February 19, 2015    Volume 22, No. 3

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Having Milked American Companies Of IP And Marketing, 'The Chinese Don't Want You Any More' -- By Michael Wessel and Dan Slane

By Michael Wessel and Dan Slane

The Chinese are beginning to tighten the noose around the necks of foreign companies.

For some, they have already sucked dry their IP and marketing expertise and they are no longer useful to the future plans of the Chinese Communist Party.

You see, the Chinese Communist Party never had any intention of turning over their domestic markets to foreign companies. They needed your technology, production and marketing expertise to grow their economy. Now that they have it, both legally and illegally, the party is over and the Party no longer wants or needs you anymore.

Under the guise of their recently enacted antitrust laws, they are starting to make life very difficult for foreign corporations. The law is being used to selectively control prices of foreign-made products and services and to demand outrageous concessions before approving mergers.

Their toolbox also contains selectively enforced and vague labor laws, tax regulations, indigenous innovation incentives and requirements and other measures.

The "State Secrets" laws provide enormous latitude for the government to detain and potentially imprison business people engaging in what are normal western business activities. Chinese President Xi himself has stated that he considers domestic control over technology a matter of national economic and defense security.

The U.S. Chamber of Commerce recently released a scathing report on the selective use of the new Chinese antitrust law against foreign companies.

Chinese companies are provided incentives by the Communist Party to openly steal or copy foreign technology. If a western company does have the audacity to sue them, they will find the average award by Chinese courts is $10,000 as compared to $5 million in the United States, and that won't begin to pay their legal bill, much less compensate them for the harm that has been done.

The Chinese government is solely interested in protecting their domestic companies and their national champions. Foreign corporations are in the way. The Party got what it wanted from Western companies and no longer needs their help -- nor, in many cases, does it want it.

Now that these foreign corporations have been exploited for their technology (to the great detriment of American workers) the welcome mat is being removed.

America wants its companies to re-shore their jobs, renew their commitment to the U.S. economy and restart their economic engines. But don't expect the American taxpayer to subsidize your return after you abandoned the United States in search of a quick profit, costing millions of jobs. Americans aren't interested in paying the bill -- once again.

-- Michael Wessel and Dane Slane are Commissioners on the U.S.-China Economic and Security Review Commission. These views are their own.

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