There are few paper shredders in the world that can rip an A4 piece of paper into 2,000 pieces, and come with functions like SilentShred, SafeSense, and “100% Jam Proof”—and most that do have the name “Fellowes” printed on top. But consumers may soon be able to buy, say, the deluxe Powershred C-480Cx, without the Fellowes brand, because the company’s entire business in China has been stolen by its joint venture partner.
“In Fellowes, Inc.’s case, a legitimate joint venture between an American company and a Chinese company is being illegally hijacked by the Chinese partner to steal critical intellectual property. In fact, entire lines of machine tools and inventory have been seized in a brazen effort to force a transfer of technology,” Manzullo said. “To make matters worse, his former Chinese joint venture partner is now marketing its own line of shredders and office equipment.”
“Vital American interests are at stake here, and if we fail to halt this behavior how can we ensure the future of American industry?” Manzullo added. “It is very troubling that we are still dealing with so many problems a decade after China’s accession to the WTO. Clearly, something more needs to be done.”
What needs to be done is that The United States must stop pussyfooting around with these thugs.
China routinely requires Chinese labor and land (e.g. your factory's location) be used if you wish to sell your products into their markets. This effectively requires you to produce your products in their nation. They also typically require local control of the distribution channel in China, effectively precluding you from having any say over the terms or territories in which your products are sold in their country.
We, of course, do no such thing here with Chinese products. But all too often what happens once you set up and are successful is that the Chinese either steal your designs and intellectual property and start producing a competing line of products in their own factories, destroying the Chinese market, or they do what's happened here, where they literally steal the entire contents of the manufacturing facility.
How do they do this? Oh it's quite simple:
These included, beginning in early 2010, illegally seizing the company seal and business license to control all legal transactions, trying to force Fellowes to hand over its 100 percent-owned assets to the joint venture, including its production tools, which are the intellectual property of Fellowes.
Got it? That's not a private action - it's undertaken with the explicit consent and involvement of the government. A business license is, of course, a government-controlled thing. Your politically-connected "joint venture" partner suddenly becomes you blood enemy and rips off everything you had in their nation.
Then, having effectively frozen your operation, you get sued by your suppliers who you can't pay (since you can't ship the product) and the Chinese strip the carcass of whatever you were dumb enough to locate in their nation to the bone.
Neither the Obama or Bush administrations have given a damn about this problem. Clinton didn't either; if you remember he allowed the sale of supposedly-civilian radar and inertial technology that was immediately turned to military purpose, allowing the Chinese to go from being able to lob nuclear weapons that would hit within 20 or 30 miles (makes a hell of a mess) to those that can hit within a few dozen yards (can take out hardened military installations.) There are several independent assertions that these advances - all given to the Chinese - allowed their nuclear weapons technology to advance by more than 30 years in the space of less than five, and we literally handed it to them on a plate.
It would be nice to believe that we're "all in this together" and that we'd act for "common purpose." But that is, in fact, a fantasy. The Chinese have never been at common purpose with the United States or anyone else; their purpose is the advancement of their nation, people and interests - period. If this happens to come with the boffing in the tail of America, that's just too damn bad, and when it comes to companies like Fellowes they're the victims of yet another Chinese buttrape.
You cannot have "free trade" with a nation that does not have reasonable environmental and per-capita GDP parity with your nation. It's not possible. You will get exploited in any such arrangement, irrespective of how you claim you're going to avoid it. There is only one way to prevent this outcome, and that is to institute wage and environmental parity tariffs that level the playing field between production in that nation and ours. For circumstances like this, where China "requires" joint ventures for access to their markets, we must demand identical considerations for access to our markets.
This, of course, is directly contrary to the elements of the WTO. China has no business being in the WTO and neither does any other nation that is going to engage in these sorts of shenanigans and refuses to recognize that the use of environmental laxity and effective slave labor conditions are not valid means by which to globally compete. If we cannot expel China from the WTO then we must leave instead.
Our nation was founded on the principle that most of our federal government funding was to come from tariffs and imposts. We've forgotten that in the intervening 200+ years, but it remains just as valid today as it was in 1789 when the Constitution was adopted.
We must address this issue, and we must do so now. Those who claim that China has us "over a barrel" are wrong. We in fact have them over a barrel. They have roughly $3 trillion in "foreign reserves" that we can declare worthless with the stroke of a Congressional pen. Without our consumption of good produced there, their economy collapses in an afternoon. They have no blue-water capability and no ability to mount any sort of meaningful military response to an assertion of our right to stop the financial and intellectual property******they have served upon this nation for the last two decades.
Let them eat all those confiscated factories. There is nothing that China has in terms of resources that the United States actually needs. The same is not true for them.
It's time to lock the children in Beijing in a box and toss the key into the ocean, never to be seen again.
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This kind of behavior shouldn't come as any kind of surprise to someone who is doing business with China. Fellowes, Inc. knew, or should have known, the risk yet they decided that the potential profits outweighed the risk and went through with the venture anyway. How is the fact that they made a bad decision the US government's problem?
If the government acts to shield corporations from the consequences of short-sighted thinking or faulty risk analysis is that not a bailout by another name?
The government's monopoly on force is allegedly present and permitted to enforce the rule of law. Nowhere is that more important than in international matters.
I am not calling for bombing Beijing (yet), but most-certainly there is no argument whatsoever for so-called "free trade" with these thieves. That's ENFORCED by government Abn; it's not a matter of free choice if you're a US manufacturer.
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I don't care if it makes sense -- only if it makes money. -- Me Bank (n): See scam, fraud and theft.Eat a bankster -- they're low-carb. What part of "shall not be infringed" was unclear?
Bohemian
Posts: 9658
Incept: 2010-07-27
California
Genesis wrote..
You cannot have "free trade" with a nation that does not have reasonable environmental and per-capita GDP parity with your nation. It's not possible. You will get exploited in any such arrangement, irrespective of how you claim you're going to avoid it. There is only one way to prevent this outcome, and that is to institute wage and environmental parity tariffs that level the playing field between production in that nation and ours.
Highlight this and stamp it on foreheads of the so-called libertarians on TF clamoring for 'free trade' with Mexico and the implementation of NAFTA rules that apply to the trucking industry. It's a no brainer.
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"The politicians are put there to give you the idea you have freedom of choice. You don't. You have no choice; you have owners. They own you. They own everything." - George Carlin
As far as I can see, there is only one man in the United States that has the sack to do something about this (other than KD), and that mans name is - Donald Trump.
A few years ago, the brown marmorated stink bug was an oddity, a curious new invader to the state. But its numbers have swelled across Ohio, and now experts warn that the voracious eater could affect fruit and vegetable crops statewide.
“We watched very carefully what was going on to the east,” said Celeste Welty, an entomologist and fruit-crop specialist at Ohio State University. “Last year, it was an extreme problem (in Maryland and West Virginia). We just heard stories that were unbelievable.”
The invasive species was first identified in Allentown, Pa., in 1998, but researchers there think it had been around for at least a couple of years. It hit Ohio in 2007 and now is in 33 states, including every state east of the Mississippi River and along the Pacific coast.
The bug, they say, probably hitched a ride on containers from Asia, where it damages fruit and soybeans from China to Japan.
If this all sounds familiar, it should — the voracious emerald ash borer arrived in much the same manner.
Where it is found, the brown marmorated stink bug, which has no natural predators, outnumbers native stink bugs 10 to 1. And they eat at least 100 different plants. Last summer, the stink bug damaged 20 to 100 percent of the fruit crops in some areas of Maryland and West Virginia, said Tracy Leskey, a research entomologist tracking the problem for the U.S. Department of Agriculture.
“It’s an extremely serious pest,” she said. “Growers had extensive injury in apple and peach orchards.”
The bugs go after apples, peaches, grapes, raspberries, tomatoes, peppers, soybeans and sweet corn.
“It travels anywhere on anything,” said Robert Black, co-owner of Catoctin Mountain Orchard near Frederick, Md. “That’s one of the biggest problems with this insect — it hangs on and likes to take a ride.”
Fellows took the risk and they lost. It is well known that business dealings in China bear risk of intellectual property loss. Maybe they can write the book on how not to do business in China.
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Dear Euroland: Relax, Germany has a plan for your money!
Political Capital Defined: We are out of money but will tax our citizens for whatever it takes to "SAVE" the Euro.
I can't disagree with what you wrote in this Ticker.
However, it seems to me that, in a karmic sense, Fellowes reaped some of what he sowed. How many people lost their jobs when he decided to offshore his production?
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". . . the Constitution has died, the economy welters in irreversible decline, we have perpetual war, all power lies in the hands of the executive, the police are supreme, and a surveillance beyond Orwell’s imaginings falls into place." - Fred Reed
Trades50
Posts: 4214
Incept: 2007-10-30
Land of Tax and Spend
Quote:
It would be nice to believe that we're "all in this together" and that we'd act for "common purpose." But that is, in fact, a fantasy. The Chinese have never been at common purpose with the United States or anyone else; their purpose is the advancement of their nation, people and interests - period. If this happens to come with the boffing in the tail of America, that's just too damn bad, and when it comes to companies like Fellowes they're the victims of yet another Chinese buttrape.
Marc Faber in an telephone interview by Peter Schiff on Friday (4/15) said the US, over the last 15 years, has built up factories and intellectual information for the Chinese. Guess we are getting towards the end of our usefulness to the Chinese.
You could see the writing on the wall 15 years ago with China. The US was used to finance Chinese as well as supply them with intellectual property.
The last recovery was mostly overseas. Financed dollars did a nice job of expanding their economy. Their thank you was to buy our debt.
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When the people fear the government, there is tyranny. When the government fears the people, there is liberty. - Thomas Jefferson
I am not calling for bombing Beijing (yet), but most-certainly there is no argument whatsoever for so-called "free trade" with these thieves. That's ENFORCED by government Abn; it's not a matter of free choice if you're a US manufacturer.
If the US government forced Fellowes to move its factory to China then let's fix that problem. If Fellowes, Inc. made a private business decision to risk their own capital and their own intellectual property then let them eat the loss so that they and other companies learn from their mistake.
You were right to argue that Fannie and Freddie bondholders shouldn't be bailed out because that debt didn't carry a federal guarantee, regardless of who would get hurt and how much short-term pain would ensue.
This case is exactly the same - the Communist Party of China reserves the right to confiscate property. Investments in China can be nationalized without recourse. Everybody knows this so if a private company takes the risk and loses they should eat the losses themselves.
If you want to talk about CCP-sanctioned hackers breaking into corporate servers in the US that's a different situation, but in the case of businesses taking losses in China you're only going to get more outsourcing if those losses are nationalized.
Fellowes made a business decision to outsource jobs to save on labors cost and get more profits. Now, they are reaping the fruits of their business decision.
The USA government should stay out of it.
When you tell folks **** stinks and they say, 'shutup, its about profits.' Let them go their way. No bailouts for these companies of any kind, shape or color. They made their bed so they lie in it. They were warned before they did it.
China is not only looking for world domination but they are also trying to get ahead of the revolt of their burgeoning population who want jobs especially meaningful jobs. China realize their entrepreneurs cant create jobs faster than their birthrate, even if its one child per married couple.
I am looking for this problem to explode as more of our companies get devour for wanting to outsource for profits.
Walmart, are you listening?
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USA IS EGYPT May God Have Mercy On Our Souls and Even That Is Not Enough.DIVIDE AND CONQUER
Where did you see me call for nationalizing the losses?
You know damn well that inventing claims around here isn't something I put up with.
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I don't care if it makes sense -- only if it makes money. -- Me Bank (n): See scam, fraud and theft.Eat a bankster -- they're low-carb. What part of "shall not be infringed" was unclear?
Then, having effectively frozen your operation, you get sued by your suppliers who you can't pay (since you can't ship the product) and the Chinese strip the carcass of whatever you were dumb enough to locate in their nation to the bone.
Immediately thought of this Goodfellas scene when I read that
Not the exact same shakedown, but a shakedown nonetheless.
Karl, I agree with you on this and many matters, but I also feel a sense of "they got what they deserved!" Perhaps this is Mr. Market's way of giving American companies a very real reason NOT to outsource.
But Tariffs will also be necessary.
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When the Athenians finally wanted not to give to society but for society to give to them, when the freedom they wished for most was freedom from responsibility, then Athens ceased to be free and was never free again.” Edward Gibbon
GE Aviation has a facility in Grand Rapids, MI that builds aircraft instruments. Previously, it was "Smiths Aerospace" and before that, "Lear-Seigler".
This facility built the cockpit for the Boeing 787, and has built all Flight Management Systems for the Boeing 737.
There are several posters in the facility reminding people to be careful of "industrial espionage".
At the same time, they have a contract with a Chinese airframe manufacturer to build them a cockpit, and at the same time teach them (the Chinese) how to do it.
It's the last cockpit GE will ever build for a civil aircraft; from now on, the Chinese will be the low bidder on cockpits for civil aircraft built anywhere in the world.
Where did you see me call for nationalizing the losses?
If the government retaliates against China on behalf of Fellowes there will be direct and indirect costs that accrue to people other than Fellowes, Inc. If you slap a tariff on Chinese imports it will lessen the consequences of their mistake by transferring some of the loss to consumers in the US.
If companies learn that if they lose their investments in China the US government will just raise tariffs to let them recoup their losses they won't have any reason not to transfer capital over there.
Medicdan
Posts: 8013
Incept: 2010-02-11
Scottsdale, AZ
Online
Neither party has the balls to stop this. They have spent years encouraging this and the few times they did react it was too late. Second issues is that China can subsidize the tariffs to take market share.
If the government retaliates against China on behalf of Fellowes there will be direct and indirect costs that accrue to people other than Fellowes, Inc. If you slap a tariff on Chinese imports it will lessen the consequences of their mistake by transferring some of the loss to consumers in the US.
Entirely disagree.
There is nothing at present to prevent a Chinese manufacturer from importing paper shredders. Without tariffs the theft of intellectual property (and physical property in this case) simply destroys the US manufacturer even if they locate their facilities here.
There is no response that makes sense to such an act other than the raising of trade barriers.
I find deeply disturbing the clear dystopia that people make excuses for when it comes to this issue. One-way trade policies are not "free trade"; they are collusive theft taking place under the government's monopoly on force. Absent that the correct response to the Fellowes theft would be for Fellowes to literally shoot and kill the people behind these acts, just as you would be justified in doing so were someone to kick down your door for the purpose of entering your home and robbing it through the use of force. It is only the monopoly on force enjoyed by this foreign government that prevents Fellowes from exercising their natural right to protect their property.
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I don't care if it makes sense -- only if it makes money. -- Me Bank (n): See scam, fraud and theft.Eat a bankster -- they're low-carb. What part of "shall not be infringed" was unclear?
If a company makes a deal with the devil and loses they should be destroyed. How else will people learn to stop doing making those deals?
If I decide to move into a neighborhood that I know ahead of time is controlled by a mafia that periodically barges into houses and takes whatever it wants and still decide to move I had better either go in there prepared to defend my property with force or else accept the fact that I'm going to get robbed.
Everybody knew that China didn't play fair. Corporations decided to outsource anyway. If the US government is making it so unprofitable to do business here that companies are willing to take the risk of arbitrary nationalization to escape then let's fix that problem. If companies are just being short-sighted and foolish then let them get bankrupted by their mistakes. New, better managed, companies will rise up and take their place and they won't export their inventions to China because they'll know better.
Bohemian
Posts: 9658
Incept: 2010-07-27
California
Genesis wrote..
I find deeply disturbing the clear dystopia that people make excuses for when it comes to this issue. One-way trade policies are not "free trade"; they are collusive theft taking place under the government's monopoly on force.
There is a clear disconnect on TF when it comes to this issue. I don't understand it, either. There are two choices. Either level the playing field for US manufacturers where environmental restrictions and wage discrepancies are glaringly apparent or raise trade barriers (tariffs) to equal the difference. Wonder where those 10 million jobs went in the last decade, folks? Take your pick. Cheap WalMart prices or jobs. You chose.
I suspect the dystopia comes from inherent lack of trust with .gov regulations, but as they are, the WTO regulations ARE the problem with 'free trade.'
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"The politicians are put there to give you the idea you have freedom of choice. You don't. You have no choice; you have owners. They own you. They own everything." - George Carlin
The way to deal with this is to eliminate personal and corporate income taxes. We'll never get our labor and environmental regulation costs close enough to compete on that basis alone, but the very real value of enforceable contracts and intellectual property protection, etc, would bring much investment back to the USA. Well, we used to have enforceable contracts anyways (ref. GM bondbagholders).
I have zero sympathy for Fellowes. They can eat a bag of dicks and die in a fire. They handed over their crown jewels knowing that most people eventually get ****ed by China.
Allowing Fellowes to retaliate against the Chinese by using any action of the US government would only encourage more companies to outsource. "Hey, the US Govt has my back!"
How did we compete with Chinese labor back in the 19th century? The same way I propose to compete with them. American labor has always been expensive relative to the rest of the world. We made up for it and then some by not taxing income and protecting intellectual property, contracts, etc.
