Trump should tell Xi Jinping to crack down on theft by Chinese companies

Every year, American companies spend billions upon billions of dollars on research and development to produce unique, profitable innovations for the global economy. Also each year, Chinese companies are coming in and stealing the blueprints to make quick money.

They must be stopped.

This weekend, as President Trump’s several days of meetings with Chinese President Xi Jinping is expected to branch into more convoluted global matters, Trump cannot afford to miss the opportunity to discuss the country’s rampant telecommunications theft.


ZTE, a major Chinese telecommunications corporation, is the main culprit. When caught, the company often admits wrongdoing, but that doesn’t stop them from going back and doing it again when Uncle Sam’s back is turned.

In 2015, New York-based telecommunications company Vringo charged that ZTE had been using its-patented technology for years without paying any licensing fees. The U.S. company looked to the Chinese government for help, but the country’s regulators refused to budge.

Randal Phillips, vice chairman of the American Chamber of Commerce in China, said ZTE was “clearly being favored,” and that the Chinese government was doing “whatever it [could] do” to support ZTE.

That’s not acceptable.

By the end of the year, ZTE eventually folded: it agreed to pay the company a lump settlement of $21.5 million. But that didn’t stop ZTE from continuing to do what it does best.

Since that time, ZTE has continued to obtain technology products from the U.S. and incorporate them into their own designs. Last month, it was discovered the company pleaded guilty to doing this over a six-year-long period, under circumstances in which they would proceed to ship their final goods to countries like Iran. Commerce Secretary Wilbur Ross announced that ZTE agreed to pay $1.2 billion in penalties.

In a statement, ZTE Chairman and Chief Executive Zhao Xianming claimed that the company learned its lesson: "ZTE acknowledges the mistakes it made, takes responsibility for them, and remains committed to positive change in the company,"

But have they really learned anything?

Time and time again, the company makes the same judgment errors. Beijing, which may very well be trying to artificially boost its growth rate in the sector, doesn’t seem to care.

To be clear, our current innovation-crippling patent system certainly needs restructuring. Patents shouldn’t bestow monopoly privilege, nor should they exist forever. They should only be in place long enough to ensure that companies spending money on research & development are able to make back some profit without any interference from profiteers with no skin in the game. But just because the current patent system in place needs reform doesn’t mean that Chinese companies should be able to simply come in and loot blueprints.

Stealing intellectual property isn’t just a foreign issue either: it is as equally intolerable when it happens in the domestic realm by sneaky Francis Cabot Lowell-like figures.

But in the case of ZTE, it’s a Chinese problem, and President Trump simply cannot allow Beijing to continue tolerating (and perhaps even encouraging) this widescale fraud.

Protecting American businesses from predatory business practices should be a top priority of the Trump Administration, and the American business community is counting on him to take a stand in his meeting with Xi Jinping. 

Tommy Behnke (@Tommy_Behnke) is a consultant at the Washington, D.C.-based Third Dimension Strategies, and a former communications staffer for Sen. Rand PaulRandal (Rand) Howard PaulDem wins Kentucky state House seat in district Trump won by 49 points GOP's tax reform bait-and-switch will widen inequality Pentagon budget euphoria could be short-lived MORE.

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