China Frets: Innovators Stymied Here

http://online.wsj.com/article/SB10001424052970203476804576617251769164740.html?mod=rss_about_china

by shaurya • 15 years ago

66 42 15 years ago

online.wsj.com

drieddust2• 15 years ago

Asians are slowly realizing that culture of conformity is not going to work anymore.

Volpe7• 15 years ago

They are? That's why they are the ones holding all the money while the "non-conformers" drown in debt.

jerf2• 15 years ago

No, they're drowning in debt issues too. Google "China debt" and you'll get an earful, one example: http://www.thedailybeast.com/articles/2011/08/23/why-china-s... If you don't like that one pick your own.

Nobody got out of the last decade unscathed, China just covered it up better. Nobody's getting out of this one unscathed, either.

chaostheory3• 15 years ago

That has little to do with creativity, and more to do with frugality.

drieddust2• 15 years ago

Non conformers are drowning in debt because instead of letting your financial system iron out its efficiencies; your governments have chosen to artificially inject stimulus which did nothing to help the situation.

Asian did not face this crisis because money and power is accumulated in the hands of few and they can actually withstand any financial meltdown because they are not answerable to any one.

http://www.dailymail.co.uk/news/article-1339536/Ghost-towns-...

Do you think in western economy any company or government can afford to do this?

chaostheory3• 15 years ago

Think the authoritarian government system deserves a bigger portion of the blame. When you don't have freedom of speech, it tends to kill creativity.

justincormack• 15 years ago

It is worth reading Krugman's 1994 argument that the Asian miracle (unlike the earlier Japanese one) is purely capital based, not productivity based.

http://media.ft.com/cms/b8268ffe-7572-11db-aea1-0000779e2340...

snupples• 15 years ago

Econ 101: an economy based on infrastructure growth is not sustainable. China has problems ahead without change.

learc83• 15 years ago

Thanks, for posting that. I've never really like Krugman all that much, but he successfully put to paper, what my intuition has always told me about China's rapid growth. Even more remarkable considering he wasn't really talking about China, and it was written 2 decades ago.

dereg• 15 years ago

Paul Krugman, in the 90s, was brilliant. Unfortunately, I think realized that greater fame, influence, and wealth comes from partisan hackery. He still has important thoughts to share, but his signal/noise ratio has degraded.

thinkcomp4• 15 years ago

This is certainly true, but innovators are stymied in good old California as well. Try tackling a serious problem, such as finance, and you'll find that your innovation breaks a recently passed law. That won't stop someone in Shanghai from copying your work, though.

http://www.1jton.com = http://www.facecash.com

So who's innovating now?

jessedhillon4• 15 years ago

This is a simplistic view. The law -- which requires payment processors to have some large sum of money, $500k I think, in the bank -- doesn't prevent innovation. There are still plenty of innovators in the payments space. What you don't have is a space frothing with activity and losing the public's money in fly-by-night schemes run by college sophomores. This sort of thing is what the law aims to prevent.

It's not anywhere close to the situation in China.

Serious problems are being challenged here in CA and in the US at large. I'm sorry you decided to shut down your startup in CA to protest the law. However, it is not the situation that the entire startup scene is defunct, or that we're hurtling headlong into an authoritarian regime a la China.

briandear• 15 years ago

You're completely correct. Just getting a business license in China takes a bribe and months of red stamping. Innovation is crushed in China mainly because of the IP laws (or ignoring thereof.)

thinkcomp4• 15 years ago

Not quite. Yours is a simplistic interpretation of a complex problem.

The problem is that the large sum of money is not $500K, which is the amount written in the statute, or $500K "in the bank," which is different from $500K in net assets. It's some other much higher number that isn't in writing and is completely up to a single bureaucrat's discretion. (See http://www.americanbanker.com/issues/176_126/think-computer-.... "A department spokeswoman says the actual amount needed is 'more than $1 million.'" I was told in person that the number is between $1 million and $80 million.) Even the Senior Counsel for the California DFI admitted that this dynamic reminded him of an authoritarian regime--but he's powerless to change it.

I didn't "decide" to shut down my startup to protest a law. The law shut down the startup.

Corruption in the United States looks different than it does in other countries. In other countries bribes are overt and expected. In the United States bribes are written into the law to serve an upper class that prices legal services out of most people's reach.

ramanujan• 15 years ago

Logical fallacy. The fact that some payment processors still exist does not overcome the prima facie fact that at least one startup (and probably more than one) was put out of business by this law.

Thus, if you agree that startups are engines of innovation, innovation was prevented.

If you support a regulation you must be intellectually honest enough to acknowledge its empirical costs in addition to claiming its theoretical benefits.

mikefox• 15 years ago

And it isn't just IT. Isn't it illegal in California and New York to use services like 23andMe because of state laws mandating that DNA tests can only be performed by "doctor's order"? If I, in New York, want to mail my DNA to 23andMe legally, I must cross the Hudson to New Jersey and mail from a post office there. The law will always be far behind what innovation demands.

hugh3• 15 years ago

An iron-clad law of the internet: if you complain about how X sucks in country Y, you'll inevitably just wind up with a thread full of comments about how X sucks in the USA.

Volpe7• 15 years ago

That so needs to be one of the 'rules of the internet' (if it isn't already)

http://knowyourmeme.com/memes/rules-of-the-internet#.TpJshTn...

SoftwareMaven• 15 years ago

As someone who is very conflicted about the IP laws in the US, it is interesting how many of the comments focus on the problems no IP protection causes.

lambdasquirrel• 15 years ago

Well there's subtle but important differences between patents in general, and patents as they have been abused regarding software.

There's also copyright and trade secrets. Namely, if someone swipes your code here in the US, and you can prove it, it's considered pretty trivial to bring them to court. This apparently not the case in China.

My take on software patents is that they aren't analogous to real-world engineering patents, for, say, a BMW engine. The analogy from BMW engine patents to software is more like copyright on the code itself. Software patents as they are now seem more like business process patents.

sliverstorm• 15 years ago

Spot-on. In the general case, patents do appear to serve their purpose in the US. It is not a perfect system, (see: software patents) but it is without a doubt superior to a total lack of IP protection.

Volpe7• 15 years ago

This article doesn't even mention Wang Chuanfu (王传福)?

Owner/Founder of BYD which is a pioneer in battery technology, expanding into cars and electronics, it's is not too disimilar from Apple (in a business sense, different industry).

rogerjin• 15 years ago

The greatest innovator (IMO) of China is Jack Ma from Alibaba Group en.wikipedia.org/wiki/Jack_Ma

fraserharris• 15 years ago

I would hope that no one here needs a link to Jack Ma.

As an added contribution, there is a well reasoned theory that Alibaba will use Yahoo as a platform to destroy Ebay: http://ebaystrategies.blogs.com/ebay_strategies/2011/10/coul...

gurkendoktor• 15 years ago

> "It's not that Chinese are not smart or don't have the potential. Look at Jerry Yang of Yahoo Inc. and Steve Chen of YouTube," he said, referring to the two Internet entrepreneurs who were both born in Taiwan and migrated to the U.S. at young ages.

This quotation is put into a weird context in the article. I guess what Kai-Fu Lee is saying is that ethnic/cultural Chinese have potential. But much of the article is about the political and economic framework of China as the country, and there is a difference between China and Taiwan IMHO. Arguably, it was not as big when Yang and Chen emigrated, but it muddles the point a bit.

China Frets: Innovators Stymied Here

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