April 28th, 2009

China and IP: the piper will get paid

Posted by Kevin O'Marah @ 9:21 am

Categories: Intellectual Property, Supply Chain, Supply Chain Risk

Tags: China, Brand, Industry, IP, Branding, Piracy, Supply Chain Management (SCM), Network Technology, Networking, Marketing

As everyone knows, and as our quarterly supply chain risk data proves, China is a den of thieves as far as IP is concerned.  Today’s New York Times has a lengthy and prominent article on brand piracy in Shenzhen’s cell phone industry.  The practice of making and selling black market phones is so rampant that 20% of all those sold in China are thought to be knockoffs.  The explanation of how this happens is candidly offered by a sales manager at Triquint Semiconductor who makes components for the industry:

“Five years ago there were no counterfeit phones.  You needed a design house.  You needed software guys.  You needed hardware design.  But now a company with five guys can do it.  Within 100 miles of here you can find all your suppliers.”

What has bugged me is the audacity and criminality of the Government who happily looks the other way as expensively developed technologies, industrial designs, and brands are flat out stolen.  One Vassar professor is even quoted in the story spinning this scandal as a virtue:

“Chinese grass-roots companies are actually very innovative.  Its not so much technology as how they form supply chains and how rapidly they react to new trends”.  Charming - reminds me of Napster as seen through the eyes of the music industry, or the go-getters out cutting down teak trees in Malaysia.  There is a reason we call it piracy.

But rest easy, poetic justice is coming to the rescue.  Remember the $1Trillion or so of dollar denominated debt held by the Chinese?  Well, after we print the trillion extra dollars it will take to undo our credit-sparked economic crisis those debts will be alot less expensive (to us) in real terms.  Think of it as a $500 billion bill being stuck on Beijing to pay us back for all the money that should have been made by Microsoft, Apple, Paramount, and Nike for their IP. 

The Piper will be paid.

March 6th, 2009

Cydia and Apple: Lawsuits will be a sideshow

Posted by Kevin O'Marah @ 7:05 am

Categories: Intellectual Property, Supply Chain Risk

Tags: Supply Chain, Lawsuit, Apple Inc., Cydia, Supply Chain Management (SCM), Enterprise Software, Software, Kevin O'Marah

Today’s Wall Street Journal has a big article about a new renegade competitor that is challenging Apple’s App Store and in the process whetting the appetites of IP lawyers. With all due respect to the legal eagles involved, technology and the global supply chain should make this debate moot. 

The deal is this: Cydia’s founder is an application developer who, like many, doesn’t see himself as an enemy of the cool company of Cupertino. He does, however, want to have other app developers able to get to market and get paid for their IP. Apple, however, stands to lose some pretty serious margin contribution (30% commission on estimated 2009 sales of $800M, according to Piper Jaffray) and, arguably, a degree of control over the cherished User Experience. The legal issue is that Cydia’s apps work only on “jailbroken” iPhones, a process (or crime) that involves installing software written to modify the operation of the device. Cydia’s founder, Jay Freeman, claims 1.7 million iPhones have installed this software to date. Apple, understandably, sees a copyright infringement. Lawyers see an irresistibly interesting case pitting the little, ironically named Freeman, against the sinister controlling monopoly—almost like the famous 1984 Apple Super Bowl ad being shown in reverse. Read the rest of this entry »

February 19th, 2009

Peanut recall and supply chain worries

Posted by Kevin O'Marah @ 1:41 pm

Categories: Supply Chain Risk

Tags:

As the Peanut Corp. of America scandal rolls on, a new bit of information has thickened the plot: Chinese organic peanuts may have been the source of another Salmonella outbreak at PCA back in 2006.  Now that China is part of the story we have a full blown worst practice example of stupidity in the global supply chain.

AMR Research’s quarterly Supply Chain Risk data came back just last week and a preliminary look into the new data shows that when asked “What is the primary risk associated with sourcing and manufacturing in China?” 136 companies surveyed said:

• Product quality/safety/fear of contamination–45%
• Rising material costs–10%
• Rising environmental compliance costs–10%
• Rising labor costs–9%
• Political unrest–9%
• Other–14%

For comparison, consider the top supply chain risks associated with manufacturing and sourcing in the US. Read the rest of this entry »