China Poses a Challenge over Intellectual Property

China Poses a Challenge over Intellectual Property
Peter A. Petri, dean of the Brandeis University International Business School, tells incoming MBA classes a story about the role of intellectual property in the flowering of American manufacturing.

Massachusetts merchant Francis Cabot Lowell visited England in 1810 and memorized the design of the power looms that drove world textile production. Upon his return, he enlisted master mechanic Paul Moody to build improved versions of the spinning and weaving machines in a Waltham mill on the Charles River. Over the next several decades, the textile and machinery industries and, ultimately, the center of manufacturing migrated across the Atlantic to New England.

That scenario may be repeating itself today as US and other Western companies, drawn to China by its cheap labor and rapidly expanding market, are finding their product designs and manufacturing processes imitated, appropriated, or stolen outright by Chinese entrepreneurs -- sometimes by their own joint venture partners.

"Technology becomes less proprietary as it ages," Petri said, arguing that US companies can sustain their leadership by innovating. "Leaders in innovation have to keep coming up with new technology."

Global companies can't afford to ignore China. But doing business in China means walking an intellectual property tightrope.

"China is a place whe