EU, U.S. Perception: "China Is Discriminating". What Are We Going To Do Against It?

US: We have so many
stars, we deserve 
to be treated
accordingly in China

U.S. Vice President Joe Biden is visiting China to try to smooth the Sino-Chinese relations (one can argue that the U.S. is borrowing money from China to import from China) and meet with his Chinese counterpart Xi Jinping (习近平) who is expected to succeed President Hu Jintao (胡锦涛) in 2013. With the election coming up in November 2012 their is pressure on the Biden and Obama to show that they can create new jobs to get the U.S. economy going. 

Perception

Biden is going to talk also with U.S. and Chinese business leaders. Kate Andersen Brower and Michael Forsythe point out in their Bloomberg article that U.S. business leaders are more worried about the level playing field in China, which includes intellectual property protection and enforcement, than the alleged overvalued Renminbi that makes export to China more expensive. 

""Our members do not think currency is the top issue in our relationship," said Erin Ennis, vice president of the U.S.- China Business Council. Bigger concerns are "level-playing field issues," like opening up the Chinese market to U.S. exports and protecting intellectual property."

Tony Su, corporate vice president and president of DuPont Greater China was quoted saying: "We have a rising concern about IP protection," Su said, adding that it is an especially important consideration for his company, the biggest U.S. chemicals maker by market value and second-biggest seed producer in the world. "The government can be an example to industry that stealing technology will be punished by law."

We have some stars,
please consider
us as stars  in China

Surveys in both the EU and U.S. confirm the concern about discrimination of foreign firms in China. When EU business leaders were asked " will the Chinese government have policies in place that discriminate against foreign companies?"in a survey by the European Union Chamber of Commerce in China, 46 percent (36 percent in 2010) answered "Yes, in the next two years."
And when the American Chamber of Commerce (AmCham) asked whether China is discriminating against foreign companies with its licensing process, 71 percent answered yes.

It is also interesting to watch the foreign politics strategies play out in regard to China. Is the U.S. strategy, which is arguably more assertive but also more confrontational more effective than the EU strategy that is more constructive but also more passive. I think if the U.S. and EU would coordinate their efforts and come up with a combined good cop bad cop approach, they can attain better results than if they would operate on their own. What do yo think?

Read the Bloomberg article via SF Gate, here

Now That We  Some EU and US business leaders Found Perceive Love Discrimination, What Are We Going To Do With Against It?

We are talking about perception. Now what are we going to do against it? Like each year the European Chamber of Commerce has formulated some interesting suggestions in their 'European Business in China 2011/2012 Position Paper' that will be launched on September 8, 2011 in Beijing and Shanghai. The following subjects, that are all related to intellectual property rights, will be covered:

1. The positive role European companies can play in helping China reach the goals of its 12th Five-Year Plan:
-Developing the service sector
-Enhancing environmentally-friendly and advanced technologies
-Encouraging Innovation
2. An overview of the key themes of recommendations to Chinese policymakers:
-Increasing Market Access
-Enhancing Transparency & Predictability in Legislation
-Improving Regulatory Efficiency
-Encouraging Innovation through Intellectual Property Rights Protection
3. Recommendations to both European and Chinese governments on EU-China commercial relations and the prospects for a bilateral investment treaty.

The Beijing launch of the paper will be held at Kempinski Hotel at 4 o'clock (free for members, 400 Renminbi for non-members) Dirk Moens, secretary general of the Chamber and Davide Cucino president of the Chamber will give a presention, see here. The Shanghai launch will be held at The Westin Bund Centre Shanghai at noon (free for members, 300 Renminbi for non-members) and Piter de Jong, vice president of the Chamber will give a presentation, see here.

Piter de Jong explains in a Squawk Box CNBC interview how the EU companies are missing out on a trillion dollar procurement, he also elaborates on the business confidentiality survey 2011 by the EU Chamber of Commerce in China, see here.

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China Cockpit: Flood the Market With Counterfeits To Fight Inflation

Imagine China Government Airlines, where the Chinese government is trying to pilot its citizens from poverty to wealth in a way that those sitting in different classes (such as the superpremium class with private beds and the class where you have to stand all flight)will stay harmonious. It's interesting to think what decisions the pilots make in the cockpit.

To make a country the size of China and with such an immense contrast between rich and poor develop in the right direction seems to be a gargantuan challenge. You can say a lot about the Chinese government, but they did lift millions out of poverty during decades of economic growth. How did you they manage this. Western style democracies are marked by sudden changes in policies every time the politic colour changes in cabinet. China's economic policies are much more long term and have proven to be able to absorb bumps in the road because of the financial crisis.

Are the central and local authorities doing what they need to do? Or is China having a lot of luck? Sometimes I think that the central authority is coordinating the decisions of all the ministries in a way that might be compared to the decisions made in a cockpit.

During president Hu's visit to the U.S. (January 18-21, 2011) the relative worth of the Renminbi in relation to the U.S. dollar was discussed. But as president Obama pointed out also other issues unrelated to currency "that must make sure that our trading relation is fair and a win-win situation as opposed a win-lose situation." Obama made a reference to progress in the field of government procurement process, which is getting more open and fair to US businesses according.

Obama: "Some of [the issues unrelated to currency] has to do with intellectual property protection. So we were just in a meeting with business leaders and Steve Balmer of Microsoft pointed out that their estimate is that only one customer in every ten of their products is actually paying for in China. And so can we get better protection? Because that is an area where the U.S. excels: intellectual property and high added value products and services. "And the Chinese government has, to its credit, taken step to better enforce intellectual property We got further agreement as a consequence of his state visit and I think president Hu acknowledges that more needs to be done."

However, if one peek into China's cockpit, you might get a different picture. In order to keep China's plane on course it might loosen up on IPR enforcement: Because China's currency is not freely convertible, there is no direct link between the money in the country and the value of the currency. The money supply in China is too high, therefore inflation is on the rise. So in order to not make the products more expensive, one can flood the market with very low cost products in high volumes: counterfeit and pirated goods could be candidates for fighting inflation. To stimulate China's domestic demand, as the U.S. recommends, will only increase China's inflation.

Around 35 minutes Obama is talking about IPR.

What do you think?

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Hu Jintao's Serious Words About Innovation and IPR in China: "Treasure As Your Life"

Innovation is for each country crucial to compete. Now China's Harmony Express, the world's fastest long-distance passenger train service between Guangzhou (廣州) and Wuhan (武漢) has just been launched and is with 350 kilometers per hour 50 kilometers per hour faster than Japan's Shinkansen bullet train and France's TGVs. Read Tom Mitchell's article for FT here. Therefore it is no wonder that China's president Hu Jintao (胡錦濤) is urging local companies to put a lot of efforts in innovation.

At a Zhuhai (珠海) software company, cited by CCTV via China IPR he even said : "Nowadays, the competition in information technology is extremely fierce. I hope you, as a software company, will treasure technological innovation as your life. You need to own intellectual property rights for your products. I hope you will be pioneers in the development of our country's software industry."

Read here.

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Promotion and Protection of China's Culture: Hard Copyright For Soft Power

In The Economist special report on China and the US called 'Overkill' where the author James Miles postulates the opinion that China is piling up more weapons than it appears to need, Mr Miles also writes about the need for China to develop its soft power:

"Soft power was mentioned for the first time by a Chinese leader in public in 2007. Culture, said Mr Hu [Jintao, China's president IP Dragon] (oblivious, it seemed, of the cold-war overtones of his remarks), was of growing significance in the “competition in overall national strength”. China should therefore “enhance culture as part of the soft power of our country”."

Read The Economist article here. Copyright can protect cultural manifestations, so makes copyright crucial to develop China's soft power.

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Hu Jintao And The Three Supremes Or Do You Rather Listen To Diana Ross?

Intellectual Property Law in China, of course, is not an insulated part of Chinese Law. A fortiori, it is an integral part of it. So those who are interested in IPR in China, could take notice to China's legal reforms of the last thirty years.

Ms Sky Canaves, lead writer for the WSJ's China Journal, visited the Foreign Correspondents Club of Hong Kong Thursday to give the highlights Mr Jerome Cohen's speech. Mr Cohen is a China Legal Expert, author, professor and Of Counsel for Paul, Weiss, Rifkind, Wharton & Garrison LLP.

In her article Ms Canaves reports what Mr Cohen said about the theory advocated by China's president Hu Jintao since December last year, called: 'The Three Supremes', which undermines a rule of law, at least from a Western perspective:

"The three supremes are, in descending order: the party, society and… the constitution and the laws. The new supreme court president has said with respect to death penalty cases, for example, that the feelings of the masses are number one, when courts have to make decisions about whether people live or die. Number two is social conditions, and number three is the legal law. This has demoralized many professionally oriented members of this rising legal class [and they have been] subject to intensive political indoctrination in the theory of three supremes."

This does not bode well, also in relation to the impartiality and independency of the IPR law judgements, that might not decide about life and death situations, but certainly can have a crucial impact on China's society.

Read Ms Canaves' interesting article here.

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