China's embassy in Angola has, this month, issued a broad security bulletin to Chinese nationals living and/or working in the country, warning to be increasingly vigilant suspicious activity, and not to travel alone after dark.

The bulletin comes in response to an increasing number of attacks on Chinese citizens and businesses that have injured many Chinese, and which have left several dead.


Organized Crime?

According to local business leaders the attacks are the work of criminal gangs who are specifically targeting Chinese workers and businesses in highly organized manner. First using scouts and/or local knowledge to pick out a target, and then sending in armed foot soldiers to take cash and equipment.

One of the most serious cases cited by business leaders is the murder of businessperson Xu Tonggou. Xu was confronted by an armed gang on September 4. When Xu refused to hand over money to the gang they shot Xu 3 times. Xu later died in hospital.

Another serious case cited by leaders was a raid on the Jiangsu International Company that was carried out on the same day as Xu's murder. 6 gang members forced their way onto a JIC construction site office. They beat staff with clubs and threatened them with assault rifles before stealing money and computer equipment.

There have also been similar attacks Chinese dormitories and other locations where Chinese live and/or congregate. As well as on individual Chinese.

Increasing Problem?

According to Xu Ning, the head of the Chinese Business Council in Luanda, the rate of crime against Chinese is increasing at an alarming rate and are becoming increasingly violent. So much so that some Chinese have begun to leave the region.


Official Scepticism?

Despite representations from Chinese business and community leaders local authorities remain sceptical. Although they freely admit that Chinese citizens have been attacked, and that a number of Chinese businesses have been robed, they deny that there is a serious problem, that it is gang related, or that it is specific to the Chinese community.

According to local authorities Chinese citizens are most likely falling victim to 'genetic crime'. Crime that effects them because they are present in a high crime country such as Angola, rather than specifically because they are Chinese.


View From Outside?

At present there is little reliable information available to analysts to determine the scale and scope of the problem faced by Chinese in Angola, particularly as it is likely that many crimes against Chinese are going unreported if the victims are working in Angola illegally, or if they are afraid of reporting the crime for reasons of face, or fear of reprisal.

The available evidence does suggest that the number of crimes committed against Chinese is growing, and that this growth appears to be in organized attacks – such as the gang raid on JIC's site office – as well as random street attacks by opportunists.

However, said evidence is insufficient to determine where the growing number of attacks on Chinese citizens and businesses is due to the fact that they Chinese – for example, local people forming into gangs and targeting Chinese because they are angry at the influx of Chinese workers -  or because Chinese are more profitable to attack - for example, because Chinese they are more likely to carry cell phones and quantities of cash than local people, or because Chinese businesses more likely to have new equipment on site than local businesses.

China watchers note that Angola has pandemic levels of violence and violent crime. Greater so than even Western countries. And that despite the increase in crime involving Chinese citizens it is the local who people remain the main victim of crime.

Angola has also long been considered a dangerous country for non indigenous people. With visitors being targeted due to their propensity to carry money and valuable items such as watches and cell phones, and because of their easy of targeting. The situation is so bad that visitors to the country are commonly advised to travel in packs, particularly after dark, and not to trust the local taxies. Visitors are also frequently warned that certain areas of the capital Luanda – where the bulk of the Chinese population is located -  such as Roque Santeiro, Roche Pinto and Serpentine,  have been placed on embassy warning lists as being off limits due to crime levels.

There are an estimated 100,000 Chinese in Angola at present. Most of whom work in the construction industry. In general Chinese are not used to violent crime. Although it exists in China public perception often greatly exceeds the actual threat. Which is many times less than is found in countries such as America and Britain, where murder, rape and assault levels have reached pandemic proportions. This leaves most Chinese unprepared for crime rates in countries like Angola.

Chinese are also sometimes lulled into a false sense of security when overseas. Believing that because China is a developing country with no history of colonialism or state interference in regions such as Africa that the local people will see them as comrades and will leave them alone in favor of targeting whites who have more money and whose countries have a long running history of imperialism and colonialism. Thus making them easy and unsuspecting targets for violent criminals.

It's an age old story, and one that's all to familiar to Western companies dealing with China. You create a product - expending time and money on research, development and design - then you find a business partner to manufacture and/or distribute it as part of of China's now infamous Joint-Venture system. Things seem to go well at first, but then you find that your partner company has appropriated your intellectual property and is selling unauthorized copies of it without paying you a cent in return.

Your product becomes their product, and because of all of the legal vagaries and hurdles there's not much that you can do about it.

This a trap that many companies have fallen into, or have found themselves in. But one case of particular note is the recent case of Zhongyi Electronic LTD V Microsoft, which has just passed through the Number 1 People's court in Beijing.

Why is this case notable, you may ask? Because in this particular case a Chinese company has proved to be the victim or IPR theft.

The Case?

In April 2007 Beijing based technology firm Zhongyi Electronic LTD lodged a complaint with the courts accusing Microsoft of violating its contractual obligations regarding the IPR rights of one of it's products.

According to Zhongyi, Microsoft signed an agreement to use to 郑码输入法 (The Zhengma Input system, Known as the Zhengma IME) - a software based system designed to allow Chinese characters to be entered onto any computer using a Western keyboard - in the windows 95 Operating system.

However, Microsoft then went on to include the Zhengma in further operating systems. Including Windows 98, 2000 and windows XP, without renewing their contract. And without paying Zhongyi for the use of their code.



The Verdict?

In a verdict, rendered on Monday 16 November 2009, the Mainland court issued a ruling in partial support of Zhongyi, but also partially in partial support of Microsoft.

The court found that Microsoft had not violated its contract in regards to the source code for Zhengma, however it found in favor of zhongyi with regards to a ancillary IPR that Microsoft shipped alongside it. Specifically, the court found that Microsoft had illegally copied and distributed Chinese language fonts produced and owned by Zhonyi with 8 versions of the Windows Operating System, due to the files falling outside of the agreed contract.

In line with the court's verdict a cease order has been issued forbidding Microsoft from shipping further copies of all operating systems that include the disputed IPR. Zhongyi now has the option to claim compensation from Microsoft, though it remains unclear what kind of figure this may entail due to the number and spread of products involved. As well as the time period between the initial violation and the verdict.

Ironically, the task of calculating compensation is further complicated by the widespread violation of Microsoft's own IPR. Leading to difficulties determining how many copies of violating products were distributed by Microsoft - and thus are liable for compensation - and how many were illegally distributed by and thus would fall outside of a compensation claim.

Microsoft's latest operating system: Windows 7, is  thought to be uneffected by the verdict as it does not include the disputed IPR. Though Windows XP, the most popular operating system in China, will be effected.

Impact?

At present the impact of the verdict is not clear. Though analysts do not predict that it will have a significant impact on Microsoft's bottom line in China due to widespread piracy and market share issues with the effected products.


Trends?

Although the Microsoft case is unlikely to have any real impact in itself, analysts have expressed a concern that the case may mark part of a longer term trend towards Chinese companies pursuing IRP cases against foreign partners and competitors A trend which could see China ceasing to become a net sink of IRP suits, and instead issuing a significant number of its own.


A similar trend has previously been observed with Chinese-Taiwan. Originally the island territory was a net sink of IPR suits due to an abundance of media piracy. However, in recent years, as the its technology sector has boomed, the has begun aggressively pursuing overseas companies for copyright infringement, breach of contract, and other IPR related issues.


The possibility of Such a trend following on from the Mainland is worrying for foreign companies. Particularly if the claims are filed in Chinese courts.

Up until recently many Chinese companies have had little choice but to pursue IPR claims in foreign courts. A process which can be expensive and which subjects them to foreign laws which can be bias against them, or which can fail to recognize Chinese IPR on the grounds that it was not registered in the country where the case is being pursued. Something that can leave Chinese companies with no jurisdictional rights to their own products if the abuse occurs overseas.

However, with an increased interest in domestic IPR, and increased willingness to pursue by Chinese courts, Chinese companies are now, more than ever, able to pursue cases against foreign companies on home territory. The reduced costs and increased the chances of winning make litigation more likely to be brought. Which in turn could prove expensive for foreign companies, not to mention embarrassing, if they are found to have violated Chinese IPR.

The scale of any future trend, if it does emerge, remains unclear. Mostly because the scale of the problem is unknown.

Up until recently the closed nature of China has meant that some companies have been unaware that IPR violations have been taking places because they have been taking place overseas, and even when they have become aware of them they have lacked the means to pursue litigation due to cost and jurisdictional issues. Equally, even when they have become aware of a violation some companies have been been forced to sign away litigation rights, and to accept low value compensation, out of the fear that if they litigate they will loose future business opportunities. Thus there may be a large flood of litigation waiting in the wings from Chiense compaines who would not previously have gone so far, or there may be comparitively little.

At present, the balance of litigation remains overwhelmingly against China, while the balance of IPR violations remains overwhelmingly the fault of Chinese companies. It is estimated that over 80% of commercial software in China is an illegal.

Chinese health authorities have now officially ruled out a link between the death of a Mainlander and the Chinese swine flu vaccination program.

According to reports published by the Chiense Ministry of Heath, the death of the Mainlander - Which occurred some eight hours after the individual received the Swine flu vaccination - was the result of a heart attack. And is not being linked to the vaccine.

It is thought that appproximately 13 million Mainlanders have received the vaccination, but fewer than 1250 reports have been received of adverse reactions, only 15 of which have been serious reactions.

When you get right down to it, China owes much of it modern wealth to the fact that foreigners (Particularly Americans) seem to have an insatiable desire to own "stuff". To cut a long story short, China, with its large pool of labor to produces "stuff" cheaply.  And foreigners, with their desire to own "stuff" buys it in copious amounts. The perfect partnership of supply and demand. so long, that is, as you ignore the fiscal deficit between the West and China.

Some of what China produces is useful and/or practical and has allowed foreigners to improve their standard of living significantly. With ready supplies of cheap Chinese goods pushing down the per unit prices of everyday clothes and home wares to a level that is it affordable to even poor foriegners, and making what were previously luxury goods - such as microwave oven and big screen TVs - into everyday commodities.

However, a lot of what China produces for foreign consumption can more accurately be classified as novelty items. Cheap junk with no practical value, or actual use. Items which foreigners often purchase on a whim, use for a brief period of time, and then either dispose of or forget about. Indeed, and in no small part due to the reforms of Deng, the Silk Road has now been replaced with the Cr*p Road. An endless flow of garbage like this rather scary singing/dancing Christmas tree. Made in China for a pittance, sold in the West for $US20-$US25, and amusing for all of 5 minutes.

ACB isn't sure whether or not they should be angry about this. Or who to be angry at.

On one hand it's all money in the bank for China. It's school fees, medical treatment, and food for children, and it's hardly for China to say what foreigners should spend their money on. On the other hand China has long critisized foreigners for their excess and for their wasteful obsession with consumerism and trivia, yet here is China feeding it for it's own financial gain, but at the cost of it's self respect. China has become part of the problem, not part of the solution, and in doing so has thrown away much of it's reputation as an ancient and wise civilization and forged a new identity as being a merchant of junk.