Motorola Solutions CEO Greg Brown explains how China went from a great business opportunity in the mid-1980s to an intellectual property stealing concern following their acceptance into the WTO in 2001.
Brown says that when China implemented the indigenous cellular standard PDT, that in essence if Motorola wanted to play there and continue to provide systems, they would have to offer up the IPR associated with that. Following that China became less and less attractive.
Greg Brown, Motorola Solutions CEO, provided a great picture of how China has stolen intellectual property from Motorola and many other US companies who do business there in an interview on CNBC:
For Years, China was Great
Historically, you can even go back to 1972 when President Nixon first arrived in China, he spoke on a Motorola provided satellite phone following the Kissinger talks. You fast forward, and in 1986 Bob Galvin led a delegation there, and in ‘87 Motorola invested and had a manufacturing and R&D footprint. For years, China was great, and the Motorola story was great, and revenue boomed, investment boomed, and collaboration boomed. Then China joins the WTO and things pivot a little bit.
To Do Business in China Motorola Had to Give Up IP
The Chinese market matures and China moves toward indigenous standards. At the time there were cellular standards called CDMA, TDMA, that ultimately went to GSM. China had their own and they called it TDS CMEA. We in the US had WiFi. They had their own and it was called WAPI. In policing, China implemented an indigenous standard called PDT, police digital trunking, that in essence said Motorola if you want to play here and continue to provide systems, you have to offer up the IPR associated with that. China became less and less attractive.
We had a lot of firsts historically. We had the first mobile phone with Chinese characters, and the first mobile phone with global positioning – GPS. At the time Motorola built the largest contiguous network in China. All that is great.
Chinese Firms Huawei and Hytera Stole IP
Historically, we had litigation with Huawei around trade secret violations. We sued them in 2010 and was settled in 2011. But as we sit here today we have a lawsuit ongoing right now with a Chinese company called Hytera. They’ve done three things; patent infringement, trade secret misappropriation, and copyright infringement. Pretty egregious, vast multi-year campaign. We’ve sued them in the Northern District Court of Illinois, Germany, where we won both cases by the way, Australia pending, and most importantly in the ITC where we just won a final determination that in fact Hytera took IPR and infringed our patents. So we are awaiting the implementation of an import ban in January.
Need Level Playing Field in China Where IP is Not Stolen
Recently, Australia has said they are concerned about Hytera 5G Gear. New Zealand has made that determination. In Britain, the U.K., just announced a few days ago, that they want to pull out Huawei 4G out of their core. I get the high stakes and I get the two juggernauts (US vs China) competing. We are all for competition, robust, let the customer win, and everybody brings their best game to the party. But when it is not a level playing field and IPR is stolen, we just are saying compete on a fair and firm basis.
Business in China a Fraction of What it Used to Be
We’re still in China, but we don’t do manufacturing in China and we don’t do R&D. We have sales and sales support staff. It is an okay market for some of what we call our PCR equipment. We have collaboration with some local Chinese partners. But to dimensionalize it, like 15 years ago we were over $3 billion in revenue and 15,000 people, today we are about $170 million in revenue and 170 people. What we are is the Western leader and alternative in mission critical communications, command center software, video surveillance and analytics.