Friday, March 4, 2011

Defending China on Intelligent Property

You may be surprised US was the intelligent property violator. US copied/stole ideas from the west without paying any royalty in the colonial days. Even at the end of WW2 US did not pay royalties to Germany in using the atomic bomb technology.

There are phases of a country moving from undeveloped to developing, and then developed country. Their major characteristics are listed. One's theory.

Phase 1. Low labor cost. Copy/steal. Low-quality consumer products.

Phase 2. Moving up the value chain. Good infrastructure. Higher quality.

Phase 3. High-end products. High quality. Innovative. Protect intelligent property rights.

China is moving from Phase 2 to Phase 3 now. Around 16th century, about half of the inventions and their derivatives were from China and no one paid royalties to China. This is the time when China was in Phase 3 relative to the rest of the world. After the semi colonization about 250 years ago, China was bankrupt and moved back to Phase 1.

China has intelligent citizens to be innovative and could churn up intelligent products like Facebook, Google... However, as long as there is no law in protecting IPs, they will not be materialized. It may take about 10 years (hopefully less) for China to protect IP.

Should IP be protected in developing countries?
Most citizens in developing countries cannot afford to buy DVDs, software..., so there are no real heavy losses to Hollywood, software providers...

New drugs are copied by China and India illegally and also distributed to poor countries. Haitians and most Africans cannot afford to buy the drugs at the asking prices. Should we let them die? No, we can treat them as charities to developing countries.

(c) TonyP4 2/1/11

Disclaimer: All my posts are for informational purposes only. I'm not a professional investment counselor. Seek one before you make any investment decision.

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