Sunday, April 1, 2018

China Steals Charlotte Pipe and Foundry's Identity

Identity theft is a nightmare. Victims can expect a long and difficult process in restoring their reputation and finances. The good news is we have laws and once the perpetrators are caught, they’ll face long prison sentences. But what if you’re an American company and the offender is a totalitarian country that acts like the mafia? What do you do then?


Charlotte Pipe and Foundry was established in North Carolina in 1901. A company that’s been around that long has established a good name by producing a superior product. Unfortunately for them, they’ve had their identity stolen by a Chinese company that produces cheap, crappy products and dumps it on the world’s market. Here is an excerpt from an op-ed written by Frank Dowd, the chairman of Charlotte Pipe and Foundry:


Free trade is supposed to be a two-way street. But if you want access to China’s market of 1.4 billion people, you will have to transfer your company’s intellectual property to the Chinese government as a cost of doing business there – that is, if they are not outright stealing your intellectual property.



We’ve experienced that firsthand as well. Last year we discovered that a Chinese company, Yitai, had stolen our company’s logo and registered it in China. They put a Charlotte Pipe and Foundry sign on their building and the general manager is passing around Charlotte Pipe and Foundry business cards. Yitai manufactures competing products and uses the stolen Charlotte brand to sell across Asia. Do you consider this fair trade?



During the later stages of the Cold War, free and open access to U.S. markets was used as a foreign policy tool to prop up our allies and promote democracy. America led the liberalization of global free trade throughout the 1980s and 90s, culminating in the passage of NAFTA and the creation of the World Trade Organization, lifting billions of people out of poverty.


This approach was premised on the assumption that the extension of free markets would lead to global convergence to Western-style capitalism. The U.S. supported China’s entry into the WTO in 2001 hoping China would eventually embrace a market-oriented trade regime. But as Mr. Trump said recently, “it is now clear that the WTO rules are not sufficient to constrain China’s market-distorting behavior.”





I listened to a panel on NPR discussing this very subject and was astonished at how brazen the Chinese can be. Apparently, they’ll attend trade shows and set up a booth right next to Charlotte Pipe and Foundry flouting their illegality. It was shocking.


The problem with gangster regimes like China is they have no respect for property rights which is essential for success. Their success is dependent on forcing companies to divulge trade secrets, or they’ll just outright steal it. This is a dilemma the Trump administration has to deal with and I don’t believe raising tariffs are going to do the trick. As of now, China has issued retaliatory measures that could possibly trigger a trade war.


The best course of action is to challenge China’s status in the World Trade Organization. As a member, China is required to follow the bylaws of the WTO which mandates protection of trademarks and intellectual property rights. If a member is a habitual offender, they must either be sanctioned or removed. A threat of this magnitude could keep an outlaw regime like China in check. Even mafia bosses crave a semblance of respectability.


Source:

http://www.wbtv.com/story/37838917/charlotte-company-falls-victim-to-chinese-trade-theft
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