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Fraud Charges, Lost Patents: How an Auto Legend's China Venture Crashed (yahoo.com) 122

"Steve Saleen claims that China has stolen 40 years' worth of intellectual property from him in launching the Saleen brand in China," reports the site Carscoops.

More information from the Los Angeles Times: Saleen's Chinese backers have accused his business partner of fraud and embezzlement and taken over the company, freezing its accounts and forcing hundreds of employees out of work. Police raided the sprawling new factory emblazoned with Saleen's name. Two senior executives were detained, and a court order sealed its Shanghai showroom... "What I'm trying to do is to bring to light how American companies will contribute IP, brands and knowhow to the China market — and overnight they will change direction, kick you out and keep the IP," Saleen said...

Whatever the outcome, Saleen's bid to bring his high-powered cars to China has crashed, leaving the 71-year-old filled with regret. "When it came to taking my brand on a global basis, it really seemed to offer me an opportunity that I could not refuse," Saleen said. "In hindsight I realize the deal was too good to be true...." Saleen said his experience should convince Washington to enact tougher protections for U.S. investors, deny Chinese firms that steal trade secrets access to capital markets and prohibit the use of Chinese asset valuations that could be subject to manipulation.

Carscoops has some more background: Writing in The Wall Street Journal, Saleen claims "the deal was a sham." According to the racing legend, the joint venture applied for 510 Chinese patents based on his designs, technologies, trade secrets and engineering developments. He adds that most of these patent filings didn't list him as an inventor. The company, known as Jiangsu Saleen Automotive Technologies (JSAT), unveiled a range of models 12 months ago.

Saleen asserts that the government of Rugao is attempting to take over the joint venture now that it has his intellectual property and patents. He claims that the director of corporate affairs for JSAT, Grace Yin Xu, has been missing since June 22 when she entered a government building shortly after refusing to lie to local law enforcement who wanted her to state Saleen's business partner had provided false information and embezzled money. In addition, the company's vice president of manufacturing, Frank Sterzer, was allegedly detained for six hours by the authorities.

In his op-ed, Saleen states that "China can no longer go unchecked", citing a 2019 survey that 20 per cent of North American corporations say the People's Republic has stolen their intellectual property in the past year.

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Fraud Charges, Lost Patents: How an Auto Legend's China Venture Crashed

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  • You're surprised? (Score:5, Interesting)

    by quonset ( 4839537 ) on Sunday August 16, 2020 @11:41AM (#60406949)

    How long have American companies been doing business in China and how long have they been raising these same concerns? How many companies have been taken away by some fake pretense yet American companies keep going back for more?

    It's almost as if they value money more than their "intellectual property" and are too stupid to just not do business in that country.

    At this point I have no sympathy for these companies. You knew going in this was a possibility, you knew going in what you'd be subject to, you knew the Chinese government could take your ideas and yet, you went anyway.

    • They think they're in a game of "chicken" with their competitors, but it's actually much worse.

    • by Zocalo ( 252965 ) on Sunday August 16, 2020 @12:17PM (#60407055) Homepage
      So much this. The telling quotes are right there from Steve Saleen himself: the mob-movie classic: "an opportunity that I could not refuse" and "in hindsight... the deal was too good to be true". Due diligence is a thing which should have set alarm bells ringing on the former, and stories like this have been around for many, many, years now, so there's no "hindsight" excuse for the latter any more. If you're not doing your due diligence and making sure that you've thoroughly covered yourself on the assumption that they *will* try something like this, then you have no one to blame but yourself when then *do* try something like this. Even Apple, with all the money they can throw at armies of lawyers to review the small print and legalities, still gets to ask "how high?" when the Chinese government asks them to jump, so what possible reason would a company like Saleen's have to expect any different?

      Greed Goggles are just as good, if not better, than Beer Goggles when it comes to blinding people to reality, it seems.
      • Yes, a yahoo story (https://news.yahoo.com/fraud-charges-lost-patents-l-164221622.html) describes the first 109 hp muscle car the JV created for sale that cratered. They sold 27 of them. They had toy literally written all over them with an emoji paint job. Yep due diligence. And his partner that he thought was "honourable" had a somewhat different history.
      • by AmiMoJo ( 196126 )

        Or maybe he's just lying to try to salvage his reputation.

        I mean it does sound like horseshit. Chinese scammers steal his amazing IP that no other automaker has but somehow this one guy does, and then... Plans to sell the products abroad... Using his name... Where he could sue them... And their stolen patents and their IP would be invalid, because obviously he got his own international patents and trademarks first.

        He's not that dumb, he did hire a half competent lawyer to help with this international busine

        • Or maybe he's just lying to try to salvage his reputation.

          That's pretty much what I thought.

          The other possibility is that he's really stupid, but it doesn't sound like that. Just greedy then.

          • by AmiMoJo ( 196126 )

            The more I read about it the more it sounds like his partner just ripped him off and now he is blaming the entire country for some reason. Well, not some reason, we know exactly why, China is the current boogyman.

            I remember not long after 9/11 some supercomputer parts were stolen in Australia and the guy supposed to be guarding them said he saw some "middle eastern looking guys" taking them. This is about as convincing as that was.

    • by hey! ( 33014 )

      This isn't just China. My brother-in-law went through a very similar experience in Chile. Even in relatively advanced countries like Chile laws regulating fiduciary duties aren't as strict as they are here, and there is no political will to protect foreign investors from treacherous but locally connected business partners.

      If you get involved in a foreign venture, and it's not some place like the EU or Japan, you have to assume that your business associates and local authorities will consider you fair game

    • It's almost as if they value money more than their "intellectual property" and are too stupid to just not do business in that country.

      A few of these companies (like Saleen) entered China based on ignorance. However, most enter willingly because they are playing with someone else's money and future. A CEO of a company is compensated on short-term performance and stock appreciation, so that CEO only needs to prop up the image of corporate success until the bulk of the stock vests. The main problem is that current corporate compensation structures promote actions that are not in the long-term interests of the company.

      • A few of these companies (like Saleen) entered China based on ignorance. However, most enter willingly because they are playing with someone else's money and future. A CEO of a company is compensated on short-term performance and stock appreciation, so that CEO only needs to prop up the image of corporate success until the bulk of the stock vests.

        And whose fault is that? The stockholders'. They bought into the company knowing how it was set up. They elect the board. They vote on major rule changes - an

      • A few of these companies (like Saleen) entered China based on ignorance.

        If you're right then he got what he deserved. Are you claiming he never spoke to a lawyer with relevant experience before starting out on this venture?

        Because if he didn't he is a very stupid man.

        • by stdarg ( 456557 )

          If Saleen's allegations are true then a good lawyer wouldn't be able to help him anyway. Therefore the only correct advice would have been to say not to do business in China. That's... unrealistic for anybody, and very unlikely for a lawyer to advise. Lawyers make their money when you go ahead with something, not when you quit.

          Look this is just a thing in places like China. It's rolling the dice. Most people end up fine. The correct way to reduce your risk if you can't afford to roll the dice has NOTHING to

    • It's almost as if they value money more than their "intellectual property" and are too stupid to just not do business in that country

      Yep, it's all about the money.

      Also, it's hard not to do business in China if you're a company of any real size. A lot of the markets and raw materials are in China, and that's also where many of the manufactured bits and pieces come from that are used to build other gadgets and devices.

      As soon as one American company moved their operations to China, the others had to follow suit to remain competitive.

      The fact is that in pursuit of the bottom line, corporate bean counters have turned this country into a man

    • by bobby ( 109046 )

      Blinded by greed.

    • Hey, I'm bored! () Let’s have a great time together () ==>> v.ht/OmBTy
    • You knew going in this was a possibility, you knew going in what you'd be subject to, you knew the Chinese government could take your ideas and yet, you went anyway.

      Business is fundamentally a game of risk and reward. The reward here is a market 1/7th of the size of the rest of the world. That's a pretty damn big reward.

    • I think part of it is that there is no loyalty left in the corporate world. Back in the 70's corporations started treating their people like shit, pension systems were abandoned, jobs were outsourced, pay and benefits stopped increasing at the same rate. For some industries this took a long time for others it was very quick.

      But before that it wasn't uncommon for people to stay at one company for their entire careers. They would work their way up and have a real tribal sense about the org. Now it seems the o

  • by HamidPayaamAbbasi ( 7143815 ) on Sunday August 16, 2020 @11:54AM (#60406977)
    I can't believe a country of based on the writings of Mao would take my private property and distribute it amongst themselves! Woe is me, I just wanted to profit by shopping around labor to push down global salaries and these meanie weanie commies took my stuff
    • by Cyberax ( 705495 )

      I can't believe a country of based on the writings of Mao

      Funny, but it doesn't require writings of Mao to commit thefts: https://ktla.com/news/nationwo... [ktla.com]

    • by AmiMoJo ( 196126 )

      Which country is that? Certainly not China.

    • I can't believe a country of based on the writings of Mao would take my private property and distribute it amongst themselves!

      While the sentiment is generally correct, calling China communist and referencing the writings of Mao in this case (or on China in general) shows an incredible lack of understanding of how China works (or how Communism / Maoism works).

      There's nothing communist nor Maoist about China or ironically the CPC given their name and their former leadership. Hell one of the first things that China did after Mao's death was initiate socialist reforms. The man's cadaver was still fresh when China abandoned Maoism.

  • Expect this (Score:2, Insightful)

    by hdyoung ( 5182939 )
    China is under-developed and trying to advance. They are ruthlessly and unapologetically taking as much knowledge as they can from the west. By any means necessary. The west doesn't like it.

    Before that, the U.S. was under-developed and trying to advance. They ruthlessly and unapologetically took as much knowledge as they could from Europe. By any means necessary. Europe didn't like it.

    Before that, Europe was under-developed and trying to advance. They ruthlessly and blatantly took knowledge from
    • True, but the flip side is that it is a good example of the fact that there will always be people looking to take advantage of others, and that doesn't bode well for left-wing pacifism.

      • by DogDude ( 805747 )
        "Pacifism"? What does that mean in that context? Starting wars and causing the deaths of thousands of people because somebody stole some trademarks?
        • There didn't really need to be any partisan politics in this thread, but the OP said something about his observation making right-wing heads explode, and I just was trying (poorly, I guess) to point out that the same thing causes grief for left-wing ideals as well. Not that I need to explain, since I'm a moderate, and I expect everyone to hate me anyway.

          • I think you completely misread what in his post would make tight wingers' heads explode: the fact that at one point the Muslim Middle East was more scientifically and technologically advanced than Christian Europe.

            • I see that I did probably read that comment as applying to more than just the previous sentence. Though I'm not sure I understand how knowledge of Muslim contributions to science and technology would affect the right-wing's opinion of them. But then I'm still stumped as to why the left-wing does not completely hate Muslims, given that they seem far, far from progressive.

    • Holy shit, I now love Islam! I knew it was Europe's fault all along.
    • by Kokuyo ( 549451 )

      It's funny that you think you just educated "right-wingers" as if they hadn't ever opened a history book, when this example topples one of the main pillars of "left-wing" dogma...

      The fact that you didn't notice before making a fool of yourself worries me.

      • Re: (Score:3, Insightful)

        by hdyoung ( 5182939 )
        There are educated conservatives and thoughtful right-wingers. I live in a purple state and am well-aware that they exist. Our governor is a conservative Republican and I'm going to vote for him, because he's proved himself competent at governing. If you happen to be one of these types, then great. However, calling me a fool makes you an unlikely candidate for that group.

        However, there are fewer of them as time goes on. This is extremely well-documented. As a group, right-wingers are less educated and l
        • by AmiMoJo ( 196126 )

          Socialism works great in Europe, maybe those Democrats just want some free healthcare and reasonable working conditions like we have.

          • I'm fairly sure there isn't a single socialist country in Europe. Check the governments of European countries...... they all fall under some category of Democracy or Republic. Check the economies of European countries..... they all fall under some form of pretty conventional capitalism.


            No, a slightly higher tax rate and correspondingly thicker social safety nets do NOT equal socialism. A lot of Bernie Bros get this confused. You want to talk about socialisms? Think less "Scandinavia" (capitalist democ
            • Ok, so you don't know what Socialist means, and believe the Republican lies that Socialist = Dictatorship?

              Fair enough, an honest mistake on your part. Go find out what it actually means (monetary&social policy, not a government structure), admit your mistake and move on.

              Or be a good little blinkered republican, double down, rant and continue babbling in error.

              • Haha. You think I'm a republican because I've admitted that I'm going to check one box as "R" (at the state level) in the upcoming election. Way off the mark. Right-wingers aren't the only ones with blind spots. With all due respect, I think that you're dead wrong about socialism.

                My info comes from this obscure website known as "wikipedia": https://en.wikipedia.org/wiki/... [wikipedia.org]. Just because there are socialist parties in control of some parts of Europe, that doesn't mean that the countries are socialist.
                • Doubled down on a false definition, and misused an article titled "List of socialist states" which defines "Socialist state" as a country which explicitly calls itself "Socialist" in a formal constitution.

                  As expected, Nonsense.

                  • Hm..... wow.... three misses in two sentences there....

                    First whiff - which false statement did I double down on and can you support the claim that it's false?

                    Second whiff - that wikipedia website is actually fairly rigorous about sorting countries into various granular categories. Seemed pretty solid to me

                    Third whiff - the clincher that failed to make me curl up into the fetal position and admit your superiority, calling me "nonsense" without actually rebutting anything. This is a discussion
            • by AmiMoJo ( 196126 )

              Have you seen how many governments are headed by or in coalition with socialist parties in Europe? Or the socialist groups in the EU?

              Anyway you might not call it socialism but we do.

    • It sounds like he completely fell asleep at the wheel.

      It sounds like every C-level exec who simply can't track everything in detail at their level, and having to assume that things mostly run on autopilot per standard business processes and a handshake level of trust.

    • Re: (Score:3, Interesting)

      Before that, Europe was under-developed and trying to advance. They ruthlessly and blatantly took knowledge from the more advanced Muslim nations. By any means necessary. Right-wingers, I hope this one makes your head explode. Yes, there was a time when the Muslim world was the most enlightened part of humanity.

      That is the dumbest thing I've heard all day. Not that the Muslim world was more civilized at one point, that is hardly news, but that you would compare China's state-organized theft of IP happening right now with the lawless and chaotic systems in place during the dark ages and before. There was no "theft" in any sense since there was no "IP" at the time, and what we got from the Muslim world was not CPU designs to be sold for profit but rather scientific and educational material, some of it which the Musl

      • Without resorting to internet searching or asking you to post sources, I honestly think that you're wrong. Maybe my analogy to the dark ages falls down a bit, but there were closely-held industrial secrets in Europe and some of these were formally considered "of national importance". The US stole them in various ways - I recall stories of individual Americans who went to Europe and closely shadowed an industry until they understood the process, and then stole samples of a few key crops in the middle of the
    • Before that, Europe was under-developed and trying to advance.

      That's giving too much credit to Europe.

    • First, the Chinese people are NOT more-recently descended from (and therefore more-closely tied to) our common ape-like ancestors, so they are NOT, as a people, less developed and entitled to be viewed as children who should be expected to misbehave; they are just as mature and should be expected to behave in just as civilized a manner as anybody else. If their culture and/or politics are more backwards or primitive then that's by their choice and it's on them. Biologically, they are the equals of the white

      • Happily, that trend is finally showing signs of subsiding as certain bubbles of tech-friendlyness began to form and grow in those societies in the latter 20th century and we now have an Arab nation sending a probe to Mars.

        After that rant about the propaganda of Howard Zinn, you fall for the propaganda of "...an Arab nation sending a probe to Mars." The UAE paid the Laboratory for Atmospheric and Space Physics (LASP) at the University of Colorado Boulder to design and build the probe and paid Japan to launch it. The UAE did fuck all to design, build, or launch that probe. They paid a bunch of contractors from other countries to do the work and plastered a sticker with their name on it at the end. They aren't even running

  • Yeah, they're *keeping the oil*

    Monkey see monkey do

  • ChinaLawBlog (Score:5, Interesting)

    by throwaway18 ( 521472 ) on Sunday August 16, 2020 @12:16PM (#60407053) Journal

    For anyone who want to know more about doing business in China, I recommend reading chinalawblog.com [chinalawblog.com]

    There is a lot of interesting and concerning advise from a law firm that has advised many business people who have got into difficulties, there is a small book worth of blog entries such as How to not get kidnapped in China [chinalawblog.com]

    • by UPi ( 137083 )
      I admit I was just nerdsniped. I can't stop reading this blog. It is engaging in the same way that the Sopranos are: the subject matter is horrific and the people and circumstances are terrible, but you keep watching because they are also just fascinating.

      Reading the blog, one can't help thinking doing business in China as a high-stake gamble: you can end up making a profit, or you can end up burned by obscure and (to westerners) counter-intuitive laws, human rights violations, theft, corruption, or all o

    • by AmiMoJo ( 196126 )

      They are lawyers selling a service, of course they are going to try to scare the shit out of you so you pay their massive fees.

  • @Saleen: You were a sucker! Live and learn. And, I told you so.

  • He's just on an anti China rant because they saw through his scam, whatever it was he was trying to pull.

    Wait for the other shoe to drop.

  • Was it meant to keep the Barbarians out, or the Chinese in?
  • "In mid-2004, managers at the Tokyo headquarters of the Japanese electronics giant NEC started receiving reports that pirated keyboards and blank CD and DVD discs bearing the company's brand were on sale in retail outlets in Beijing and Hong Kong. So like many other manufacturers combating intellectual property thieves in China, the company hired an investigator to track down the pirates."
    It's a remarkable story of China cloning NEC then disappearing when caught. https://www.nytimes.com/2006/05/01/technology/01pirate.html [nytimes.com]
    • by grub ( 11606 )

      22 fake Apple stores.
      "The illusion was so perfect that even the employees thought the place was legit. Let's say that again: Even though it's a complete knockoff, all the employees completely believed they were working for Apple."

      https://www.cracked.com/articl... [cracked.com]
    • by AmiMoJo ( 196126 )

      Seems very odd because as the article notes the products were generally quite good and well made so why not just set up their brand? It's not like people have an irrational hatred of Chinese brands, is it?

      Maybe things were different back then, although worth noting that the police investigated and shut it all down. These days brands like Xiaomi, DJI, Lenovo and Anker are sought after.

      • Seems very odd because as the article notes the products were generally quite good and well made so why not just set up their brand?

        Because brand name is damn important. Wanting an NEC monitor is not the same as not wanting a brand you've never heard of.

        I'm glad you mentioned Lenovo. They're a great company now that they've painstakingly over 35 years built up a brand by manufacturing for the west and then outright buying out recognisable businesses from well renowned western companies.

        Every other company you list also didn't appear overnight, they either came to the market with something unique or built up their brand over many years.

        N

        • by AmiMoJo ( 196126 )

          How about Xaiomi though? They have built their brand from basically nothing in a few years by having great products. Same with OnePlus. Huawei phones are well rated despite the persistent propaganda about them.

          Seems like an error, they could have build something great.

          • How about Xaiomi though?

            I'll reserve judgement on them when I actually see someone with a Xaiomi device anywhere in the west, same with OnePlus. I've seen plenty of Huawei gear, but then that is also a company that was founded in the 80s and built up an empire over many years.

            No doubt Xaiomi and OnePlus are fine, just not a household name like Huawei or Lenovo.... yet. Now doubt they'll get more popular over time though, but still nothing like popping up a fake brand overnight selling quickly and disappearing into the ether when y

            • by AmiMoJo ( 196126 )

              I have all of them except Huawei. OnePlus phone still going strong at six years old. Xiaomi vacuum cleaner is better than a Dyson and a fraction of the cost.

    • by habig ( 12787 )
      Sometimes the system works to protect IP: but even this egregious ripoff of a US glue company was only fixed because the counterfeiters were so brazen as to rip off images of the guy's wife too. The radio story's a fun listen: https://www.npr.org/2019/03/20... [npr.org]
    • In fairness, it isn't hard to copy Saleen - you just take a Mustang, throw on a supercharger, and bolt some ugly half-baked shit to the body. Done. Maybe the Chinese partner realized that Saleen was a crap company and that he wasn't really getting anything from their "IP" other than the brand identity.
  • WTF do westerns suddenly get upset when Chinese either STEAL the technology, the company, OR for the small guys, they set up companies that compete directly against you, and with CHinese government Yuans, dump on the global markets?
    Seriously, this is foolish that ppl do this and then gripe about it. About the ONLY company doing things right is tesla and even then, I do not trust the situation. Thankfully, all the money is from China, not from American markets.
  • Who would have guessed?

  • by argStyopa ( 232550 ) on Sunday August 16, 2020 @06:05PM (#60408131) Journal

    ...'brilliant' people are pretty fecking stupid.

    Nobody with a brain should assume their IP is *ever* safe in China.
    I know one of our competitors built a factory to produce a specially-coated paper there, mainly because our customers were DEMANDING (for no logical reason) that Asia/Pacific (China) prices "just be 30% lower" than anywhere else in the world.

    So dutifully, they put a factory down the road from this customer in China, and business seemed to be good for 5-6 years. What they didn't realize was that the Chinese were simultaneously building an IDENTICAL plant a little further down the road. Eventually, their now fully trained staff (who had been dutifully photographing and copying everything) just up and left to work at the lovely new Chinese owned plant, leaving them without staff. I believe the endgame will be that they will be compelled to sell their plant at half-price as well.

    • Soon it won't matter they have 6 times STEM workforce wrt. USA. If they can't copy, they will wrap their head around and start innovating. Now, what is more dangerous?

      • While I don't disagree with your overall point, I don't think creativity is that easy.

        I think one underappreciated facet of our various economic situations is that the US is really entirely populated by people descended from people willing to take a MASSIVE risk of relocating their lives. In most cases, this is voluntary (not refugees, for example).

        I don't think that's trivial. I think it suffuses the US populace in a subtle way that hasn't been much studied. (And, frankly, as many Americans are now 3+ g

  • Seems Just a typical contract dispute where someone is playing the racial card. Shady business deals and fraud are hardly unique to China so lets not carried away in a righteous crusade against the "other". Conservative dogma espouses there are too many lawsuits because we have too many lawyers. In fact most US lawsuits are business related where someone alleges some misbehavior. "Poor" Apple defends and settles hundreds of intellectual property disputes every year. As far as stealing intellectual property
    • Seems Just a typical contract dispute where someone is playing the racial card.

      "China" is a race now? I guess it was only a matter of time. Who's next, Niger? Oh wait...that's probably not a good idea.

  • ... with China.  They each ended up being undercut in their market by the people they had contracted to produce their products. 

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