You don’t see stuff like this every day:

It turns out that factory workers — not the activists labeled “preachy” by one expert, and not the Nike executives so wounded by criticism — get the last laugh. Villagers who “went out,” as Chinese say, for what critics described as dead-end manufacturing jobs are sending money back and returning with savings, building houses and starting businesses.

Workers who stitched shoes for Nike Inc. and apparel for Columbia Sportswear Co., both based near Beaverton, are fueling a wave of prosperity in rural China. The boom has a solid feel, with villagers paying cash for houses.

This flies directly in the face of the accepted wisdom of the U.S. media, which includes:

1. Foreign companies go to China because of low wages and/or poor environmental laws.
2. Foreign companies in China always adopt local standards, which include low wages and unsafe working conditions.
3. Foreign companies in China try to cover up information about their China factories because the facts are ugly.

Now, I’m the first to admit that those three statements are correct some of the time. Absolutely true. However, somewhere along the line, it became cool to write stories about these problems, which has led to a perception that this is descriptive of all foreign factories here. That of course is incorrect and highly misleading.

So when the article excerpted above, from the Portland Oregonian, takes such a different tack, it is worth notice. But why did the Oregonian dare to be different? Some sort of crusade for the truth?

Perhaps. I suspect, however, that Nike’s presence in Portland, and that company’s past PR problems with respect to China factory working conditions, motivated the piece. That being said, this is not a Nike apologia, and is in fact quite balanced:

Improved living standards don’t negate criticism by activists who castigated the outsourcing industry, especially Nike, a 1990s lightning rod for allegations of low pay and onerous working conditions. Abuses continue in some plants, especially those unconnected to international brands.

But longtime activists acknowledge that the sweatshop issue has lost steam, at least concerning China. Conditions and wages have improved, says Jeffrey Ballinger, a critic who still dismisses corporate-responsibility programs — in which Nike, Columbia and other companies set standards and inspect factories — as spin.

Kudos to the Oregonian for neither accepting conventional wisdom nor writing a puff piece on a local corporate giant.

Import substitution industrialization (also called ISI) is a trade and economic policy based on the premise that a country should attempt to reduce its foreign dependency through the local production of industrialized products. (Wiki)

During the past six months or so, one of the big themes in foreign investment circles has been the extent to which China has rolled up the red carpet for foreign companies. Some of this talk is in reaction to recent government enforcement policies that have made it more difficult for foreign companies to do business here. Additionally, China’s industrial policy has led to significant concentrations in certain market sectors, dominate by “chosen” State-owned Enterprises (SOEs).

In my own law practice, I have seen a disturbing trend with respect to technology transfer. In the past year, I have seen one tech license deal go bad because of a very questionable patent invalidation decision — the result allowed the local company to use the tech royalty-free. The other matter was a transfer of Chinese tech offshore, a purchase by a foreign entity; a couple of years ago, this deal would have gone through within days but now is bogged down in red tape.

For a long time, two of the chief motivating factors behind China domestic innovation programs are: self sufficiency and avoidance of paying royalties to foreign enterprises. As a developing country, China’s econ policy here makes some sense if it leads to domestic innovation and a continuous rise up the value chain of tech products.

However, if this attitude leads to specific policies designed to dislodge foreign suppliers in favor of domestic firms after tech know how has been shared, that’s not so cool. So what should we make of this sort of report:

China spends billions of dollars importing high-end scientific instruments every year, and its global competitiveness in manufacturing this technology is dwindling, a survey has found.

Conducted by Peking University and the National Center for Nanoscience and Technology and the National Science Library, the survey found that in some sectors scientists rely 100 percent on imported high-end instruments.

Importing these high-end instruments, including DNA sequencers and particle colliders, cost several billion US dollars in 2009, an increase of 30 percent on the previous year, the report found, without specifying an exact figure. (China Daily)

On its face, this is a simple report about how China is spending a lot of money, perhaps inefficiently. Maybe I’m reading between the lines too much here, but in addition to being more efficient, the obvious solution to this problem is import substitution.

At Tuesday’s Senate hearing on Internet censorship, someone in the press asked Google VP and Deputy General Counsel Nicole Wong about an action against the Chinese government at the World Trade Organization.

Well, the press (again) has taken the bait and is talking about the possibility. The Financial Times kicks their coverage off with this tagline:

If Google chooses to take its case to the WTO, the battle could be both bloody-minded and counterproductive.

Sounds dramatic. I like the blood part.

So, should Google take China to the WTO? Great idea, if the WTO allowed non-Member States entities other than Member States to initiate proceedings. IT DOESN’T!!! (more…)