The "trade war" thing has been the most/only interesting ideas to come from trump, to me.
It was interesting in that he did recognized (fluked into?) an actual shift in public/expert position. China is the pro-trade side. They'll be willing to make concessions, do the work, etc. It's the beijing consensus now, not washington.
Large american companies are still on the pro-trade side, being multinationals. They also have pretty obvious interests. They want market access, american IP protection, they want freedom to operate mostly independently of the CCP.
Market access is a typical request. This has been the basic definition of free trade for a while. They probably can get this protection. Independance is a trickier one. I'm not sure it's realistic. Imagine a Chinese company operating in the states, with an a fully imported senior management and all "c-level" discussions in chinese. I dunno. I doubt they'll get what they say they want.
The "IP" point is interesting. Why does the american economy want US IP rules everywhere so bad? Same reason Disney does. They have the biggest IP portfolio. A pharmaceutical company's value (for example) is mostly IP. IE, the market cap is the IP portfolio.
Why would china want to use this IP system, where they start with fewer chips than the US? I'm not sure. Who says a fake Gucci is a crime, if the buyer knows it's fake. Why should a US drug patent grant a worldwide monopoly. This one would be a concession.
Anyway, it's not just pharmaceuticals that need IP. The economy is ethereal these days. Capital isn't building and machines. It's intellectual property of one sort or another, whether or not it's legally formalized as such.
..
PS: I'm Irish, not American. Realize from the wild votes in both directions (didn't think) that I've obviously waded into live american politics. I wasn't trying to make any political points. Just musing and bullshitting on the shifting world of political interests after reading the morning paper. I'm not against anyone, nor do I mean anything too seriously.
> Who says a fake Gucci is a crime, if the buyer knows it's fake.
It's not enough for the buyer to know it's fake, everyone who sees it must also know it's fake, or else the fake is freeriding on the cachet generated by Gucci's marketing.
People buy prominently branded fashion objects for their signalling value more than their utility value. Signalling which is easy to fake isn't very valuable.
It's perfectly possible to think that social signalling using fashion objects is wrong and should be eliminated, but signalling appears biologically determined and is common across many species, it's unlikely to be eliminated without committing greater wrongs.
It's worth having a dialogue about this. This specific type of signaling (flashing brands) is enforced by social rules that prevent chameleons. It would be pretty easy to imagine relaxing this - allowing products to appear externally in any form, as long as their nature is always recognizable to the owner (to prevent fraud). It's not clear this would be bad for society.
IANAL, but it seems to me that plastering logos all over a handbag is an abuse of trademark functionality doctrine. The function of the pattern is to make the owner appear wealthy, not to prevent buyers from being misled.
The purpose of brands and high fashion is not to be functional in the utilitarian sense. They are meant purely for signalling and their utility is an afterthought at best. See for e.g. women's jeans which have fake pockets.
For people who care about such things, its more important for their outfit to be congruent to some fashion principles (color, fit etc.) rather than the actual utility that such things provide.
Fashion is but the extreme end, where 90% or more of the value is created by the branding and designer cachet, but it goes all the way to much more prosaic items, like washing machines (Miele) and DIY tools (Makita), where the brand is acting much more as protection for a promise of quality, yet the branding still has pose value - showing off your middle class credentials when someone is visiting your house or borrowing your tools. I don't think there's any real cut-off point where you get to say it's an abuse, because value is whatever we humans think is valuable, whether that's high quality or socially desirable.
I wasn't trying to make a semantic point, more of a sovereignty or legislative point.
I'm perfectly willing to concede the semantic point: that bag is fake. The legislative one is "does thia have to be a crime?"
Trademark (like most IP rules) are ultimately decided mostly on utility grounds. Does this IP system produce or destroy economic value, and who's value is it producing and destroying.
Maybe China can do without trademarks and patents. Whatever you think about ip laws in general, there is certainly a self interested swing in favour of more liberal if you don't currently own any IP.
This has always been the case. America "stole" IP from Britain during the industrial revolution. China is doing the same now. IP laws are part of the legal doctrine of any country; another Sovereign entity cannot be compelled to follow it legally. So you use other tactics, e.g. membership in the WTO, which gives access to Western markets, to try and force other Sovereign nations to respect those laws.
It is very fascinating. There is a LOT of nuance behind the question of why certain countries manage to industrialize/develop and others fail to. And then answer isn’t obvious or simple. I think this is a nice article about this specific topic: http://foreignpolicy.com/2012/12/06/we-were-pirates-too/
It's more important to know where your money/the profit is going IMHO, who is being rewarded for their effort, etc, what type of behaviour is rewarded/perpetuated.
Similarly, do we want to reward people who participate in and perpetuate Pyramid-Ponzi scheme-like structures?
Where money and resources flows will have an impact on quality of life, the amount of offspring, and the role modelling/knowledge/behaviours passed down through generations.
Please stop to reconsider reality before labeling China "pro-trade".
As a foreigner, China is truly off-limits:
* In China, nearly all innovative industries are completely legally restricted from foreigner owned businesses (in contrast, in the US, the lone restricted industry is mortgages).
* Likewise, in China, most non-innovative industries require you to setup a company with foreigners as minority shareholders, so control is never in foreign hands.
* In China, all foreign private investment is also highly restricted with all transactions needing government approval.
* Large foreign-owned businesses operating in China seemingly always lose to local Chinese companies, not on merit, but by red tape or shady government practices: Google, Facebook, Amazon, Uber, and others
Sure, China is "pro-trade" in the sense of wanting to making money off the status quo trade imbalance.
But don't kid yourself, apart from wanting to strategically own foreign companies and import trade secrets, China has no desire to integrate its markets with the rest of the world in any fair way.
> * In China, nearly all innovative industries are completely legally restricted from foreigner owned businesses (in contrast, in the US, the lone restricted industry is mortgages).
Umm, what? Airlines must be majority owned by US entities, broadcast is controller (why do you think Murdoch got a US passport), Qualcomm couldn't be sold to a company incorporated in Singapore...I could go on.
Which is the historical norm. It took a series of extraordinary crushing defeats and the fallout therefrom to produce a China weak enough to be willing to "open" it's markets on terms not its own. Reversion to previous patterns is not terribly unexpected.
Serial foreign entrepreneur in China here. Your points are so incorrect I wonder where do you get this information that you feel stating it as fact is acceptable?
I feel compelled to dispel these because it's dangerous and unconstructive for the community to have such completely false information presented as fact. I might actually share a detailed post on this in the near future since I feel people here completely misunderstand China regularly.
As a foreigner, China is truly off-limits
No, it's not. Visas are not easy but they are easier than the US. As a founder, you get infinite renewal on long term business visas instantly, with low capital requirements and essentially no other requirements. I would say that China is very friendly and more welcoming to foreign investment than many other countries in measurable ways. In addition, corruption is very much under control and the business environment is overall pretty advanced. It's not all rainbows and unicorns: documentation and process can be very frustrating, but it's fundamentally an open and welcoming system. Once you're on the books, it's awesome. Digital tax, 100% mobile payment penetration, automated banking APIs, etc. Having been through the experience of applying for a US work visa and many types of Chinese visas, both for myself and employees, I am speaking from direct experience here and therefore feel qualified to comment.
In China, nearly all innovative industries are completely legally restricted from foreigner owned businesses
Absolutely, completely untrue. Restrictions exist only on particular industries (chiefly media, telco and some sectors of finance). Pretty much everything is open. China really likes innovation and key cities such as Shenzhen are actively seeking to bring in more foreigners, with an international entrepreneurial recruitment drive to bring startups to the city underway right now.
Likewise, in China, most non-innovative industries require you to setup a company with foreigners as minority shareholders, so control is never in foreign hands.
Absolutely untrue. You can set up a wholly foreign owned enterprise in almost any sector.
In China, all foreign private investment is also highly restricted with all transactions needing government approval.
Corporate setup requires government stamping, but I have never heard of a rejection of investment. There is an approval process on international corporate transfers and some restrictions on minimum domestic capital maintenance (largely for asset seizure in case of domestic legal concerns) but this is cleared if a company is wound down and there are so many workarounds in place that one could see these processes being streamlined in the near future.
Large foreign-owned businesses operating in China seemingly always lose to local Chinese companies, not on merit, but by red tape or shady government practices: Google, Facebook, Amazon, Uber, and others
The political reality is that it is not in China's national interest to allow the creation of vast databases of its citizens and their movements by foreign companies for storage on foreign ground. As with any market, it is important to understand where the limits are when doing business in China. However, the good news is the government is more likely to come knock on your door and let you know if they are getting uncomfortable with how things are going and offer you an opportunity to correct than outright shut down your business.
My personal experience with Amazon in China was that they had copy-pasted foreign process to China with little thought, and that seriously undermined their offering to the point where, even as a foreign business owner with some international infrastructure requirements, it made no sense to deal with them.
Even small foreign-owned businesses in China get weeded out through dubious enforcement
Food is my industry so I can probably add some context here. While I hadn't heard of this case, it's true to say that Shanghai has been particularly strong on cracking down on food safety related issues recently. This is partly due to the shake-up of food safety regulation which occurred recently at the national level and the evolving enforcement framework trickling down as a result. Frankly some areas are currently inadequately detailed, and it is unclear whether the case mentioned was due to an honest mistake, an upset former employee, or shady business, or some combination all three.
As a foreigner, if you marry a Chinese national, getting a Chinese work visa actually becomes harder
I am on my second marriage to a Chinese national and my second business. The Chinese visa system is not designed for people who cross categories - ie. doing business, also married. That's OK, it just means you have to apply for one category or another. The truth is, it is actually easier for founders to get long term visas than for people married to Chinese citizens. The visa rules are constantly evolving, in short it was very easy pre-2008, now it is a hassle but getting better. Unless you have visited Turkey or Syria, in which case it is very hard.
Sure, China is "pro-trade" in the sense of wanting to making money off the status quo trade imbalance.
Every country's government wants economic fortune.
I’ve worked for Microsoft in China, our C suite was all Chinese (well, many Taiwanese). The nearest foreigner headed up sales for the region, was a German. Americans were common, but they were almost all Chinese or Taiwanese who naturalized.
Our SVP based in Redmond was also a Chinese (In charge of all of Microsoft Research and advanced research). He would try to conduct our meetings in Chinese, and then would demure to English when a few of us foreigners walked in.
I do of course, and said so in my comment (I referred to them as Americans who naturalized from Chinese and Taiwanese nationalities). I was just pointing out that they were all Chinese speakers and were born in China or Taiwan. Conducting business in Chinese is not a problem for them.
It isn’t, but since we were talking about China anyways. Note that many Microsoft employees (as in most big tech companies) even in the states aren’t American, which is already quite different from Chinese tech companies. As for Europe, my colleagues in Cambridge conducted most of their business in English and most of the management was from Europe (not necessarily the UK). We didn’t have much presence in the continent.
Thank you. Although to be honest, I did not misunderstand OP. My comment was just a lazy (and therefore impolite) way to point out that things may be different in China compared to Europe and that OP's comment may not be a relevant response. As such my comment may actually deserve downvotes. I will try to do better in the future.
Ah, thanks for the honesty. I wish some days when commenting I had actually taken a break from HN due to the lesser quality, less thoughtful replies I'll make.
Europe and the US have a very extreme history. These trade norms were established when America was either your (as a west European) your saviour from fascism and protection from Stalinism, or your occupier. They were also fabulously wealthy, successful and powerful.
People have forgotten over the last 10 or 20 years, how things were until the early 90s, at least in terms of narrative perspective.
You think it's odd that in Europe, where the UK/Ireland play a substantial role, that meetings are conducted in English? Especially at tech companies, where US-based companies play a substantial role in the world?
From my experience, English is the common denominator of languages across Europe and tech. Most tech documentation is in English.
Regarding your postscript edit, there are many global participants of varying agendas working to disrupt faithful discussion of real issues and it is easy to be misconstrued, so I wouldn't take it personally.
Not to mention Korean ones (Samsung is famous for this). There are enough Chinese expats in the states that I’ve heard there are even a few American startups that conduct business in Chinese.
> China is the pro-trade side. They'll be willing to make concessions, do the work, etc. It's the beijing consensus now, not washington.
China isn't pro trade per se. They're pro export, in the old mercantilist sense. They've spent the last 30 years heavily restricting trade access into and within China by foreign entities.
They'll amass around a $900 billion to $1 trillion trade surplus with the EU over the five years 2015-2019. For the US of course it's even worse, closer to a likely $1.7 trillion over that time.
Here's how the China trade illusion works (and the West keeps falling for it for some reason):
Have vast, rigid restrictions on market access that few to none of your big trading partner nations have. Use an endless variety of means - some subtle, some beligerent - to thwart foreign entry and competition with domestic businesses (whether state owned or entirely private).
When caught behaving badly or not living up to promised standards (eg for the last two decades re the World Trade Organization), promise to improve, drag your feet, buy more time, make subtle improvements, tout those improvements while moving backwards on other things. All the while your actual goal is to get big enough to not have to ever play nice.
While you do all of that, pretend you're in favor of free trade. Tout that you are, yell it from the roof tops. It doesn't matter if you actually are, it doesn't matter what the actual condition of trade access is on the ground, what matters is that you act as the face of free trade through the process of touting it. It's all about buying more time by sowing confusion over what the real picture is and what's actually occurring (are they liberalizing, are they not, are they going to?).
Then one day in the near future you wake up and have a $30 trillion economy with little to no need of the imports from the EU or US. You also no longer need their capital at all. The foreign traders and investors can see themselves out if they disagree.
> Imagine a Chinese company operating in the states, with an a fully imported senior management and all "c-level" discussions in chinese. I dunno.
All foreign corporations are free to do exactly that in the US market. The sole practical consideration is being able to speak English to interact with the wider economy. If Toyota or Nintendo want to run their US subsidiaries with imported talent, they can do so. There are probably no large economies that have been more welcoming to foreign companies and imports than the US over the last 30 or 40 years. We let Toyota come in and kick Detroit's ass, and that was at a time when Detroit still had immense political power. Picture China allowing Google to do the same to Baidu right now.
The west acted as if mercantilism basically couldn't work. Ricardian theory of comparative advantage was elevated to near-religion status in the 90s and early 00s.
China not opening up fully was seen as an aberration that would ultimately only harm China rather than a potential long term threat. That was the prevailing attitude among policymaking circles (you can see this attitude reflected by checking old issues of The Economist).
Ultimately the fact that lots of profit could be made out of managed Chinese trade kept western countries from reacting in a sensible, self-interested manner.
Mercantilism still doesn't work, but like most bad things in capitalism, the corrections can take so long they may not be worth the pain they cause.
The idea is that we take advantage of China's willingness to make stuff for us (west) cheaply while they grow their exports, then when they try to raise prices, we switch away. The risk is the switching costs are expensive.
>Here's how the China trade illusion works (and the West keeps falling for it for some reason):
Plainly, its because most Western Governments (especially in the US) are heavily influenced by business interests via lobbies, PAC's etc. And Businesses simply want to use cheap labor in China to improve their bottom lines, even if that means the labor force in the US suffers as a result. They do not give a shit if China reneges on its WTO promises or destroys other Western companies.
Sometimes the kind of skilled labor force or logistical supply chain is simply not present in the US, or is too expensive to implement in the US.
Trump might be fighting for a good cause, but he is doing it in the most stupid way. The road to hell is paved ...
Case in point: the original TPP had plenty of protection for American IP. The orange demagogue ditched the treaty, all the other countries removed those protections and now he wants to come back. The pattern of stupidity is pretty obvious: the US needs international allies to prevail against China, but it won't get any ally with an "America first always" policy.
> the original TPP had plenty of protection for IP. The orange demagogue ditched the treaty
You mean the same position taken by the other party's entire field in that election? (even if you suspect that Clinton's opposition was disingenuous, and forced by pressure from Sanders)
There’s a difference between saying it needed to be changed and ceding economic leadership to China. Trump’s flip-flop is presumably after hearing from large businesses about the cost of being left out entirely versus changes they would have been comfortable with.
The world economy is not a zero-sum game. You're making the same mistake that Trump is. Everyone benefits from China, the United States, Europe et al becoming (and staying) rich and prosperous. We should all be concerned.
This is true, but status is always relative to others, and I get the impression that those with more nationalist leanings would prefer a slightly worse off America if China would remain a 3rd world country instead of rising to challenge America on the world stage.
The concerns I saw raised were about subverting sovereign power while elevating corporate power. I didn't read the source documents myself, but I would before getting too deep into the weeds on this topic.
Certainly, walking away from the table with some doctrine of, "unilateral agreements only" is shortsighted.
It was interesting in that he did recognized (fluked into?) an actual shift in public/expert position. China is the pro-trade side. They'll be willing to make concessions, do the work, etc. It's the beijing consensus now, not washington.
Large american companies are still on the pro-trade side, being multinationals. They also have pretty obvious interests. They want market access, american IP protection, they want freedom to operate mostly independently of the CCP.
Market access is a typical request. This has been the basic definition of free trade for a while. They probably can get this protection. Independance is a trickier one. I'm not sure it's realistic. Imagine a Chinese company operating in the states, with an a fully imported senior management and all "c-level" discussions in chinese. I dunno. I doubt they'll get what they say they want.
The "IP" point is interesting. Why does the american economy want US IP rules everywhere so bad? Same reason Disney does. They have the biggest IP portfolio. A pharmaceutical company's value (for example) is mostly IP. IE, the market cap is the IP portfolio.
Why would china want to use this IP system, where they start with fewer chips than the US? I'm not sure. Who says a fake Gucci is a crime, if the buyer knows it's fake. Why should a US drug patent grant a worldwide monopoly. This one would be a concession.
Anyway, it's not just pharmaceuticals that need IP. The economy is ethereal these days. Capital isn't building and machines. It's intellectual property of one sort or another, whether or not it's legally formalized as such.
..
PS: I'm Irish, not American. Realize from the wild votes in both directions (didn't think) that I've obviously waded into live american politics. I wasn't trying to make any political points. Just musing and bullshitting on the shifting world of political interests after reading the morning paper. I'm not against anyone, nor do I mean anything too seriously.