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China and the United States met recently in Washington DC for a meeting to discuss trade practices and make mutual pledges with regards to change commitments that are necessary to improve the status quo. The US-China Joint Commission on Commerce and Trade talks were initiated in 1983 when bilateral trade between the US and China was about $5 billion. Today that number has spiraled to $500 billion. In fact, the world's two largest economies are now each other's second largest trading partners.
For many years, software piracy and other intellectual property rights (IPR) have been major concerns for US software companies where there are more pirated copies than authorized and licensed versions in places like China and India. To address this issue, the Chinese Minister of Commerce Chen Deming pledged to step up the IPR law enforcement, including the software used by state-owned enterprises, banks, and government entities.
Microsoft Office immediately comes to mind as being the suite with an unprecedented number of illegal copies overseas. But where enterprise is concerned, many of the supply chain management tools used in logistics and manufacturing are also copied in spite of copy protection safeguards. These software applications and operating systems cost hundreds of millions of dollars, requiring thousands upon thousands of man-hours to develop but cost the bootleggers pennies to knock-off and distribute. So far China's ability to curb this illicit practice has not been effective.
China is going to lift the TTP requirement as a precondition for allowing market access. Both the US and China also pledged to fight policies of restraining trade through methods such as tariffs on imported goods, restrictive quotas, and a variety of other government regulations designed to allow “fair competition” between imports and goods and services produced domestically. In another major move, the US agreed to relax technology export controls. This is a cause of concern for US interests, but until those “controls” are articulated, we won't know how concerned we should really be.
In the past, when I have tried to send microprocessors overseas, I have had to look up the manufacturer's name and part number against the Federal Trade Commission's not-authorized for export list. If products like microprocessors, microcontrollers, and other advanced components are exported with reduced restrictions, then we may be inadvertently giving up some of our core technologies in terms of development and processing know-how.
Recently, Intel was able to double its transistor count per unit area by using a 22 nanometer technology design that stopped the gate current leakage problems previously encountered on reduced sizing efforts. This was a very costly development and effectively modified Moore's law for semiconductors. We already know we have a massive counterfeit problem with China's cloning and distributing semiconductor parts that have been falsely marked with US manufacturers' names and logos. Chinese foundries and factories can copy almost anything we can produce, and at lower cost. Given China's track record for counterfeiting products targeted to commercial, industrial, and military concerns, unless there are enforceable sanctions as a result of violations of codified trade agreements, I don't anticipate changes any time soon.
On a positive note, every agreement has to start with honest communication between or among parties, so in that light and with China's new leaders preaching “reform,” I sincerely hope that they will be as good as their word.
We talk about jobs going overseas, but if we lighten up export restrictions too much, then we will need to talk about national security losses as well. Whatever is decided in these trade commission talks, there is no doubt that the Department of Homeland Security will be involved in every technology export modification proposal. I'm not as much concerned with airport security as I am with the tradeoff between export dollars and common sense.
Trade reform will help both USA and China for better technology movement.
@All…TTP stands for Transfer of Technology which means heretofore, we had to virtually tell all and show all about a product or process before China would take a product to market. Now, with that restriction being lifted, we might be able to hold onto our IP a little bit longer.
I think there is a certain level of risk when some stuff like processors/controllers or even compiled software (with no original source code) are exported. The export restrictions may be lifted but companies may be still cautious and take necessary steps to prevent piracy to happen.
@t.alex…when you consider that semiconductor counterfeiters can reverse engineer an entire die in order to produce a clone, then protecting design rights from an IP standpoint is almost a moot point. If I can copy and mass produce an item, I don't even have to know how it works or the theory of operation in even general terms. If I copy the part, it is a simple matter to copy the spec sheets and logos.
You are right. Law enforcement on this in China has to to be really in place. Lots of simple electronic products are cloned so far. Die, eeprom content, PCB circuit design and many more.
You are right. Law enforcement on this in China has to to be really in place. Lots of simple electronic products are cloned so far. Die, eeprom content, PCB circuit design and many more.
Perhaps the OCM's need to start getting serious about using DNA marking as a counter measure to all the counterfeits. There seems to be a lot of push back against moving forward with that in spite of the proven technology (at least according to APDN and the DLA).
“For many years, software piracy and other intellectual property rights (IPR) have been major concerns for US software companies where there are more pirated copies than authorized and licensed versions in places like China and India”
Douglas, nothing going to ha happen with respect to piracy because it's a Chinese government sponsored program. Quiet sometime back, I had visited some of the government labs and universities in China; in most of the places they are using cracked/pirated versions of software. When I talked with one of the fellow he casually responded that “why should we purchase the original version for making such MNcs richer”
@Jacob…You are correct. IN fact that is why one of the Chinese “pledges” was to crack down on government agencies using pirated software. The Chinese government has truned a blind eye to this practice and admitting they plan to clean house, they are tacitly admitting they know how imminent the problem is in their own ranks. I think this is a wait and see scenario and I am watching for the announcements in China Daily. If I see of a crackdown or pirate bust I will post the news. I also am going to start reading the lesser known, more contraversial papers like the Southern Weekly now garnering much US press due to the protests response by the Chinese government. Interesting stuff. I hope before the US makes any agreement concessions we have a “trust, then verify” approach so the pledges and changes are not all one way.
>>Perhaps the OCM's need to start getting serious about using DNA marking as a counter measure to all the counterfeits.<<
I agree with you curbing the problem as well as other lapses in IT/High Tech Biometric solutions look like jewel to solve those issues. What about the cost of investing in technology like this?
NO!!!! It will only make it harder for CHINA to copy our parts/units/phones. As we all know trade only goes one way. (from CHINA)
I was wondering what the people in CHINA, KOREA and INDIA, that are assembling the TV's, phones and all the other various electronics think about not being able to afford to buy these wonderful devices? Or in CHINA, have no time to watch TV! (Work, eat, sleep.)
I recently heard some new Samsung starts selling Tizen-based phones. Tizen is a another Operating System developed by Intel. Will this work out anything interesting? I am not so sure because both Intel and Samsung are the hardware guys. Isn't it true they need some software guy like Google with Android to make the phone interesting?
The most admirable contribution from Samsung is to keep price under control and bring it lower for common person. Thanks Samsung and Goolge.
but Samsung Electronics is clearly giving its North American rival a run for its money.
@Bolaji, I totally agree with your observation. Samsung is trying to capture the market by releasing wide variety of handsets to market. This diversity in the handset features, price is helping Samsung to capture the market wherease Apple has released limited varieties.
The most admirable contribution from Samsung is to keep price under control and bring it lower for common person.
@_hm, its not only Samsung but there are many other companies like HTC, LG, Sony which have released low-priced smartphones. I think one advantage that samsung has is, it has released costlier phones like Samsung-Note and it has also released low-priced phones like Samsung-galaxy. This helps samsung to capture the wider smartphone market.
Isn't it true they need some software guy like Google with Android to make the phone interesting?
@t.alex, one advantage of Tizen is that it is supported by Linux Foundation and the LiMo Foundation. Moreover HTML5 is used to make Tizen Apps and this has created lot of excitment among the developers. Needs to be seen if this can emerge as strong competitor to Android.
>>Samsung, it seems, has the momentum on its side even though Apple is leading in terms of revenue growth rate and profits<<
This happened years back when Apple was about to take the lead away from Nokia, eventually Nokia slipped and dethroned. And now, smarthpone consumers are resetting the market dominance – what's responsible for this, Software or Hardware? Considering the fact that world markets are littered with android based phones but Samsung stands out of them all.
A friend with Apple's phone a few months ago said iPhone is the best to my surprise, i saw this guy with a new smartphone – Samsung Note 2 weeks later. I asked why this time Samsung – “oh! i think Samsung is the best, my friend said.
I think Samsung has had its trying times but taking the leading. For how long can it last on the throne?
>>Isn't it true they need some software guy like Google with Android to make the phone interesting?<<
@t.alex, Samsung intends to lock the markets out against its rivals and hold to its keys. Already, the company's gaining its success with Andorid but staying ahead in competitive markets of mobile devices you need to spread your tentacles to a wider research areas especially in software, i think.
The adoption of the Tizen operating system is part of Samsung's strategy of going to market with various OS as opposed to sticking with one, which is preferred by Apple.
Anadvy, Correct. The flood of smartphones from rival companies is what is pushing prices down. Samsung, of course, is contributing to this but so are other vendors.
Wale, Samsung will have quite a run before being dethroned. It has a different strategy than Apple. It has numerous devices in the market, unlike Apple which sells the iPhone only. Samsung has many handsets and also uses several operating systems, which means customers — rich or poor — have options.
Of course, this strategy has its own weakness. It was once used by Nokia and the seeming lack of focus plus the challenge of supporting so many devices contributed to Nokia losing the top spot.
There's a lot to be said for being a premium product, and Apple has managed to keep that title to itself. People will buy Apple no matter how often new hardware comes out or how much it costs. Yet, Apple is moving down the price point with the mini and a less expsnsive smartphone. Samsung has always offered a range of products and prices to fit every budget. Even if it is not just Samsung Apple is following, the migration to more price-sensitive products is a significant move for Apple.
Douglas makes a good point. To date, IP enforcement in China has been posturing, and there's no reason to belive that will chnage. I read somehwere that it has to do with the idea that in a communist/socilast socirty, there is no private property–everything belongs to the state/population. If that is the case, this is a cultural, rather than legal, challenge for US and other nations.
anandvy, HTML5 apps seem promising! Let's hope this is another strong choice for the developers as users.
İ think the key advantage Samsung has is it offers many products addressing different markets. İt is not putting is eggs in one basket which is a smart thing to do. Although Samsung has a wide range of products, it is able to maintain a good level of quality for each one as well. İn terms of creativity, Samsung is also in good shape İ think. The last Samsung product İ have seen is a digital camera with Android OS and 3G on it. This combo allows you to instantly share your photos after you shoot them. Samsung really understands what the consumers want in various markets and they are good in delivering them. Time will show how Apple will do with Steve Jobs' absence. The Apple products that keep the company going has Steve's genius built into them still and they still have some steam left in them. Let's see what will happen in 2013. İ wonder if we will still be discussing Apple vs. Samsung a year from now.
İt is not putting is eggs in one basket which is a smart thing to do.
@Cryptoman, you are absolutely right. Samsung has done smart thing by releasing wide-variety of handsents. Samsung is also releasing some creative products like smasung is planning to release 3D camera called NX300. I am sure this innovation will help Samsung to capture bigger market share.
>>İ wonder if we will still be discussing Apple vs. Samsung a year from now.<<
Time will tell if Apple would be able to respond to it. Nokia – > Apple – > Samsung, after Samsung whose turn? Motorola, LG or still Apple? My bet on Motorola to come out stronger in near future and compete well in world markets.
@Barbara, I am in fact purchasing a Mini with I5 and 500GB drive for $588.00. That is definitley a competitive price for the power and the software that Apple produces and is a good reason to have a cheap Apple Mini on hand. Would I get the Mini without the software applications in tow?….probably not. I also have a Samsung Smart LED 40″ 3D TV that has a lot of third party apps, but Samsung does not control its app availabiltiy and therefore has to wait to introduce a better product based upon third party development and release to Samsung targeted operating systems. IN that sense, Apple has more control over its own destiny and may outlive Samsung in the AV and PC marketplace.
Barbara, I listened recently to a program on NPR that in my opinion captures the challenge awaiting Apple in a few years. Analysts don't try to look that far ahead and many of them are enamored with Apple, of course, which makes them more focussed on singing its praise than on accurate analysis.
But, I digress. The NPR presenter told a story of how his young daughter wanted to know how to save money and increase her net worth. He advised her to take a trip to a pawn shop and avoid buying products there. He later visited a pawn shop himself and found that the majority of products there were Apple devices. These products ended up in this pawn shop because people dump old Apple devices as soon as a new one was released. They were keeping up with the Joneses! Of course, we could say this will continue for a long, long time but I personally don't think it will. Eventually, people will find either new Joneses to keep up with or just decide it ain't worth it keeping up with Apple's Joneses!
Samsung and Apple are the two major players today in the mobile devices market and that isn't likely to change in the next year or two. It takes time for a new competitor to build a following. People will definitely still be discussing the two companies one or more years from now.
>>Samsung really understands what the consumers want in various markets and they are good in delivering them<<
I think you made a valid point! Apple has been focusing on high cost products for years, that's beginning to manifest between it and its close rival – samsung. Although, Apple's quality products can hardly be undermined but people at the bottom of pyramid earnings will often dictate the markets, even forever.
I think we won't see the end of Samsung or Apple that soon. The two are major players in the technology market and will probably continue to dominate the market for the next 3 years.
Douglas, one thing is very evident from Chinese government ‘they speaks well and do something else’. I don’t know how they are going to treat US laws and treaties. But they had done similar thing with most of the Asian countries and always a defaulter in executing treaties and laws in correct sense.
Barbara, exactly and moreover they don’t want to change it also. But publically/officially they spoke well about the requirement of protecting IPs and copy rights.
Bolaji, interesting story of the pawn shop. That is surprising! I should pay a visit to a pawnshop one day to see what's going on. Nevertheless there is still strong demand for 2nd hand Apple products like iPhones and iPads. People dump not only at pawn shop but also on Ebay too.