[opportune]

Pretty sure that's only true if you actually set up operations in China. Not that they might not try to get the IP anyway, but it's definitely not a given.

It makes complete sense for a Chinese investor to want to invest in biotech in the US and not China, btw. The US is a world leader in biotech and the American market is... very lucrative in the biotech area as well.

[mdorazio]

Nope, it goes for companies setup stateside as well. For example, Faraday Future, a now-failed electric car startup was headquartered in California, but had very strong IP transfer methods in place to get technology developed here back to the China "sister company" also run by the Chinese investors. The same setup is used at a couple of other China-funded startups I've run into in the last couple years as well. Basically, if you take Chinese investment money it's highly likely to come with some very strong strings attached.

[RidingPegasus]

I can never understand how people are complaining about this stuff. You willingly and knowingly sign a contract with the terms stated right there. Whose fault is that? The Chinese?

If you signed a contract handing over your large profitable company in exchange for some magic beans who exactly is the bad person here?

Don't sign the contract if you don't agree to the conditions. The real people to blame for IP transfer don't seem to cop a single mention by most.

[avinium]

> I can never understand how people are complaining about this stuff. You willingly and knowingly sign a contract with the terms stated right there. Whose fault is that? The Chinese?

Have you ever done business with/in China? Contracts are treated like toilet paper, and most of the stuff OP is talking about probably may not have been written there in the first place.

It's definitely possible that the tech transfer provisions were there in clear black ink, and so the founders knew exactly what they were signing up for.

It's also possible that the condition was "we will invest on condition that we nominate the COO", and the COO then proceeds to filter all research/designs/etc back to the sister company. It's also possible that the contract says funding injections will be provided at milestone X, and up until that point the investor is saying "sure, no problem", then at the 11th hour the investor threatens to withhold it until you give them copies of all your research.

Having worked there and experienced all of this first hand, I think it's unlikely that it's as simple as you imagine.

[jorblumesea]

Given the Western way of doing business, it does come as a shock when China spins up a complete clone of your business with government money, including IP and R&D. It's malicious intent. They have no motivation to see the business succeed.

It's not like it's spelled out in the contract: "we will use free loans from the Chinese govt to take your tech, undercut your markets and put you out of business. We have no intentions of letting your business thrive and survive."

We're getting smarter about it but this is way of doing business is very foreign to the West. The West sees investors as capital assets and not active market players. When Peter Thiel invests in a company he is not looking to spin up his own competing clone. He wants the business to succeed. Not so in China, who has a vested interest in running US businesses into the ground.

[RidingPegasus]

Should other countries cede sovereignty and do exactly what others dictate to them? The West needs be smarter about how to compete and deal with the global landscape rather than crying about it incessantly and childishly trying to divert blame. Nothing illegal happened in the examples above, Western CEO's willingly handed over their property knowing full well what happens. And they did it to profit.

India flagrantly walks all over IP too. They have a massive export business stealing new pharmaceuticals and selling generics to the world. This is the reality of the world.

Either get smarter at how to manage this stuff or give up. The US is hardly in a position to suddenly want an international arbiter deciding who is playing fair or not given the history of torn up treaties and general aversion to international governance.

It's not a game of baseball, countries are free to make their own rules and decide whether they respect yours or not.

[SkyMarshal]

As a Westerner I fully agree with this. US seems to have this conceit that China, India and other emerging economies will play by the post-WW2 global trade rules we set up, if we just continue to nudge and pressure them in that direction. But it's been obvious for a while now their intent is to play by their own rules. US whinging about something so blatantly obvious, unsurprising and foreseeable is pretty lame.

[derefr]

> It's not like it's spelled out in the contract

I mean, it is, just not in those words. What we're talking about here is a vulnerability in the contract, in the software-security sense. Everyone should be reading contracts the same way they read source code during a security audit: under the assumption that all parties involved have malicious intent and are trying to destroy one-another 100% of the time. So when a contract says "we can do X", it must be read as "we can do X to make us succeed at your expense." Just like when code says "this module can do X", it must be read as "an attacker having gained control of this module can do X to succeed at your expense."

[bin0]

Here's the problem - there's usually a stipulation of good faith. A Chinaman investing money in your company with the intent to clone it like that is not in good faith, and would be so adjudicated by any American court of competent jurisdiction. Even if, however, your contract is technically enforceable in American court, it's not easy to go get some one from China to punish.

In America, you're very much expected to be a "right guy" when dealing with others. Regardless of what the piece of paper says, you will (deservedly) gain a bad reputation is you exhibit bad behavior, and become a person with whom no one wishes to transact. Word will get around. I think this system of doing things is highly effective, contracts aside. Interestingly enough, this is strongest in the South, followed by the Midwest, and only occurs to a lesser degree on the coasts. I sill haven't figured out why.

China has a very different perspective. Her business culture involves things like committing embarrassing acts in each other's company, a sort of mutually assured destruction. For better or for worse, when these two cultures mix, American businessmen end up the suckers.

[heavenlyblue]

Speaking of “clean business practices” - haven’t Americans literally invented patent trolling?

[bin0]

Americans have significanlty more patents than other nations in history. I'd view it as a random consequence and an action taken by the handful of criminals all nations have.

[seanmcdirmid]

It’s a culture difference: in China, it’s the victims fault for letting the perpetrator take advantage of them, while in the west it’s the perpetrator’s fault even if the process was completely legal.

[cma]

When the US was a developing economy like China, investment was much more cut-throat than including an IP transfer in an investment deal:

https://en.wikipedia.org/wiki/Dole_Food_Company#Hawaiian_cou... https://en.wikipedia.org/wiki/United_Fruit_Company#Guatemala https://en.wikipedia.org/wiki/Banana_Massacre