American firms must form more joint ventures with Chinese business entities to address the longstanding intellectual property rights (IPR) enforcement problems in China. To incentive their formation, the United States and China should create a bilateral agreement with benefits for joint ventures. About 86-90% of all IP protected goods sold in China have been illegally copied. As a result, U.S. industries lose billions of dollars and thousands of jobs per year. Local Chinese businesses have a vested interest in the counterfeiting industry, so China is unlikely to support IP-protection until incentives change. China does not consider IP-protection a priority because it is a net importer of IP-protected goods. Many local communities …show more content…
For example, General Motors (GM) partnered with Chinese manufacturers in 1997 to produce their vehicles in China, giving China 66% ownership in the combined venture. As a result, GM can outsource manufacturing to China and cut down costs, while Chinese manufacturers earn technological transfer and a share of profits. A bilateral agreement that encourages joint ventures between the U.S. and China will also help to foster a culture of IPR enforcement in China. Intellectual property lawyer Frank Lin attributes China’s dismissive attitude towards IP protection to China’s recent emergence from Communism, as private property rights in China have only existed for one generation. Joint ventures will help to accelerate a shift in cultural attitudes. China might object to a bilateral agreement encouraging joint ventures because it would place purely domestic Chinese firms at a relative economic disadvantage. However, to persuade China to adopt an agreement, the U.S. could point out that China cannot continue to depend on selling low-value-added goods to Western consumers for economic growth. As PRC officials have stated, China must shift from an export-led to a consumption-based economy by harvesting domestic demand from its growing middle class. Joint ventures would allow China to produce goods domestically for consumption rather than export. Some may object by claiming that a bilateral agreement provision for joint
The simplicity of doing business index evaluates the influence of direct policies disturbing businesses in a particular nation. According to the index, China was ranked the 89th out of 185 countries, whereas Russia, Brazil and India were graded the 120th, the 129th, and the 133rd, respectively. Therefore, China is the best option amongst the four in terms of providing a stable business environment. However, there are two significant drawbacks surrounding the Chinese regulatory framework that would critically concern GENICON. Firstly, the country has a track record of not protecting foreign intellectual property rights. As the knowledge base for the medical devices that GENICON are carrying is readily available, local manufacturers can effortlessly start manufacturing nearly indistinguishable products and sell them at lower prices. Second, policy implementation in China is often escorted with deflection, as implementation measures are carried out in unpredictable and contradictory manners. Unavoidably, the uncertainty around the regulatory system creates additional legal risks. As exhibit 3 shows, the corruption perceptions score ratifies the lack of transparency within the Chinese legal structure. According to transparency international index, China scored 3.6 out of 10 and was ranked the 79th,
Joint ventures (JV) are a popular method of foreign market entry because they theoretically provide a way to join complementary skills and know-how, as well as a way for the foreign firm to gain an insider’s perspective on the foreign market. Since China began its market opening in 1978, joint ventures have been the most commonly used form of foreign direct investment (FDI), with about 70% of FDI in China in the 1980s and 1990s taking the form of joint ventures (Qui, 2005, p. 47). The Chinese company, as well as the foreign investor, has since 1978 been drawn to the joint venture form. Walsh, Wang & Xin (1999) note that from the Chinese
The legal system is another issue to be considered when doing business in China because it is still viewed as being in a developing stage. Contracts, for example, are highly influenced by this difference. In the Chinese culture, contracts describe how relationships will be developed whereas in the United States, the contract is a binding agreement that spells out the specific terms, conditions and expectations from each party involved. As Company X pursues the possibility of expanding business to China, it must understand that the Chinese business culture does not place as much emphasis on the binding force of a written contract.
The following examines the nation of China and its trade relations with the world, particularly the United States. The focus is primarily on China’s culture and how it impacts business dealings with other countries. Areas examined include: Religion, Management Philosophy, and Business Etiquette. Also discussed is China’s growing status as a world super power and how that has impacted the global business landscape. Likewise, various trading partners are examined and the effects of doing business with China, specifically for the United States. Points of concern for the United States are things such as the
The World Intellectual Property Organization (n.d.) helps one understand the importance of protecting intellectual property. They have spelled out several reasons of this importance including inventing new works in technology and culture, which allows progress to be made that, can be utilized worldwide. In addition, the legal protection of intellectual property encourages the commitment of additional resources for further modernization. Finally, promoting and protecting intellectual property encourages economic growth. It creates new jobs and industries. Protecting intellectual property also enhances the quality and
It's prevalent to affirm that the China and the United States relationship have improved over serval decades; nevertheless, both countries does not seem to play by the same rules. China censorship and apply heavy laws and regulations to benefit its local industry over the rest of the world's organizations in an apparent unfair manner; having said that, the Hofstede’s individualism cultural dimension sets China as a collaborative nation and the United States as an individualistic nation. With this precedent, would you think that a third party or mediator could be the driver that allows both nations to collaborate and coordinate their agenda?
The United States and China have been in a long-term lop-sided relationship where China makes things and America buys them. At least this this relationship is becoming a little more reciprocal by moving in the direction of the United States.
If the United States is going to stand by and let China break the agreement that we have set then what is the point of having rules or laws in the first place? If we can accept the fact that China is breaking our laws then we can also understand that this behavior can very well lead to a state of anarchy and lawlessness. These are all things that are breed by a lack of law, and also facilitated by a lack of proper enforcement of our current laws. This is a warning also for the future as we show China that the United States will not stand for the flagrant breaking of its laws.
China is on its way to attaining mega market status as a consumer of technological goods and services. Countries unwilling or unable to compete for a share of this market place put themselves at a substantial competitive and economic disadvantage. The admission of China into the WTO will greatly benefit many companies across the board in the United States. The potential for computer makers, software makers, internet providers and internet service providers are immense and American companies could gain tremendously from their potential. These benefits will not be limited to the big name companies of the United States either. Smaller start-up companies will be on the same grounds now and receive the same benefits as larger firms. The small companies will now be able to sell their products in China where as they could not do so before because of the numerous obstacles that only the larger firms were equipped to maneuver around in China. Thus all businesses working from within the United States will have the fair opportunity to extend their reach into China.
In terms of geographical breakdown of imports, again the major trading partner is Asia accounting for around 66 per cent followed by Europe 17 per cent and USA 9 per cent. The import/export imbalance with respect to the USA is one of the reasons causing discomfort in Washington
With China emerging as a global power in business within the last decade, knowing about doing business in China has become more important than ever. There are both many advantanges and challenges with doing business in China in this modern era, and understanding both sides of this coin is the key to being successful in China. Some aspects to keep in mind include the cultural barrier, the price of the work force in China compared to the United States, and have the “made in China” brand be accepted back in the United States.
Studies have estimated around seventy percent of the intellectual property theft is related to China. The head of the National Security Agency told a Senate panel that China’s government
This site contains information on China's patent and copyright law. It goes on to discuss some ethical issues about China's lack of law enforcement on intellectual property protection.
Yes! The Chinese auto industry is attractive to BYD. Given the expected growth and demand in the auto industry, combined with Chinese government having stopped issuing production permits for new automotive companies, there are very few remaining opportunities to get in to this booming auto industry. Moreover, BYD is getting a good bargain as the assets of the state-owned Qinchuan Auto are being sold at a cheaper price. The state owned auto manufacturers without foreign partners accounted for 25% of auto sales in China. Many of the SOE manufacturers did not even have R&D departments. Because most of the automobile parts were imported, similar models of cars cost more in China than in USA. The existing foreign joint ventures were selling the vehicles at prices that gave them margins of 10% to 20%. Considering the current situation, there is room for low-priced entrants. Wang always dreamt of applying Li-ion battery technology to develop an electric vehicle. Using newer battery technology and assembling it cheaply, the vehicle could be competitively priced and represent a way for China to leap
There are two sides to the problem, the Chinese and the American, and Ray is the only one who can see both of them. The reasons for these two points of view are the socio-cultural differences that exist among countries. Culture is what defines a country and it can be composed of the language, values, religion, models of conducts, and beliefs, among others. There are many cultural differences between China and the U.S. China has a strong sense of hierarchy and respect towards figures of authority. For example, the vice president of a company might decline to participate in a very lucrative opportunity if it meant going over the president and his boss. This is a behavior that many Americans would find difficult to understand because their priority would be to make money. Another example is the role women play in business world. Even though the number of professional Chinese women has grown, men still think they are inferior, which is why when they see a woman succeeds in a position usually occupied by men; she earns great respect (Fang, 2008). This is actually something that other countries looking to enter Chinese market can use to their advantage. These and the many other cultural differences that exist between China and the U.S. explain why they see the problem in a very different way. Based on these differences, if Rocky River decides to pull out of the venture, it will be very difficult for the Chinese to trust the