Monday, July 26, 2010

JCB's Chairman Compares China's IPR Enforcement To Disease At Banquet With Premier Wen

Jonathan Guthrie's article for the Financial Times about the travails of JCB, the manufacturer of loaders, forklifts etc. to survive the economic crisis, includes quotes of its chairman. This Sir Anthony Bamford allegedly said to the Chinese premier Wen Jiabao during a banquet that the unlicensed copying of Western technology by Asian manufacturers equals "cancer".

Is this an effective metaphor or a hyperbole that is offensive to those who suffer from it directly or indirectly? According to Wikipedia, cancer is a class of diseases in which a group of cells display uncontrolled growth, invasion and sometimes metastasis. Many times the counterfeit and piracy can grow beyond the control of the rights holder. Invastion (intrusion on and destruction of adjacent tissues): it can destroy market share of the genuine product. Metastasis (spread to other locations in the body via lymph or blood): spread to other locations via export or up and downloading. It might be accurate at some level, but very stylish it is not. And these expletives lead to inflation of meaning. What's next? Godwin's law comes to mind.

One cannot accuse Sir Anthony of using euphemisms or much talent for diplomacy. Then again he is not mentioning China but uses the more generic category of Asian manufacturers. But premier Wen took the hint that he was meaning China and Guthrie reported that premier Wen answered according to Sir Anthony: "He said that China was a big country with millions of mouths to be fed, and that many Chinese businesses were suing Chinese competitors for the same reason".

In the first part of the answer "China is a big country with millions of mouths to be fed" the premier plays the "China as a developing country" argument. And the latter part "many Chinese businesses were suing Chinese competitors" contends that the problem that bothers foreign businesses also bothers Chinese companies. In other words the problem is distributed equally over foreign and domestic companies. This remains to be the question. China can easily come up with a number of intellectual property rights (IPR) disputes between Chinese companies that outnumber those IPR disputes where a foreign companies' IPR in China is involved, in absolute terms. However, if one looks at the relative numbers I am positive that the percentage of foreign firms whose IPR are infringed in China is higher than the percentage of domestic companies' IPR that is being infringed in China.

In short: domestic companies' IPR infringed divided by all domestic companies with IPR versus
foreign companies' IPR in China infringed divided by all foreign companies with IPR in China

Openly critizising China's IPR enforcement to the Chinese premier during a banquet is a route not much travelled by fellow captains of industry. To my knowledge it is the first time (let me know if I have missed other examples). Most company representatives are afraid that critique will lead to repercussions, in the form of covert barriers. Let's look how JCB fares in China in the future.

Read Mr Guthrie's article here.

No comments: