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BJC

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Does anyone know why Chinese companies are so eager to buy all the GA companies worldwide but very few if any of them are significantly profitable and there is no domestic civil market to speak off? Surely the armed forces are not interested in such things besides some curiosities orders.
The answer that I got to that question about eight years ago was that the Chinese purchaser/owner of a USA-based E-AB company was that he expected a major developing demand for GA and E-AB aircraft in China. About that time, he bought three or four E-AB kits from different companies, shipped them to China, hired a factory build assist crew to go to China and teach locals how to build them. He also funded a Type Certification program for one brand.


BJC
 

Vigilant1

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Does anyone know why Chinese companies are so eager to buy all the GA companies worldwide but very few if any of them are significantly profitable and there is no domestic civil market to speak off?
Domestic GA manufacturers aren't profitable at US labor rates, local subassembly prices, US tax rates, US regulatory compliance costs (environmental, employment law, health and safety standards, etc). They could probably make money if their workers were paid $40/day and lived in dorms at the factory, if they could dump toxic waste into nearby pits, if they could buy materials and subassemblies at low prices nearby (manufactured under similar conditions), etc.
 
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PMD

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China does things strategically, and there is a lot more than military interests involved. For some reason, someone in Beijing sets a goal, and that IDEA is spread throughout 1.7 billion people more-or-less by osmosis. You will seldom see any such thing in writing, but in China reality is you can't micro-manage from central planning, so you direct by planting the seeds and see how it grows. Everything in open communications is "fuzzy" because it is a contextual language, and the words will change to suit the situation, but the underlying idea will stay pretty stable. Somewhere back several years, someone decided that genav was a business priority, so the civilian army went out (and continues to go out) and starts buying up control of production, technology and access to markets. Once one of these ideas takes root it could take decades to change any direction - and for genav, that "tipping point" of the seat of genav going from an over-regulated, over-insured and over-lawyered USA to a over-financed and over-ambitious China is very near.
 

jedi

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I worked for Glasair for a short while and have asked the same question about why. Following is my observation and conclusion. Maybe it is worth what it cost you and possibly there is some truth to it.

A good portion of the equation is to spend US dollars and get the security having funds outside China. The problem now is that it is now difficult to export currency from China so the funding has stopped. Glasair is no longer getting support from China and they are having to survive on their own income.

Likewise, Top Cub has stopped construction on their assembly facility and the building has sat empty for several years.

A second factor is real estate. If you are going to manufacture aircraft you need a facility to fly them (even if there is no where to go). An aircraft factory has good reason to own very large tracts of land. The holding company that purchased Glasair is a real estate company that builds large apartment complexes and business parks.

They have plans to build a large living and entertainment area that would put Disney World to shame. Glasair is nothing to them but a foothold to have an airport associated with the facility.

It is not an unrelated issue that Icon marketing started to promote recreational lining and real estate as a part of their sales plan towards the end.

FWIW I answered an Icon sales inquiry about a week ago (or more) indicating an interest in purchasing in the near future and have not gotten a reply. I have seen the local Icon in flight within that time frame so the aircraft is available for demonstration if the company were actively promoting themselves.
 
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trimtab

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Patents are just one way to attempt to protect IP. IP can also be proprietary. Most of the most valuable IP is proprietary. This could be customer lists, manufacturing methods, etc.

Most people don't realize just how pointless it is to protect IP. Unless people are subject to a set of favorable contract laws to enforce specific contractual and comprehensive agreements (China isn't), it is nearly impossible.

Investors and B-school management usually has little idea about the "value" or prospects for IP protection. The only real way is actual secrecy, and if something must be disclosed publicly, it is rare (but certainly possible) to be unique enough to sew up a market segment. Meanwhile, weekend "So ya want to be a big shot investor" weekend seminars keep harping on IP value like a broken record. The genuine value is usually in the execution team, systems, resources and positioning.
 

PMD

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I remember my first encounter with B-school, banks, consultants...."experts" regarding IP. The Research Council would host luncheons for the "high tech" community, and this time we were advised it would be a 2 hour ordeal since they had brought some big shots out from down East to tell us dumbass clodhoppers how IP is transferred. We listened to their pitch, then they started the round of self-agrandizement that we were expected to endorse with accolades. Instead, I rose and commented that they addressed almost every kind of IP transfer except the biggest one of all - theft. They were aghast that anyone would suggest such a thing existed - and my tiny respect for Bschool grads and financial "experts" flushed down the toilet of real life. I got my industrial mentorship working in a company that manufactured some very expensive equipment highly "patent protected". We legally worked around said things with ease and out in the open.

China and Russia simply take that from a backroom underground project to one of gargantuan scale mostly run by their national armed forces and security services.
 
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AdrianS

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...
The American Patent Office does not have the
person power to see if a patent is "Original Art" or just a slight rehash of the formula
like old wine in new bottles. Should one have the staying power, patents can be voided.
It is matter of your lawyers vs. theirs. Take Away: (per Pirate's Guide) "A patent is
a hunting license".
In my opinion, the US patent office is not fit for purpose.

They charge per patent, and do no research. As a result, they have granted many, many invalid patents, particularly in the software area.

There's no consequences for them selling an invalid patent - you can challenge them in court, show prior art that proves the patent should never have been granted - the patent may be invalidated, but the same people will rubber-stamp another rubbish patent that afternoon.
 
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Vigilant1

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They charge per patent, and do no research. As a result, they have granted many, many invalid patents, particularly in the software area.

There's no consequences for them selling an invalid patent - you can challenge them in court, show prior art that proves the patent should never have been granted - the patent may be invalidated, but the same people will rubber-stamp another rubbish patent that afternoon.
Maybe, given the rate of change and the intricacies of trying to determine that a bit of code is novel, that is all that can be expected? In this case the patent just serves as a registration/"marker" and if someone wants to dispute it and believes it is sufficiently significant then they'll hire some lawyers and do all the research of prior art, etc.
Probably a big cost for all concerned, but what would every patent itself cost if we paid govt researchers to do the digging for every patent in every arcane area? Filing fees for US patents are pretty low: USPTO fee schedule
 
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AdrianS

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I don't have an answer, but some of the software patents granted have been for ludicrously obvious things that no-one bothered to patent.

Twenty years later, some **** in the USPO grants a patent, and the corporate trolls play stand-over man to as many companies as they can - and many small outfits will pay the protection racket because they can't afford to go to court over it.
 

TFF

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GA in China is a strange animal.

First issue is they don’t want people flying Willy Nilly anywhere they want. They really want shuttles. Busses in the air. 20 -40 passenger busses. Move needed people but control. There are not many roads either. Provences are almost separate countries except central government. Little intermixing and you are assigned to one even if you get a job in another. You only count as a citizen in the one you belong


The second issue is cities are very far apart. There is no landing short to get fuel or pee. Planes have to be able to fly 800 miles or they don’t need to take off. Drop off rural, you have to carry your own fuel. Think of Alaska times ten.

The general public have no knowledge of how it should work so they are oblivious to the usefulness.

Turbine DC3 that could fly as far as a radial would be the perfect product.

Now if your family owns a bank, factory, or high government official, you can act pretty much as a standard millionaire does anywhere.
 

Fiberglassworker

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The Chinese have been doing this for many years now, And not just aircraft, they have purchased Repair stations in Canada, and elsewhere in the world, then have taken their engineers to China to " assist" with the design of Chinese light aircraft. One engineer reported to me that one facility he visited was using pirated software from Dassault and other Cad programmers, that they really had no idea how to use, but they were making pretty pictures. Some 8 years ago I was invited on a "field trip" to this same facility , but declined.
 

pwood66889

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"In my opinion, the US patent office is not fit for purpose. "
I differ, Adrian. Patents are called out in the US Constitution. They serve good purpose, IMHO, to provide a monopoly to inventors of useful things. This monopoly (which I do not usually favor) runs for only a certain amount of time, then it is "open season." Thus, one's business plan accounts for the time one has, and has a profitable business to the end. During that time, they can improve the product to get commanding real advantage.
And other countries are not bound by the US Constitution! They have different cultures, so our "Theft" (thanks, PMD, for your data point!) is another culture's use of what is available.
So I amend my take on "A Pirate's Guide" to "In the US, a patent is a hunting license." To be a good hunter, one needs a Patent Attourney. These folks need some Real Science, not what is usually found in your average Ambulance Chaser. With such, one gets a sound patent, and can pick off the infringers in the American Market.
 

Bille Floyd

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China is kind of going at it like the Wright Brothers which was own the design and fight it all in court.
...
I was at Irv Culver's house, in 1990
(the gentleman who answered the phone with : “Skonk Works.” ) and the name stuck;

I had spotted a mistake in his math , from a page long formula , and he heard me say under my breath, (that EGO will get Ya). He brought me over to a library of papers, he wrote ; one was about the Wright Brothers, and technologically how far they went, Vs, how far they Could have gone, IF they hadn't spent so much time covering their A$$ and EGO with so many patents. It was a Great read !!

Bille
 

Alan_VA

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Would the Wright brothers (and US aviation) have been better off if they hadn't spent so much time trying to patent ailerons (and everything else) and sue all their competitors?
Thank you for bringing up the Wright brothers. Theirs is a classic case of patent law over-reach. As we know, they used wing warping for roll control, but their law suit against Curtis, et al, wasn’t based on unlicensed use of wing warping. The Curtis team had invented hinged ailerons, which do not change the shape of the “host” wing. Both methods change the overall camber of the wing, and therefore its lift vector, but they are separate solutions that achieve the same goal. In effect, the Wright brothers successfully defended in court the discovery of a physical law, not a device or invention. It’s as if someone patented gravity or acceleration. But they got away with it because the judge was ignorant of the subject.
 

epc

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I worked for Glasair for a short while and have asked the same question about why. Following is my observation and conclusion. Maybe it is worth what it cost you and possibly there is some truth to it.

A good portion of the equation is to spend US dollars and get the security having funds outside China. The problem now is that it is now difficult to export currency from China so the funding has stopped. Glasair is no longer getting support from China and they are having to survive on their own income.

Likewise, Top Cub has stopped construction on their assembly facility and the building has sat empty for several years.

A second factor is real estate. If you are going to manufacture aircraft you need a facility to fly them (even if there is no where to go). An aircraft factory has good reason to own very large tracts of land. The holding company that purchased Glasair is a real estate company that builds large apartment complexes and business parks.

They have plans to build a large living and entertainment area that would put Disney World to shame. Glasair is nothing to them but a foothold to have an airport associated with the facility.

It is not an unrelated issue that Icon marketing started to promote recreational lining and real estate as a part of their sales plan towards the end.

FWIW I answered an Icon sales inquiry about a week ago (or more) indicating an interest in purchasing in the near future and have not gotten a reply. I have seen the local Icon in flight within that time frame so the aircraft is available for demonstration if the company were actively promoting themselves.
This is a remarkable insight and more people should read this to understand some of what's going on with China.

Chinese tycoons have amassed astronomical wealth in the last 40 years. They are well-connected to the party and military elites. Many of them have concluded it's better to move some or significant portions of their wealth overseas. But China has strict foreign currency controls; no problem to bring US dollars in, but an individual can only transfer ~$60k a year out of China.

Now you see why starting around 10 / 15 years ago, Chinese businessmen started buying up all kinds of western companies. First they were buying mid-size German engineering companies for the know-how. Then they started buying weird stuff like European soccer clubs, movie theaters (like AMC) and little airplane companies. There might be some business rationale for these deals. But like Jedi said in quote, a big part of the calculation is that these deals are a good vehicle to move millions of dollars out of China in 1 shot. China's foreign exchange reserve started really going down; $4 trillions in 2014 at the peak, down to $3 trillions by 2017, back up to $3.2 trillions now.

Chinese government wised up to these shenanigans, so such deals have decreased dramatically in recent years. Some tycoons were ordered to unwind some oversea deals and bring the dollars home (AMC's Chinese owner just completely sold his stake this year). Some tycoons were jailed for showing insufficient obedience to the party, which validated their decision to start moving their money abroad.

I know this post seems only tangentially related to home built airplanes. But this is the behind-the-scene reason why Chinese companies bought Cirrus, MZ engines, etc.

Actually, MZ engines was probably a good buy. These cheap 2-cycle engines are a good powerplant for the drones China is churning out.
 

cheapracer

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Oh here we go, the China Bash is on again ...


Most people don't realize just how pointless it is to protect IP. Unless people are subject to a set of favorable contract laws to enforce specific contractual and comprehensive agreements (China isn't), it is nearly impossible.
Oh, please tell us your personal experience with Chinese contracts and IPR .... also law in general ...

[moderator edit - no need to get nasty, gentlemen.]
 
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cheapracer

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Removed by Vigilant1.
I didn't reply to you before, but ....

These proprietary processes, etc can be more effective in the real world than patents are, especially if dealing with entities/governments with a record poor IP protection or even dedicated government programs to steal whatever IP they can.
There is nothing in China more powerful than the written word, nothing. If you have a contract with a Chinese company, and they break it, you will win, no if's or buts, it's that simple.

Unlike many Western Countries where Lawyers find loopholes in IPRs, or Corps just keep litigating to break an inventor by sending them broke, Chinese Courts go by the spirit and intent.

I have some product on my desk that is broad bean chemical extract for treatment of pimples, developed over 10 years by an Australian, he made one small error in the patent, and now an American company is producing it. They submitted his entire patent with the correction. In China that would never happen as the Judge would support the overall intent of the patent.

Here are the words of an American Law Firm to that effect:

Chinese courts will enforce the law prescribed in a contract, Chinese judges place more emphasis on the overall context and “fairness” of the case and much less on legal technicalities than their American counterparts.

China Litigation and Arbitration - Harris Bricken

another

What it’s like to sue a Chinese company for patent infringement in China | IAM

In 10 years of owning a Law Firm here, there has never been a failed lawsuit surrounding legitimate IPR or Contract claims.

Consider that those who know nothing about how to do business in China, or how to recover losses when they happen, are the complaints that you have read about, but their failings and blaming a whole Country, doesn't make it true.
 
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