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Wed, December 10, 2008

A Good (Potential) Risk Management IQ Test For Management

By Rich

It looks like China is thinking about requiring in-depth technical information on all foreign technology products before they will be allowed into China.

I highly suspect this won’t actually happen, but you never know. If it does, here is a simple risk related IQ test for management:

Will you reveal your source code and engineering documents to a government with a documented history of passing said information on to domestic producers who often clone competitive technologies and sell at lower than the market value you like?
Do you have the risk tolerance to accept domestic Chinese abuse of your intellectual property should you reveal it?

If the answer to 1 is “yes” and 2 is “no”, the IQ is “0”. Any other answer shows at least as basic understanding of risk tolerance and management.

I worked a while back with an Indian company that engaged in a partnership with China to co-produce a particular high value product. That information was promptly stolen and spread to other local manufacturers.

I don’t have a problem with China, but not only do they culturally view intellectual property differently than us, there is a documented history of what the western world would consider abuse of IP. If you can live with that, you should absolutely engage with that market. If can’t accept the risk of IP theft, stay away.

(P.S.- This is also true of offshore development. Stop calling me after you have offshored and asking how to secure your date. You know, closing barn doors and cows and all).

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