Why Business Methods Are as Important as IP to China

Courtesy of China Defense Blog, I just read a fascinating (if you like aircraft) report on China's capability to natively produce jet engines produced by China SignPost titled Jet Engine Development in China: Indigenous high-performance turbofans are a final step toward fully independent fighter production (pdf).

It's common to see open source reports describing how the APT seeks intellectual property (IP), which many people read as plans, designs, and related mechanical and scientific information. What some miss, however, is that China needs business know-how as well as technical know-how in order to achieve its economic and security goals. The report includes examples of this:

What China must achieve, however, is a methodology akin to Six Sigma or Total Quality Management (TQM) to ensure quality control and sufficient organizational honesty to ensure that actual problems are reported and that figures are not doctored.

Otherwise, standardization and integration may be the one in which the costs of China’s ad hoc, eclectic approach to strategic technology development truly manifest themselves.

The Soviet defense industrial base failed in precisely this area: talented designers and technicians presided over balkanized design bureaus and irregularly-linked production facilities; lack of standardization and quality control rendered it “less than the sum of the parts.”

If there's anything you need to know about the Chinese government, it's that it seeks to avoid mistakes made by others. The Chinese government does not want to repeat the Soviet failure, and it knows that technology isn't the only component when trying to build jet engines. Expect to more open and hidden actions by Chinese actors to gain the resources they need to indigenously create this core military and civilian capability.

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