Tech Transfer

Latest at the Diplomat looks at the latest in the long-running discussion of China’s intellectual property regime:

Over the past weeks the nature of U.S. complaints over Chinese violations of intellectual property have become clearer. In particular, one of the violations the Section 301 filing alleges involves the forced transfer of technology from U.S. firms to Chinese firms. This has long been a concern in the United States, both to industry groups and policymakers, although more to the latter than the former. Effectively, U.S. firms need to pay a bribe to Chinese partners in the form of technology transfer in order to operate in China.

Pay-to-play is a problem, but generally speaking a manageable one; if U.S. firms do not want to transfer technology, then they can simply say no to joint ventures, even if this means that they cannot operate in China. Pay-to-play arrangements violate certain aspects of U.S. and international IP law, but the decision on whether to pay can be essentially economic, given the existence of a robust system of intellectual property protection. The problem emerges when U.S. firms have no faith in the interest or ability of the Chinese government to protect their technology. Technology transferred to a particular firm on the basis of a joint agreement may not stay with that firm; instead, it may spread to numerous competitors.