One Billion Customers - James McGregor [26]
As a result of its 1992 agreement, China had set in place at the national level means of enforcing intellectual property rights. But now officials complained to Barshefsky that they had difficulties controlling what happened in the provinces, where local officials often were involved in factories producing illegal merchandise.
Okay, Barshefsky decided, if the problem is in the provinces, I’ll take my case there. She set out for Guangdong province, adjacent to Hong Kong, where the military and local officials were involved in many of the CD factories. Barshefsky threatened sanctions on China’s textile exports, by far the nation’s largest export industry, if the CD factories weren’t closed. She gave Guangdong officials a choice: “If the [CD] factories are not closed, your textile industry will bear the burden. Period.”
Savvy lawyer that she is, she also refused to be lured into the theatrics of a high-level meeting. Like the emperors who came before them, top Communist party leaders want foreigners to feel grateful when they are granted an audience. Even Mao kept Nixon on tenterhooks, giving only one-hour notice before their meeting in 1972. As Barshefsky pressed the case against the offending CD factories, President Jiang Zemin invited her to meet with him. Barshefsky refused, shocking both the Chinese and her U.S. colleagues. Her crafty refusal put even more pressure on Chinese negotiators. She told Chinese officials that she didn’t want to embarrass Jiang. If she met with him and then went ahead to impose sanctions on Chinese textiles, Jiang would lose face. Shortly after she spurned Jiang’s invitation, the CD factories were closed.
Despite that success, Barshefsky decided that threatening China to force change wasn’t a winning formula. Instead, she figured the only way forward would be to convince Chinese decision makers that Chinese reforms constituted a “win-win” situation for both sides. The prevailing mentality in China is that of the “zero-sum” game. China is all about “I live, you die,” “you win, I lose,” a vicious cycle of conquest and revenge. But Barshefsky convinced China that if it didn’t institute laws and structures protecting intellectual property, then Chinese companies would be hampered in their own development of software, entertainment, and technology products. The result was a stronger structure for intellectual property protection, although enforcement won’t be effective until China’s own industries have built sufficient intellectual property to be worth protecting.
Barshefsky was struck during the intellectual property negotiations by how incompatible China’s economy was with WTO rules. She had the USTR office construct a detailed “roadmap” for China, showing how to transform its system to meet WTO standards. She marketed her road map to senior officials as another part of her “win-win” strategy, explaining how the changes would make China a global competitor and not just throw open the country’s doors to foreign companies and products. Among the Chinese who bought wholeheartedly into the “win-win” principle was China’s chief trade negotiator, Long Yongtu. Long, a graduate of the London School of Economics, was one of the emerging generation of Chinese officials who understood how the world worked.
The Endgame