Monthly Archives: May 2011

The cost of Chinese piracy

According to the International Trade Commission the cost of Chinese intellectual property rights infringements (IPR) to the US economy amounted to USD 48.2 billion in 2009 or, to be more precise, somewhere between USD 14.2 and USD 90.5 billion… Such large variation is explained by the fact that many firms are unable to calculate the losses incurred. The ITC goes as far as computing the number of jobs (2.1 million) that could be created if China was to comply with its IP obligations.

The sectors most suffering from losses are information (USD 26.7 billion) and high-tech manufacturing (USD 18.5 billion) and the largest type of infringment is copyright (USD 23.7 billion). Surprisingly, consumer goods manufacturing is thought to suffer losses below the USD 1 billion mark. Another surprise comes from the fact that 40% of IP-intensive firms doing business in China do not report IPR infringments. Finally, it turns out that Guangdong, Shanghai and Beijing are both the best and worst locations for IPR protection (depending on which sector one looked at).

IPR infringments remind me to an extent of the drugs issue: it is all very well to look at the supply side but what about the demand side?

Forchlorfenuron + watermelons = Boum

It is not a prank: watermelons have been exploding due to a chemical that farmers in the Jiangsu province used to increase the size of their crops. The incident even got national coverage as the Chinese government is attempting to improve food safety standards across the country following numerous deadly scandals.

Forchlorfenuron, the incriminated hormone, is used to promote plant cell division and lateral growth. According to the American Environmental Protection Agency which registered the chemical in 2004, it could find a niche for kiwi fruits, table grapes and raisin grapes.

The watermelons explosion is a reminder of China’s overuse of fertilizers and of their limits. The consumption of nitrogen fertilizers almost doubled in the past two decades while grain production increased by just 22%.

A domestic war for standards

Usually when there is an issue about standards in China it is about pitching an international standard against a domestic one (such as TD-SCDMA or WAPI).

This time the dispute is between two Chinese firms who are both trying to impose their own standard of mobile-payment technology. On one side there is China Mobile – the country largest mobile phone operator – who pushes for RFID chips embedded into the SIM card. On the other side there is China UnionPay, a bank-card-network operator backed by the government who pushes for near-field communications (NFC).

Who will win? NFC operates at a higher frequency than RFID which is supposed to make it less vulnerable to hacking. There also seems to be more indigenous technology around NFC (e.g., readers) which reduces royalties to foreign firms. In addition China UnionPay has a quasi monopoly on all online transactions. Last but not least, it has partnered with China Mobile’s competitors (China Telecom and China Unicom). The downside is that NFC comes at a cost. And there is of course the fact that the battle is fought against a behemoth, which happens to be the most valuable brand in China (over RMB 200 billion).

For once the government’s job is not as easy as usual. Very pragmatically it playing the clock and suggesting to conduct more tests.

One spatial superpower replaces the other?

As Endeavour makes its final trip into space, another nountry gets ready to spend the taxpayers’ money up there. Earlier this week, China announced a plan to build a manned space station (names Tiangong or heavenly palace) in the next decade – joining Russia’s Mir and the joint International Space Station (ISS).

While largely symbolic, the Chinese ambition to conquer space “on their own” also signals that the tables are turning when it comes to spending money into such lofty endeavours. The good news is that, in this age of standardization, the docking hardware will be compatible with ISS enabling some high-level exchange between both station.

As a reminder, the spatial arms’ race wasn’t the least factor precipitating the end of the Soviet Union empire. No doubt that China will avoid that history repeats itself.