The U.S. administration is portraying China as the key bad actor in the theft of intellectual property, ala economic espionage…but, please don’t infer this is a problem that suddenly got out of hand! I, and others, have been consistently examining ‘economic espionage’ since the early 1990’s, initially as an academic (investigative) researcher and now as an intangible asset (business transaction) strategist and risk specialist.
The proposed imposition of tariff’s, will, to be sure, expedite…political – public attention and reaction. The target country in this instance, China, there is ample – 30+ years of – evidence for doing what’s being alleged. Of course, to no one’s surprise, the administration’s, not so unique tariff-based threats have sparked a bevy of in-kind responses from Chinese officials, i.e., placing tariffs on specific (politically sensitive) U.S. produced-manufactured goods. But, this administration’s presumption that proposed sanctions (ala tariffs) will manifest as a deterrent to China’s indisputable and illicit practices for acquiring intellectual and structural capital, i.e., knowledge and knowhow, which are generationally embedded in their business and social culture, will be a long shot, at best.
The paths to (politically) maximizing a tariff-based initiative, should, in my judgment be divided in two distinct parts…
- clear evidence of specific and distinguishable bad actors, i.e., countries and governments who variously sponsor, encourage, and consistently engage in theft – misappropriation – infringement of intellectual property and its underlying know how.
- the types and categories of products and know how which are being targeted and stolen.
- objectively measured losses to U.S. businesses, i.e., economic, competitive advantage, employment, etc.
- acknowledge challenges to acquiring this data because a large percentage are anecdotal-based estimates.
- then, portray same in a manner that readily translates to both business decision-makers and creating an informed public
…from personal experience, the latter has inherent challenges to compile.
Yes, it is China…but, also, there are numerous other countries, which are – have been longtime bad (trade) actors in this arena, admittedly, not necessarily on the scale of China. Never-the-less, they routinely engage in economic espionage on various levels. That is, they purposefully acquire valuable ‘know how’, reverse engineer, and mass produce counterfeits, particularly the simpler goods and products.
For the more economically sophisticated (growth) countries – actors engaged in economic espionage…which, by the way, are increasing in number. Such efforts range from the acquisition and integration of extraordinarily valuable ‘game changing’ technologies which may variously render them on par with the U.S. or provide competitive advantage trade boosts which are challenging to overcome. Either way, China, and other ‘bad actor’ countries, have been consistently engaged in an asymmetric brand of economic espionage for many years.
Economic espionage is indeed a global phenomena…which I and others, many of whom are colleagues, have devoted many years of investigative research, writing, publishing, and public speaking, including visits to China and other countries to fully grasp its scope including how, why, when, and its lucrative elements to not solely economic espionage, but, product counterfeiting as well.
It is a truism that, one can take comprehensive photos…of a U.S. developed – manufactured product, forward those photos to known locations, i.e., people, shops globally, and within 5-7 working days, the product’s counterfeit reproductions can appear, for sale, at ‘swap meets’ in the U.S., if not, integrated into heretofore legitimate supply chains.
I served as one of four principal investigators to a nationwide study-survey of U.S. companies…on this matter. I also engaged in lengthy (in-depth) conversations with countless private and public-sector (national) security officials who are professionally familiar with, have direct knowledge of, and operational level clarity with the complete range (big picture) issues related to who, how, what, when, where, and why aspects of economic espionage perpetrated against the U.S.
In fact, each public – private sector security official – executive I have engaged on this matter, beginning in the early 1990’s…professes genuine familiarity with the issue of economic espionage, obviously, more so with those representing companies (organizations, institutions) who actually-engage in trade with China and other countries with ‘bad actor’ traders.
Admittedly, for obvious reputation and repeat trade transaction purposes…few business leaders, be they representing the public or private sector, seldom convey comfort with going on the record, either anecdotally, or otherwise, regarding their observations and facts they have gleaned regarding their company being victimized or having suffered losses to its intellectual properties.
That said, when an administration publicly portrays these acts-events as being exclusively related to intellectual property…a legal designation, which respectfully, large percentages of U.S. citizens are unfamiliar, aside from the singularity of patents, there will be, based on my experience, numerous and unnecessary misconceptions and generalities espoused which do little to advance the already contentious diplomatics.
As respectful as I am able, it may not be a stretch...to suggest, a potential (or, at least, partial) rationale for this administration to aggressively engage (international) intellectual property matters may be variously related to this President’s and family members’ private businesses.
For example, the Trump companies, publicly acknowledge their interest – trend toward ‘licensing’ the Trump name…as a distinguishable brand for sppecific types of properties, i.e., apartment buildings, hotels, and golf courses, etc. And, as Trump Company officials routinely – publicly admit, doing so can be a (legitimate) tool for any company to generate streams of revenue, should the desire or, be positioned to do so.
Brand and ‘branding’, and its licensing, of course…are forms – variations of intellectual property rights enforcement, for which infringement, misappropriation, and counterfeiting are not insignificant matters that necessarily require consistent, even, perpetual oversight.
To be sure, it is not my role here…to suggest there is, necessarily, anything nefarious underlying this current initiative toward – against China insofar as tariffs. However, the above are examples of the type of speculation which can naturally follow, when any U.S. government official pursues a specific initiative in which there may be underlying motives, and which, if there is a favorable resolution, can or may lead to personal gain.
Again, the fact that China, and numerous other countries, and their governments…have variously sponsored as well as actively and consistently engaged in economic espionage, is nothing new. It has been occurring for decades, if not centuries. And, in numerous instances, the theft, infringement, and misappropriation of intellectual property, and/or product counterfeiting have become – are integral to numerous countries economic and social advancement and GDP (gross domestic product), China being no exception.
Generally, it’s a good thing. to elevate business and public awareness about global intellectual property theft…but, doing so through simplistic phrases, descriptions, and personalized quips, to present an aggressive and rousing rationale for imposing tariff’s, as a presumed deterrent, may not end well. And, presenting a complex matter as this with broad generalizations, to me, presumes the U.S. public is inept insofar as being able to understand the distinctions, complexities, and consequences of stolen – misappropriated information-based intangible assets, ala intellectual property, i.e., patents, trademarks, copyrights, and trade secrets. That is, through these lens, an error in judgment!
So, government officials and the echo-chambered pundits, with some notable exceptions, find it to easy to portray…the intricacies and nuances of economic espionage and data-information mining with presumably the more understandable and singular phrase ‘theft of intellectual property’ which, based on my various experiences, really doesn’t bring the significance of the matter into the homes of U.S. citizenry, unless, of course, it is your company which has been victimized, causing significant employment cutbacks and other forms of downsizing which adversely affect you!
It is especially important for proponents and advocates for this initiative, to acknowledge and keep in mind…amid the discussions and debates regarding these allegations related to trade, that, it is an economic fact today, that 80+% of most company’s value, sources of revenue, competitiveness, sustainability, and growth potential do lie in – emerge directly from intangible assets, parts of which are – may already be legitimately issued intellectual property, i.e., patent, copyright, trademark, trade secret.
I urge readers of this blog and audiences to whom I speak, to avoid characterizing these allegations – this phenomena as…merely distinctions without a difference. It is indeed much more. That-is to say, a company’s intangible assets, e.g., its intellectual, structural, and relationship capital, ala specific knowledge and know how, which, by the way, routinely and simultaneously serve as foundations to conventional intellectual properties. It is the intangible assets which are the real targets – benefits of economic espionage and data mining. Both are consistently conducted 24/7/365 globally, by just about anyone with a laptop connection and some rudimentary ‘business intelligence’ skill sets. To lay this entire matter solely at the doorstep of China, may be a starting point, but far from being an ending point!
Michael D. Moberly April 5, 2018 St. Louis firstname.lastname@example.org ‘A business intangible asset blog where attention span really matters’!