China Committee should consider reparations for U.S. businesses
OPINION:
Republicans and Democrats in Washington don’t agree on much these days, but they do see eye-to-eye that China is a major threat to the United States. The new Congress will see a bipartisan Select Committee on China that will tackle issues including Chinese human rights abuses, military aggression, and theft of Americans’ personal data.
The committee should also study how to make China compensate American businesses for decades of intellectual property theft, fraud and other abuses. Chinese abuses in business have cost U.S. companies and shareholders billions of dollars as they have suffered one fraud after another.
Unlike the U.S., China is not a free market. For an American company to do business in China, it has to find a Chinese partner. And that has led to American businesses being ripped off time and again.
Activision Blizzard, the largest video game company in the U.S., provides a recent case study on the bad behavior of Chinese business partners.
Blizzard owns the most popular game ever: World of Warcraft. It’s not uncommon to see Internet cafes in China full of dozens of young men playing the online role-playing game at all hours of the day. But to operate in China, Blizzard needed a Chinese publisher.
Recently, negotiations with the publisher NetEase fell through after they couldn’t agree on terms, meaning that World of Warcraft will be shut down in China. Coincidentally, the Chinese publisher has released its own online multiplayer game similar to World of Warcraft.
The same Chinese publisher was sued last month by another U.S. company, Riot Games, for allegedly copying its popular online shooting game Valorant.
Far from apologizing, NetEase has taken to social media to share offensive memes and criticize its former partner — for no apparent reason other than being exposed for shady dealings.
Such stories are common in the business world. Chinese factories manufacturing goods for U.S. companies often produce extra products and sell them separately, undercutting the brands they are supposed to work for.
Outright fraud is regular, too. The law firm Harris Bricken, which handles business disputes in China, recounts one case “where a company had bought about a million dollars of fish and received containers of cheap bricks surrounded by fish” by a Chinese supplier.
Chinese fraud is costly, and it can also be deadly. Remember the 2007 scandal involving adulterated pet food that killed American cats and dogs? Or the adulterated blood-thinner medication that killed 81 people in 2008?
Decades ago, China’s opening market was viewed with promise. The hope was that American investment in China and more trade would help liberalize the communist country. But that hasn’t happened.
To be clear: These horror stories shouldn’t cause us to cast judgment on all of China, or all Chinese businesses. Indeed, these stories of corporate misbehavior are equally bad for Chinese consumers and companies, as they reinforce unfortunate stereotypes of what it’s like to do business in China.
If the Select Committee on China is to have a lasting legacy, lawmakers should find concrete solutions to teach China that crime doesn’t pay.
• Will Coggin is managing director at the American Security Institute.
