With the massive trade between China and USA this is a difficult situation to address diplomatically but something definitely needs to happen. I guess the USA could stop buying Chinese goods until China respects IP but I am not sure the USA public could stomach the increased costs.
The Senate Armed Services Committee found counterfeit parts -- usually from China -- on at least seven aircraft, including theLockheed Martin Corp. (LMT)C-130J transport plane, Boeing P-8A Poseidon maritime patrol and L-3 27J Spartan transport.
Though there have been no accidents due to te counterfeit parts, so far, there is huge potential for disaster here.
This is a serious issue where military products are meant to be highly reliable. Are healthcare electronics being affected by counterfeit components as well?
@clairvoyant. The answer is yes. Counterfeiters are equal-opportunity suppliers, they don't discriminate when it comes to end markets. Medical is just as vulnerable as military, automotive, communications, etc. The issue with military is that the programs are funded by the government and there are geo-political issues associated with the sourcing of counterfeits from China. Also, the military buys a lot of replacement parts for ancient equipment and the only place you can find these parts is often through non-franchised independent distributors and brokers. So Congressional attention is focused there. The best defense for medical equipment companies is a systematic inspection and testing regime for all parts purchased through non-franchised distributors.
Good point on the replacemen parts. The design and testing for military hardware has had such a long cycle time that some components become obsolete during production phases. There is often the chance to make a 'last time buy' purchase, but repairs may be needed much further dowm the road.
This is a very serious problem and CHINA is the head of it. CHINA is controlling all the Contract Manufacturing, Celestica, Foxccon, Flextronics, etc. what do you expect.
The biggest question to Rayheron, L3 and Lockheed Martin is what CM's are you using to build your assemblies? The US Government has to start addressing the problem.
I don't think the US can afford to abandon trade with China or take any strict measures which will hurt the US-China relationship. I am in the favor of a diplomatic solution here which focuses on pointing out the benefits that China itself will have once they implement IP rights management and control counterfeiting.
For now China actions against conterfeit prducts will still be very limited because it is how chinese are learning new technologies. They copy to gain the knowledge to become more competitive. That is what the Japanese used to do in post wars periods (part of the second period of the 20th Century) until they become a well established industrial country and are able to offer competitive products. China will come to that, but we will have to wait.
It's hard to compare Japan to CHINA. Japan didn't want to control all the manufacturing in the world, them just want there fair share. When various free country's talk about loss of job's it's because CHINA has taken all the low pay, manufacturing job's out of there country. When a country wants to expand manufacturing in CHINA, they say NO, only if they switch manufacuring to CHINA.
Do you all know that CELESTICA Canada is a Qualified Military CM owned by CHINA!!!! When will FOXCONN take over CELESTICA?
@Mr. Roques - The are separate but the fear is that they have and will overlap. There was a rumored case a few years ago of communciations equipment used by the US Navy that provided access to unauthorized (potential enemy) sources. There's the potential to embed viruses, and malwear in software and programable devices that can bring down systems. This is suspected as the cause of problems reported in computers used at the Iranian Nuclear site. There was also a report recently that the US Air Force's drone operations were hit by a virus. So the threat is real.
Well, in that case the US has a strong argument to stop contracts being fulfilled by Chineses companies... but they will have to pay extra for that. In difficult times, maybe the budget constraints is too big to listen to conspiracy theories.
Diplomatic solution will never happen, but now what my concern is how are we going to get out of china. They already have a good skill set and may try and start ruling over other companies.
This is going to be a long drawn out process and a very difficult one to end. It is a shame that we are going to have to go to extremes to make sure we can prevent any serious damage. It would appear that these companies are going to have to get very strict on how they control their employees access to data and any removal procedures.
Anything related to the military should always be protected with accuracy and reliability. But I come across many reports citing China's involvement in many hacking plots and information espionage. So what I would recommend the US do is disallow (at least): any products made in China should not be included in military hardware. Whether this is a realistic goal is another point but it's a starting point.
@pocharle, I realize the military is important but counterfeiting at any level can be extremely dangerous. In the medical industry, for instance, fake drugs, sub-par equipment and any other forms of counterfeiting can be as deadly as a weapons system with the wrong or faulty components. The story about the military grabs the headlines, however, counterfeiters are as active in other critical parts of the economy too. For instance, they are involved in aviation, industrial, home goods, etc. Counterfeiting is a danger to everyone.
With some of the industries that you mentioned, is the distribution of the counterfeit goods widespread. Like, for example, aviation. I cannot fathom that Delta, for example, would buy goods from untrusted manufacturers. Don't suppliers/vendors have to gain some type of certification prior to selling goods?
@pocharle, Counterfeiting is not widespread in aviation or anywhere else but it's no comfort. You only need one failed component to have a major calamity. Companies in the electronics industry are committed to fighting the problem but this is not enough. A more concerted effort is needed.
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