My dad has been in the industry for a long time and he has done a good deal of business with China. I was just emailing him about this. Here\'s his take on it:
I am surprised that people took so long to figure out that this HAS BEEN already going on. This has been standard practice in China for a while now.
They also require a "joint venture" to be setup in China and for you to manufacture the products in China. So, you must disclose all the inner workings and then build a separate company (the "joint venture") in China to manufacture the products. That company is to be staffed by nationals. It\'s common knowledge that some key ones work for the gov\'t there. Often this company is then used as a tunnel or springboard to get back into other areas of intellectual property inside the home western company.
What some companies have done to try to insulate themselves from this is to partition the product into 2 pieces -- the secret part which they do in their home western country and the other part, which they will manufacture in China. They then combine the 2 together. But, the secret part is done in a way that it is a "black box" whether it\'s software or hardware so that you can\'t see the inner workings and can\'t steal or reverse engineer (ie, figure out how it works).
So, now they are trying to take all of it.
It will be interesting to see how Intel responds to this. While they do have a plant in China to make semiconductors, they have not disclosed the secrets inside. The chinese merely turn the crank to make the microprocessors for the PC\'s. If Intel were to disclose the inner details, they will be out of business within one turn of the product cycle (ie, the time to make a new round of products). That will be 12 to 18 months.
It\'s a big technical / economic arm wrestle going on.
