In a DC Velocity article in which a senior executive of the U.S.-China Business Council says conditions for foreign companies doing business in China have reached a new low, a quote from a 3Com spokesperson makes for interesting reading.
3Com is a networking vendor that manufactures nearly all its products in China. Most of its design and development is done there, too. As such, it’s notable that 3Com should have concerns about China’s “indigenous innovation” polices, which are intended to boost the research, development, and manufacture of Chinese companies — relative to foreign competitors — in computing, software, telecommunications, and cleantech.
One might think that 3Com, essentially a Chinese company with an American moniker, wouldn’t have an objection to China’s industrial policy. Nonetheless, 3Com is concerned, as the following paragraph from the DC Velocity makes clear:
Not only does that policy erect unfair trade barriers, it also puts intellectual property at risk, said Misty Rutter, trade compliance director for 3Com, a telecom hardware maker that manufactures almost exclusively in China. Rutter warned that the process of certifying a product’s compliance with the “indigenous innovation” policy exposes design and other intellectual property to Chinese government scrutiny—and potentially, to piracy.
HP’s pending acquisition of 3Com has been held up, awaiting official approval from China’s Ministry of Commerce (MOFCOM). If 3Com has concerns that China’s indigenous innovation might compromise its intellectual property, one can only wonder what HP will make of the situation.