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I've highlighted this issue before. U.S. taxpayers finance
research and development in many, many ways: tax credits for
R&D, tax support of major universities, tax support for the defense
budget, tax support for... a bunch of other stuff relating to promoting
technological advancement.
The Chinese take our research in many, many ways: espionage, piracy, sending their students to U.S. Ph.D. programs with government high-tech contracts, state owned entities buying U.S. companies that are strategically important, and joint ventures.
Joint
ventures? Yes. China conditions U.S. investment in their country
upon the U.S. company transferring technology to their companies, often
government controlled. Baird Capital Partners learned this, as
noted in a recent Wall Street Jounrnal China Business Briefing article.
(I can't show you this, subscription only, but dated August 30, 2007).
Baird tried to set up a plastic molding company joint venture in China recently.
While
reading the fint print of an agreement between Xaloy Inc. and a local
manufacturer, Baird Capital came across a clause indicating that the
Chinese entity planned to set up a sister company with access to
Xaloy's proprietary technology. Baird... slipped a noncompetition
clause into the agreement and the other party pulled out.
Ask
Microsoft, Intel and Google if they have transferred proprietary
technology in return for permission to do business in China.
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