When the Japanese and European high-speed rail companies signed on to build trains for China, they eyed the $ multibillion contracts in the booming new market. What they got was competition from Chinese firms who took their technology and turned it against them within a few short years. Chinese companies, fueled by technology transfer, reverse engineering, and process redesign (Ch.7), are now selling trains even faster than foreign rivals Kawasaki, Bombardier, and Siemens. The national strategy of boosting state-owned firms and obtaining advanced technology at the expense of foreign powers is challenging the US and other powers doing business in China.
Yesterday’s Wall Street Journal (Nov.18,2010) quotes a China rail official who says they are “learning and systematically compiling and re-innovating foreign …technology” and now have trains that go 37 miles an hour faster 
(236 mph) than European and Japanese rivals. Kawasaki’s view: a few tweaks to exterior paint scheme…and a beefed up propulsion system is not a new technology. “Its nothing but deceitful propaganda”, says an exec. Kawasaki had set up production facilities in China, trained Chinese engineers, and developed a supply chain for components.
Today, the Journal’s headline addressed China’s advances in pilotless drones— putting the US and Israel at risk in their worldwide 
dominance. Same story: technology transfer by Israel propelled the 25 different models of unmanned aircraft…a major advance in only 2 years. And last week’s lead story was the unveiling of China’s C919 commercial jet, a direct threat to the Boeing 737.
So how is this different from post-war Japan (and Korea as well) transforming their economies by reverse-engineering foreign technologies in steel, autos, ship building, and computers? China’s share of manufacturing advanced equipment could climb from 8% today to 30% of global exports within the decade, writes the Journal.
Discussion questions:
1. Discuss the ethical issues that arise from these articles.
2. What is China’s long-term manufacturing strategy, and how is it changing?
3. How did companies like Kawasaki end up losing their dominance in the Chinese market?