Tag Archives: China

Intellectual Property Theft Costing US $600 Billion Each Year

NKIE & McDnoald’s [sic] sandals in China. Photo by Stephen Woolverton.
According to private watchdog group, the Commission on the Theft of American Intellectual Property, annual losses of intellectual property range from around $225 billion to as much as $600 billion. The breakdown is as follows:

  • Theft of Trade Secrets: between $180 billion and $540 billion.
  • Counterfeit Goods: between $29 billion and $41 billion.
  • Pirated Software: $18 billion.

China, including Hong Kong, is the biggest culprit, says the commission, accounting for about 87 percent of the counterfeit goods which are confiscated at the border. The report issued by the commission states that Chinese authorities actually encourage the theft of intellectual property.

The commission is headed by former governor of Utah and Republican presidential candidate Jon Huntsman, who was also a US ambassador to China; and a former director of US national intelligence, Admiral Dennis Blair.

“The vast, illicit transfer of American innovation is one of the most significant economic issues impacting U.S. competitiveness that the nation has not fully addressed,” Huntsman said. “It looks to be, must be, a top priority of the new administration.”

Seven Billion Dollar Deal Could Bring 50,000 Jobs to US

The top and side of an iPhone 5S, externally identical to the iPhone 5. Photo courtesy of Calerusnak

Two high tech giants, Foxconn and Apple, are considering a deal to build a panel factory in the United States at a cost of about $7 billion and could create between 30,000 and 50,000 jobs. Chairman Terry Gou of Foxconn said that an investment by Foxconn’s Sharp division will depend on the terms negotiated for the deal at the state and federal levels.

The announcement of the deal comes close on the heels of President Donald Trump’s inaugural address in which the new president promised to make “America First” as the backbone of his policies leading the nation. Trump stated in his speech: “We will follow two simple rules: buy American and hire American.”

One of Trump’s campaign promises was to try and persuade Apple to bring the manufacture of iPhones to US shores. Trump said that he was optimistic that Tim Cook, CEO of Apple, had his “eyes open” to the possibility. Foxconn is the biggest producer of iPhones.

Gou said that Trump-style protectionism was inevitable, but he is unsure how Americans will feel about spending hundreds of dollars more for a phone that does not work any better than a less expensive model that was made overseas.

Gou vowed to increase his investments in China. Apple is also dependent on China, not just for production, but also for sales. Last year China made up 22 percent of Apple’s total revenue, some $46.4 billion.

All the ‘Coffee’ in China: Starbucks Moving East

Starbucks, the giant coffee purveyor, is planning on adding an additional 12,000 stores to their existing 25,000 within the next five years. Luckily for people who like to see other stores besides those that sell coffee, not all of the additional 12,000 are going to be in Manhattan. As a matter of fact, only half are going to be built in either the US or China.

But if you really do like coffee and were even slightly worried that you might need to walk more than 30 seconds from wherever you may be to get your mandatory Caramel Brulée Latte, you can rest at ease now. As CEO Howard Schultz puts it:

“These are the early days of the growth and development of the company. If Starbucks was a 20-chapter book, I still think we’re in chapter 4 or 5.”

“Demand is there, and our ability to deploy capital and get the return on invested capital is very strong,” Starbucks President and COO Kevin Johnson said.

The fabulously successful company discussed their business plans at an investor day even in New York City last week. Schultz reassured his shareholders that:

“Our core business has never been stronger in the U.S. and around the world.”

Starbucks has its eye on the enormous potential market in China.

“Not only will China one day be bigger than the U.S., but our business in China will demonstrate that we will be one of the…most significant winners in terms of a Western consumer brand,” he said.

China Investing Heavily in US Real Estate

A recent study outlines the extent to which Chinese investors have been flooding money into the United States real estate market. According to the study a recent surge of Chinese buying of residential and commercial property as brought the five-year total investment to over $110 billion.

Conducted by the Asia Society and Rosen Consulting Group, the study shows that the huge size of the total investment helped the US real estate market recover from the real estate crash that began in 2006. The Chinese investment in real estate has also influenced other countries, inflating prices in developed markets such as Australia and the UK.

The study predicts that, despite the tightening restrictions of capital outflows by Beijing, the amount of investment will double to $218 billion.

“What makes China different and noteworthy is the combination of the high volume of investment (and) the breadth of its participation across all real estate categories,” including a “somewhat unique entry into residential purchases,” the study said.

IMF Warns of Global Economic Slowdown

The International Monetary Fund is warning that the risk of a global financial crash is on the rise due to China’s economic slowdown and a concomitant decline in world trade. This double-headed decline has the effect of de-stabilizing emerging economies which are burdened with large debt.

The IMF, the Washington-based lender of last resort, explained that because of the large scale borrowing by emerging market countries with debts which are highly susceptible to increased interest rates, policymakers need to act fast to strengthen the financial system.

The cautionary statements come after a difficult summer of global market chaos caused by China’s currency devaluation, instituted to increase its export flow. That action set off a panic reaction in world-wide markets, which crashed. Investors suddenly understood the real meaning of China’s economic slowdown.

Earlier in the week the IMF lowered its prediction for global growth in 2015 down to 3.1 percent. That number is the smallest since the low point of the 2009 downturn.