It really depends on what innovation is about. And in the wild, you can do whatever you want in a shorter time frame. In a more structured environment, there is higher possibility to enjoy having innovations that requires longer time frame. As someone said, all systems will be gamed. By looking at what we can achieve in the wild, it's a good refresh to push for a better system for innovation.
I simply can't trust or rely upon a country where laws don't matter. Sure, in the United States, money buys you better representation, as it does everywhere. But in China, Russia, etc. being disliked by the government can be a death sentence.
Start your company in China, fine. You'll move to a western country eventually, if you get big enough, and China doesn't reform. You simply can't trust a society where the laws don't apply equally. There isn't an Apple, Google, or Microsoft coming out of China. Instead, you get Ali Baba and Weibo that clone American startups.
I won't consider China a threat to American innovation until they get a true rule of law, democracy, and intellectual property rights. This is a tall order that won't be fulfilled anytime soon.
IP rights are the least important. I strongly believe that a protocol needs to exist to expel the top government leader(s) using non-violence to prevent corruption. Any system that exists without transparency and checks & balances ultimately results in corruption. FIFA is a perfect recent example.
I think you're illustrating quite well how people don't get China. Just because you don't like certain things doesn't mean it won't be overshadowed by other realities. The US is dysfunctional in many ways too, but are still a leader in some areas.
As an American living in China, I agree with you 100%.
A few points:
- I would not consider Taobao a clone.
- The US has its advantages but also its disadvantages. Funding (e.g. SBIR grants) is very corrupt in the US (corrupt in the Latin sense, meaning not necessary meaning bribes but personal relationships. I could tell stories, Lordy Lord).
- "true rule of law" The true rule of law is a question of money in the states. For the average citizen the law has become more a risk than an asset.
Venture capital or a bank loan in china for your biz requires guangxi galore, they are not at an advantage over the USA.
Rule of law is very strong in the U.S.; but ya you need to afford a lawyer. In contrast, a lawyer cannot help you much in China if the government has already made up its mind. The level of dysfunctions in either system differ by an order of magnitude.
I don't know the Chinese VC-Scene well but I know a few "Western" VCs in China so I can't make a judgement.
It is my impression that it is much easier to get money in China than in the states, at least until recently.
On the other hand: Often you get money from non VCs and VC is not very in the nature of a true Chinese. Chinese prefer M&A (with the focus on the A). How much is it to buy everything? They don't want any long term partner and they want everything based in China.
You need a reputation, and they'll only fund you for something safe (like copying and localizing an already successful western internet service). The money doesn't flow easily at all for higher risk, which is sort of the point of a startup. Anyways, Beijing is the best city for software startups, but ranks pretty low compared to many cities in the west for funding. If it's not china related, don't do it here.
"banks will only lend to SOEs or big private companies"
Banks' prefer to lend to SOEs or larger companies, sure, and those customers get the best rates. Credit _is_ available from banks for smaller businesses, but banks' role in this lending is a little different than in the US/UK.
A bank making a small business loan in the UK is serving two functions: (i) providing capital, (ii) taking on credit risk. In China, many small business loans are granted by banks (and live on a bank's balance sheet), but the credit risk is taken on by a credit guarantee company.[0][1]
The small business will pay interest to the bank, and fees to the guarantee company.
"there isn't much credit for small private companies"
There is, it's just that (i) when banks lend money sourced from their wealth management products (理财产品) , it doesn't show up on banks' balance sheets, and (ii) there are other non-bank lenders.
Search for 'wenzhou rate', 'shadow banking' or 'china wealth management' if you're interested in more detail, e.g. see the 'wealth management' section of this paper[2].
Irrelevant to the topic of innovation. I strongly dislike how gun rights, black lives matter, anti-police, etc. people have tried to warp many conversations on HN to this topic. I get it, USA has issues, stop trying to force the discussion everywhere.
So you can talk about how Chinese govt disliking people, how China doesn't have "true laws" and link them to innovation while my comment on to US laws is dismissed as irrelevant?
Yeah, I get it. Talk about bad things about US and get downvotes. Talks about bad things about China and get upvotes.
USA does not put citizens in reeducation camps for tweeting about their dislike for their leader. China will have you murdered if you agitate enough. The discrepancies in the two countries in how they handle dissent could not be farther apart.
I wish USA's police did not kill so many people. But Obama does not have dissidents executed for their thought crimes. You should be happy you can post open dissent about the USA on a public internet forum. In many countries, such as China, this is a dangerous move.
Well, if those are the facts that you have gathered, I have nothing more to say but to suggest you to travel to China, and experience it for yourself instead of absorbing news from your preferred media channels.
You're actually both right. China is among the biggest I.P. thieves, esp stealing from U.S. Funny thing is that the advantage of cheap, skilled labor means most companies can't help but take advantage of it. It can be a necessity for firms with little capital. The overall trend seems to be using American tools and high-level design with RTL + manufacturing done by Asians. No real surprise there.
I didn't mean to suggest Chinese people can't do engineering or research, and in fact 'the west' here is a shorthand for 'traditional IP ecosystem' that properly includes Taiwan/Korea/Japan.
What I meant is if you're going to compare IP ecosystems you need to be honest. The "Chinese network IP ecosystem" is not a closed loop as the diagram suggests but is heavily subsidized by innovations from outside of that system.
Ha, you western guys just talk like us. I never think highly of Chinese innovation, there's just pirate. It's much more easier to protect your innovation in west, therefore easier to publish your innovation.
There's pirating, innovation, and both. For instance, the ShinWei processors seem like Alpha rip-offs that got improved way beyond what Alpha did in last models. That's their usual way of doing things: pirate for headstart, then innovate based on labor at least.
"I want to be able to fork existing cell phone designs."
Right. That's the problem. He wants to steal someone else's technology and resell it. What he means by "innovate" is "add some tiny feature to someone else's thing."
What the article talks about is that these technologies are forkable in China. The author wanted to do no more than what is already possible. And it leads to an interesting discussion about IP law and practice between the West and China. As well as a very interesting technical discussion about a specific technology that was investigated.
On the other hand, anyone wanting to buy it for a fair price wouldn't get it: our patent system (maybe others) is too rigged for owners for that even ignoring its broken aspects. One measure said a smartphone might be covered by 250,000 patents with multiple claims. How does a small business with little to no investment legally determine who they'd owe, how much, and pay just that? They can't even if they want to. And they'll be hit by trolls as well.
Wanting to treat it like software and market economy in such a situation makes sense. I'm for limiting the effect of patents to the lifecycle their functionality represents. For instance, an improvement for version 12 is protected until version 13 is released. Maybe add some time. Long-term stuff, like fundamental techs, get more protection. Current system just kills innovation by every measure I've seen or locks it into oligopolies. There's exceptions here and there that are small players making it. Mostly just anti-competitive.
" What he means by "innovate" is "add some tiny feature to someone else's thing.""
That's most innovation: rehashes of and improvements on existing stuff. Theirs sounds like straight up using something but even inventing it yourself is a violation if a patent maybe covers it. Still need heavy-hitting lawyers or consult tons of patents per commit/algorithm. Seems impossible. Even big boys don't bother to do that: they just collect their own patents and use them as leverage for potential countersuits. Whole model is broken for startups in such industries if not looking to be sued or acquired.
So, for crap like this, I tell them to copy away because that's what the pro-patent competition are doing too. Out of necessity. Pay what you have to, esp what's justified (real innovation). Otherwise, don't give a shit and stay out of U.S. if extra worried. I've known many in HW business (esp ASIC's) that do that.
Serious question: lots of people claiming innovations in China. What are these innovations in the past 20 years? Where are these innovations sold? Because walking around the busy streets of Europe or America or Japan, I sure don't see any Chinese brands or products that would be remotely popular. sure there are made in China stuff ( although nowadays it's made in Vietnam or India or Philippines).
China joined WTO in 2000. So in a way they have a delayed start. By 2025-2030 time frame they are going to be #1 economy in absolute terms, so I would take the article very seriously esp. in conjunction with stifling IP laws of West. You are being dismissive and I understand where you are coming from, but in 2035 when you are walking the streets of Europe you my friend will see lot of Chinese brands. I am not that bullish on China, but the world center of finance is already shifting to East at a rapid pace. Taunt at your own peril.
I haven't been paying attention to the streets of Europe or America or Japan, but I sure see a lot of Chinese names on papers heralding scientific advances from Western labs.
The answer is that you're asking the wrong question. China has half the worlds population at its doorstep. Whatever you're seeing isn't relevant nor is a 20 year time frame. China is going to sell infrastructure and consumer products to all the emerging economy in the upcoming decades. That some things aren't made in China anymore is a sign of success not the other way around.
While I would agree that the current IP licensing environment could be vastly improved, I am not sure I consider putting out phones with whacky features "innovation" in the technical sense.
This is, however, a natural outcome of the Shanzhai culture. For the life of me I cannot find it now, but there is a fascinating article (by a well-known sci-fi author, I think... William Gibson? Neal Stephenson?) about Shanzhai, aspects of which TFA alludes to. It gives very good insights into the pros and cons of the culture of sharing that underlies today's Chinese tech industry. While one of the pros was the dizzying array of remixes it produces, one of the cons was that it essentially removes the incentive to invest in expensive R&D. While China is very good at the former, the West is still where the latter happens, and I tend to attribute this to the different cultural attitudes regarding IP.
Regarding the references to fair use and reverse engineering, there may be a lot of FUD out there and TFA helps in dispelling some of that, but there is no shortage of reversing in industry today. Companies regularly reverse their competitors' products, either to ferret out technical secrets or to detect infringement of their own IP. IANAL, but with few exceptions (like those clauses in the DMCA regarding DRM-related mechanisms), IP laws do not forbid prevent reverse engineering per se. Generally it's only when you leverage the knowledge gained from reversing in a commercial product that you can get into trouble.
One thing that's amazing about China is the size of the market makes it a perfect test bed for new product and business strategies.
Look at what Tencent did with QQ and WeChat, the kind of feature experiment they run on a monthly basis alone is mind boggling.
Look at what Kuaidi and Didi did to work WITH the taxi industry and be profitable, instead of fighting against the taxi industry head on like Uber is trying to do.
These kind of "soft" innovations are just as important as "hard" innovations such as a new processor design. In fact these kind of innovations are more interesting to me because they are very often not predictable and nobody has a solid "roadmap for business model", unless hard, tech roadmaps.
42 comments
[ 3.7 ms ] story [ 107 ms ] threadStart your company in China, fine. You'll move to a western country eventually, if you get big enough, and China doesn't reform. You simply can't trust a society where the laws don't apply equally. There isn't an Apple, Google, or Microsoft coming out of China. Instead, you get Ali Baba and Weibo that clone American startups.
I won't consider China a threat to American innovation until they get a true rule of law, democracy, and intellectual property rights. This is a tall order that won't be fulfilled anytime soon.
- I would not consider Taobao a clone.
- The US has its advantages but also its disadvantages. Funding (e.g. SBIR grants) is very corrupt in the US (corrupt in the Latin sense, meaning not necessary meaning bribes but personal relationships. I could tell stories, Lordy Lord).
- "true rule of law" The true rule of law is a question of money in the states. For the average citizen the law has become more a risk than an asset.
http://www.amazon.com/Three-Felonies-Day-Target-Innocent/dp/...
Rule of law is very strong in the U.S.; but ya you need to afford a lawyer. In contrast, a lawyer cannot help you much in China if the government has already made up its mind. The level of dysfunctions in either system differ by an order of magnitude.
What makes you think that?
VC is always based on guanxi, sure, but banks will only lend to SOEs or big private companies, there isn't much credit for small private companies.
On the other hand: Often you get money from non VCs and VC is not very in the nature of a true Chinese. Chinese prefer M&A (with the focus on the A). How much is it to buy everything? They don't want any long term partner and they want everything based in China.
Banks' prefer to lend to SOEs or larger companies, sure, and those customers get the best rates. Credit _is_ available from banks for smaller businesses, but banks' role in this lending is a little different than in the US/UK.
A bank making a small business loan in the UK is serving two functions: (i) providing capital, (ii) taking on credit risk. In China, many small business loans are granted by banks (and live on a bank's balance sheet), but the credit risk is taken on by a credit guarantee company.[0][1]
The small business will pay interest to the bank, and fees to the guarantee company.
"there isn't much credit for small private companies"
There is, it's just that (i) when banks lend money sourced from their wealth management products (理财产品) , it doesn't show up on banks' balance sheets, and (ii) there are other non-bank lenders.
Search for 'wenzhou rate', 'shadow banking' or 'china wealth management' if you're interested in more detail, e.g. see the 'wealth management' section of this paper[2].
[0] http://www.ft.com/cms/s/0/2653ed8e-21a2-11e0-9e3b-00144feab4...
[1] http://www.wsj.com/articles/next-up-for-chinas-central-bank-...
[2] http://journals.sub.uni-hamburg.de/giga/jcca/article/viewFil...
http://www.bunniestudios.com/blog/?tag=gongkai
http://www.bunniestudios.com/blog/?p=4018
http://www.bunniestudios.com/blog/?p=284
http://www.bunniestudios.com/blog/?p=147 (I've been there. It's overwhelming.)
This submission turns out to be a dupe of https://news.ycombinator.com/item?id=8807651.
Url changed from http://gizmodo.com/why-its-easier-to-innovate-in-china-than-..., which points to this, and 2014 added.
I also simply can't trust or rely upon a country where people get shot on a daily basis.
http://shootingtracker.com/wiki/Mass_Shootings_in_2015
Yeah, I get it. Talk about bad things about US and get downvotes. Talks about bad things about China and get upvotes.
I wish USA's police did not kill so many people. But Obama does not have dissidents executed for their thought crimes. You should be happy you can post open dissent about the USA on a public internet forum. In many countries, such as China, this is a dangerous move.
What I meant is if you're going to compare IP ecosystems you need to be honest. The "Chinese network IP ecosystem" is not a closed loop as the diagram suggests but is heavily subsidized by innovations from outside of that system.
Right. That's the problem. He wants to steal someone else's technology and resell it. What he means by "innovate" is "add some tiny feature to someone else's thing."
What the article talks about is that these technologies are forkable in China. The author wanted to do no more than what is already possible. And it leads to an interesting discussion about IP law and practice between the West and China. As well as a very interesting technical discussion about a specific technology that was investigated.
Wanting to treat it like software and market economy in such a situation makes sense. I'm for limiting the effect of patents to the lifecycle their functionality represents. For instance, an improvement for version 12 is protected until version 13 is released. Maybe add some time. Long-term stuff, like fundamental techs, get more protection. Current system just kills innovation by every measure I've seen or locks it into oligopolies. There's exceptions here and there that are small players making it. Mostly just anti-competitive.
" What he means by "innovate" is "add some tiny feature to someone else's thing.""
That's most innovation: rehashes of and improvements on existing stuff. Theirs sounds like straight up using something but even inventing it yourself is a violation if a patent maybe covers it. Still need heavy-hitting lawyers or consult tons of patents per commit/algorithm. Seems impossible. Even big boys don't bother to do that: they just collect their own patents and use them as leverage for potential countersuits. Whole model is broken for startups in such industries if not looking to be sued or acquired.
So, for crap like this, I tell them to copy away because that's what the pro-patent competition are doing too. Out of necessity. Pay what you have to, esp what's justified (real innovation). Otherwise, don't give a shit and stay out of U.S. if extra worried. I've known many in HW business (esp ASIC's) that do that.
This is, however, a natural outcome of the Shanzhai culture. For the life of me I cannot find it now, but there is a fascinating article (by a well-known sci-fi author, I think... William Gibson? Neal Stephenson?) about Shanzhai, aspects of which TFA alludes to. It gives very good insights into the pros and cons of the culture of sharing that underlies today's Chinese tech industry. While one of the pros was the dizzying array of remixes it produces, one of the cons was that it essentially removes the incentive to invest in expensive R&D. While China is very good at the former, the West is still where the latter happens, and I tend to attribute this to the different cultural attitudes regarding IP.
Regarding the references to fair use and reverse engineering, there may be a lot of FUD out there and TFA helps in dispelling some of that, but there is no shortage of reversing in industry today. Companies regularly reverse their competitors' products, either to ferret out technical secrets or to detect infringement of their own IP. IANAL, but with few exceptions (like those clauses in the DMCA regarding DRM-related mechanisms), IP laws do not forbid prevent reverse engineering per se. Generally it's only when you leverage the knowledge gained from reversing in a commercial product that you can get into trouble.
Look at what Tencent did with QQ and WeChat, the kind of feature experiment they run on a monthly basis alone is mind boggling.
Look at what Kuaidi and Didi did to work WITH the taxi industry and be profitable, instead of fighting against the taxi industry head on like Uber is trying to do.
These kind of "soft" innovations are just as important as "hard" innovations such as a new processor design. In fact these kind of innovations are more interesting to me because they are very often not predictable and nobody has a solid "roadmap for business model", unless hard, tech roadmaps.