Theft of Intellectual Property

Yesterday President Barack Obama and President Xi Jinping of China announced that they had reached a common understanding to combat “cyber-enabled theft of intellectual property” As stated in the New York Times report of that “understanding,” the two leaders had agreed that “neither country’s government will conduct or knowingly support cyber-enabled theft of intellectual property, including trade secrets or other confidential business information, with the intent of providing competitive advantages to companies or commercial sectors.”

Meanwhile on that same day Apple introduced the iPhone 6S and iPhone 6S Plus and, despite Steve Jobs promise to “spend every penny of Apple’s $40 billion in the destroy Android, because it’s a stolen product,” (See on the day before in the 24 or so fake Apple stores in the Shenzhen shopping corridor unauthorized “fakes” of the new Apple phones were already available for sale, some of which are running on the Android OS.

These phones appear authentic although they are not openly displayed and some run slow and their images are fuzzy. But they’re a steal at a tenth of a price of a real iPhone. In these fake Apple stores, the logos, uniforms, display shelves and shopping bags resemble those found at a genuine Apple store and some of these stores do, in fact, offer the real thing, smuggled across the border from the U.S. and Hong Kong but those real phones are being offered at as much as double the official price as legitimate purchases must have been pre-ordered.

Is this a bad thing for Apple? Yes, the sale of inferior knock-offs tarnishes their brand and may divert purchasers from paying more for the real thing. However, maybe not as some analysts have said that these rotten Apple stores may promote brand awareness in the world’s most populous country which has a meager 22 legitimate Apple stores.

We will also have to see if President Xi Jinping keeps his promise to combat China’s theft of the West’s intellectual property. Though, making that theft easier will be Boeing’s opening of its first aircraft production facility abroad, in China, a joint venture between Boeing and the state-owned Commercial Aviation Company of China which is building a Chinese competitor to the 737. See quoting Lenin as saying, ” “the capitalists will sell us the rope we use to hang them.”



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