.
Chinese speak in the perjorative of Japanese civilization, some of the cornerstones of which without doubt pay homage to China, as if it was a poor imitation. But anyone with only a bare knowledge must acknowledge the distinctive, idiosyncratic Japanese-ness in something as commonplace as udon (うどん). Compare it with la-mian (拉面). Both are noodles, the first Japanese; the second, Chinese, but characteristically different in their ingredients, taste and texture. Each is redolent of its own culture and not of the other, despite their common root of origin in China. What began as a copy has been recreated anew.
Americans, knee-deep in fake designer clothing and auto parts and watches, bemoan the outright Chinese piracy of American intellectual property (while often enjoying it in the privacy of their own homes). Rightly so, but it is as if Americans had never indulged in similar behavior.
Americans were once intellectual property pirates themselves -- of European technology, of the published works of British authors, of consumer products produced by other Americans. [For some background, see this study, this paper and this book review.] The legal regime established to prevent piracy developed in America and the western world incrementally over the past 150 years.
The western world, especially Americans, however, steadfastly insist that the Chinese immediately create the legal, economic and ethical environment that will end Chinese IP piracy. It simply can’t be effected in a nation of 1.3 billion, where people copy with a clean conscience: Chinese haven’t been taught and do not grasp the idea that copying is considered to be theft. Generations may pass before they do.
Aside from the relatively narrow business issues of asset theft and loss of profits, we need to know -- to gather a wider understanding -- what the Chinese are copying, why are they copying it and where are they going with it.
The Japanese have the well-deserved reputation of taking the clay of foreign ideas and things and shaping them anew. [This paper deals with the topic.] Chinese appear to have, in a sense, mimicked this exact behavior. And Chinese aren't merely copying things to be sold at market for profit, but, in fact, have progressed well beyond to the level of social structures and ideas.
The ultimate question is this: will the Chinese move beyond mere replication to something newly creative and expressive of themselves? More discussion of this to come.
[Note: The day after this posting, the Financial Times has printed Oded Shenkar's, "Why Fake Goods are a Natural Economic Motivator." Subscription Required. From the piece,"The Chinese have a huge problem sustaining a stream of innovations; de Tocqueville pointed this out 170 years ago and it is still true today. There are many ways in which they are planning to catch up but, for now, free borrowing is essential to the system. It took the US almost a century to turn from a violator (ask Charles Dickens if he ever got royalties from American publishers) to an IPR champion. How long will it take China? The Chinese do not even have a proper legal framework in place. For instance, legal opinion is split as to whether exporting a fake product constitutes a sale under Chinese law. What is not in question is that enforcement is largely absent."
Posted by Richard at 9:49 PM | Comments (0)May 17, 2005
Late-breaking: U.S. Warns China On Currency
UPDATE, June 23, 2005:
Greenspan informs U.S. Congress that revaluing the renminbi will not increase manufacturing activity or jobs in the United State.
Original post:
Without further comment, please see:
New York Times [Registration Required]
For the response from PRC officials, see this.
And an article on the Chinese "rejection" of revaluation from the Financial Times. [Registration required.]
More than you need here. [In Chinese.]
For background, see this. [In English.]
Posted by Richard at 8:14 PM | Comments (0) | TrackBackMay 13, 2005
Event Announcement: Congressional-Executive Commission on China
Intellectual Property Protection as Economic Policy: Will China Ever Enforce its IP Laws?
Monday, May 16, from 2:00 – 3:30 PM
Hart Senate Office Building, Room 192
Washington, D.C.
OPEN TO THE PUBLIC, registration is not required.
There is no charge for admission.
The Congressional-Executive Commission on China will hold another in its series of staff-led Issues Roundtables, entitled "Intellectual Property Protection as Economic Policy: Will China Ever Enforce its IP Laws?"
This Roundtable will examine the current crisis resulting from the lack of IP enforcement in China. Looking beyond the simple question of how much piracy and counterfeiting occur, we hope to examine the policies that have created the current problems and assess whether they are likely to continue in the future. The witnesses will explain the scope of the problem, analyze its source, and assess which strategies will advance IP protection in China.
The panelists:
Daniel C.K. Chow, Robert J. Nordstrom Designated Professor of Law, Ohio State University Michael E. Mortiz College of Law.
Eric H. Smith, President, International Intellectual Property Alliance.
James M. Zimmerman, Partner and Chief Representative, Beijing office, Squire, Sanders & Dempsey LLP.
Posted by Richard at 3:49 PM | Comments (0) | TrackBackMay 11, 2005
The Plan to Sell State's Interest in the Chinese Stock Markets
The broughouha receiving great wads of press this past week relates to the Chinese stock markets. In a nutshell, the 证监会 (China Securities Regulatory Commission) has apparently decided to implement a “reform” of the markets. Or at least they have decided to toe-test the waters.
As I answered in “Who Owns the Equity in Chinese-Listed Companies?” the state does, or at least, two-thirds of it. Last week, comes the report of an experimental program by which state holdings may, it is hoped, be successfully unwound. [Pay site. Registration required. Or see this page.]
To be fair, the program involves only four companies, heavily invested in by the state. Details of the rumored process by which the companies were selected may be found here. [In Chinese.] Proposed reasons for the selection:
对于已经公布的四家试点企业，华泰证券裴雷认为，这批公司尽管处于不同的地域，属于不同的行业，但它们至少有这样几点共性：
从规模来看，四家上市公司都不属于中央级的大型国有企业，而属于地方国企和民营企业。紫江企业、三一重工均为民营企业，其中紫江企业还是中外合资公司；清华同方和金牛能源则是地方性国有企业。从股权结构来看，四家公司的股权结构都相对简单，控股股东能够具有绝对的发言权。
而在股份类别上，四家公司均为纯A股公司，未含B股或H股。从经营业绩来看，四家公司自上市以来均未出现过亏损，且盈利能力较强。尤其是近三年来业绩发展持续稳定，显示出较强的行业竞争力。
In other words, the chosen companies are all profitable and competitive smaller, regional enterprises with uncomplicated stock ownership structures involving only A shares. So, is this an experiment representative of a sell-off of state interests in the market as a whole or more likely one conceived to please members of the State Council? [That was a rhetorical question.]
[Let me answer it.] This is a program designed to ensure the highest chance of success. Is it possible that the wider implementation of the sell-off has not yet been approved at the highest levels, but is dependent upon the success of this experiment? To what extent is wide scale implementation a certainty?
Yes, we are already reading the Chinese media play to the mass by portraying the program as the vanguard of a “total solution.” A Jiangnan Daily headline proclaims that “The State Council Has Now Become Directly Involved: The Problem of the Chinese Stock Markets to be Thoroughly Resolved.” But, in the past, the state has announced many programs with similar fanfare that have nonetheless died the slow death of wholesale inattention.
By the way, “unwound,” as I mentioned above, is the Financial Times's polite parlance for “dumped,” which I think, although a rude allusion to a garbage can, the more apt verbal selection. The introduction of an additional 200% of the outstanding stock to failing markets, already dead-swinging at a six-year low, can not possibly be a hopeful occurrence. If timing could be any worse, one could not think of it. But is any timing propitious for the offloading of more surplus shares than currently exist on the market, under business conditions at present in China?
The markets were designed with a fundamental flaw – massive state involvement -- in what became overvalued shares. Some have called for massive state injection of funds in the markets, which the magazine, “Caijing,” editorializes as “wrong headed” and “dangerous.” One doesn’t see how the Chinese state can save the day with any plan. It is a conundrum, with the only real resolution likely causing collosal damage domestically while baring the weaknesses of the Chinese economy to the world.
UPDATE: June 13, 2005
IHT: Tsinghua Tongfang rejects; Sany accepts.
The Financial Times of London paints a different portrait: "China's plan to reform the complicated shareholder structure of its stock market has suffered a setback as investors in one of the four companies involved in its pilot programme rejected the proposals." [Subscription required.]
Is "setback" an accurate portrayal?
Posted by Richard at 8:41 PM | Comments (0) | TrackBack
