Coronovairus, Phase One Agreement, Lower for Longer

[frankfurter + 562]

11 hours ago, Osama said:

See, I might not be as experienced as you. But what I am saying is that as the virus is indirectly going to effect one of the key point of the Phase One deal... We might see trade tensions resurfacing.. And therefore a downward pressure on oil prices. 

As noted by others, contracts will have many provisions for performance, majeure, etc. From your notes, I deduce your concern is whether China will cite force majeur to curtail volumes, and the USA will in turn cite non-performance to terminate. ?   imho, Unless the USA turns vindictive, I can't see termination occurring. Too much is at stake, politically and economically.  The USA does want China to buy USA goods and services; and China is open to buy. Phase One was reached after 2+ years, and I suspect the parties are not too keen to repeat.  But, with Trump et al, ya never know, so your concern is rather justified, imho. Has the time come to flip a coin? aye, there's the rub. 

[aside; please note the words "effect" and "affect" have different meanings.] 

[0R0 + 6,251]

1 hour ago, Douglas Buckland said:

I never insinuated that they should ‘shut their factories down’. They probably have other clients that they may have been able to service.

So let me get this straight...I sign a contract, I assume it is binding, to have Company X manufacture and deliver 100 widgets within a certain timeframe. Company X only delivers 75 widgets during this timeframe.

Company X is now in breech of contract.

Depending on the terms of the contract, as Tom pointed out, I SHOULD have the options of:

A. Terminating the contract in full without accepting the 75 widgets.

B. Accepting the 75 widgets as per contracted terms, then terminating the contract.

C. Accept the 75 widgets as per terms of the contract then renew or renegotiate the contract.

As I indicated previously, why even negotiate a contract if it is non-binding on either party?

It is binding. The terms of penalties for breech are normally listed or you go by the law of the contract jurisdiction. Most often, the contract is just as good after the temporary breech as it was before. Some reparation would be made in proportion to losses by the aggrieved side. 

[Ward Smith + 6,615]

1 hour ago, frankfurter said:

As noted by others, contracts will have many provisions for performance, majeure, etc. From your notes, I deduce your concern is whether China will cite force majeur to curtail volumes, and the USA will in turn cite non-performance to terminate. ?   imho, Unless the USA turns vindictive, I can't see termination occurring. Too much is at stake, politically and economically.  The USA does want China to buy USA goods and services; and China is open to buy. Phase One was reached after 2+ years, and I suspect the parties are not too keen to repeat.  But, with Trump et al, ya never know, so your concern is rather justified, imho. Has the time come to flip a coin? aye, there's the rub. 

[aside; please note the words "effect" and "affect" have different meanings.] 

Interestingly your response shows your worldview, which is diametrically opposed to American thinking. Note the bolded parts. Your first phrase starting with "China" makes sense to Americans, because we understand that China has multiple state run entities. On the other side, saying USA makes little to no sense to Americans. The government here is never the buyer or seller, it is always totally independent companies. Most of them are publicly traded, and if China Inc. wanted to buy them, for the most part they could, on the open stock market. Admittedly that didn't work out with Unocal as I recall, but China was a bit heavy handed and picked too large a target. Note that Saudi Aramco bought the biggest refinery in the US fairly recently. Wonder whose crude feedstock that refinery "chooses" to purchase? 

As to the rest, yes the govt here got involved in the tariff realm, primarily because of the abused independent companies losing intellectual property and more. I believe you claimed this hasn't happened, but I can name a half dozen cases involving semiconductor companies off the top of my head. I'm sure there's more, in other industries such as pharma and aerospace, I'm not involved in them. 

[Osama + 248]

3 hours ago, frankfurter said:

As noted by others, contracts will have many provisions for performance, majeure, etc. From your notes, I deduce your concern is whether China will cite force majeur to curtail volumes, and the USA will in turn cite non-performance to terminate. ?   imho, Unless the USA turns vindictive, I can't see termination occurring. Too much is at stake, politically and economically.  The USA does want China to buy USA goods and services; and China is open to buy. Phase One was reached after 2+ years, and I suspect the parties are not too keen to repeat.  But, with Trump et al, ya never know, so your concern is rather justified, imho. Has the time come to flip a coin? aye, there's the rub. 

[aside; please note the words "effect" and "affect" have different meanings.] 

Indeed! Trump is quite whimsical and believe me they can become "keen to repeat" whatever they did in the past two years. 

 

(Thank you for the correction, I always mess this up) 

[Dan Warnick + 6,100]

1 hour ago, Ward Smith said:

As to the rest, yes the govt here got involved in the tariff realm, primarily because of the abused independent companies losing intellectual property and more. I believe you claimed this hasn't happened, but I can name a half dozen cases involving semiconductor companies off the top of my head. I'm sure there's more, in other industries such as pharma and aerospace, I'm not involved in them. 

Aviation IP theft has been massive, and has been happening since at least 1990, from personal experience and memory.  Of course China was able to make airplanes before the theft began, and did, but the problem was one of safety and reliability, not to mention scale, production efficiency and costs.  Western commercial airplane companies have struggled tremendously since that time with how to compete in China without giving up too much of their technology and leading edge production know-how.  It has been a losing battle for the most part.  Time after time they were told they could either transfer their IP and production know-how so that State owned Chinese companies could leap frog up to their own manufacturing, or face the loss of significant sales today.  Well played, China.  Competition for airplane sales is intense involving huge USD currency and values, and the Chinese leveraged Western companies against each other, even though it meant in the long term they were cutting their own throats.  When you see joint venture production facilities in China, those facilities were not built with employment in mind; they were forcefully required by the Chinese government in order to more rapidly transfer IP and know-how to key Chinese government enterprises.

This also happened with military aviation as well, but was more limited to components and systems, I believe.

Then the Chinese government enterprises were able to combine their "acquired" experiences to start up supply chains of critical systems with both civilian and military applications.  Then, because they had not been burdened with R&D, they were able to dump on the markets and force many Western companies out of those markets.  And then you have U.S. Navy ships colliding with civilian ships in the South China Sea (scratch head: how did that happen?  Not once but a number of times?) and, when that started happening, the Navy found through root cause investigations that the "chips" and software that they thought was secure and top secret had Chinese components integrated inside.  Just one example.

U.S. Government estimates of IP theft by the Chinese run as high as $550 Billion/year, and the above examples are just part of it.

[wrs + 893]

15 hours ago, 0R0 said:

VLCCs are the carriers for round the cape transport to China. Not Panamax, those are largely US West Coast transport. They carry far more oil than fits on a Panamax.

Right and the point is that Panamax would be the most direct but even there the amount they carry leaves the cost per mile too high.  The VLCCs cannot be loaded yet so they aren't an option unless it's ship to ship and also, the around the cape adds a lot more miles and thus expense to the trip.  That's what the article I read was pointing out about the US shipping oil to China.  It only works when rates are really low.

[0R0 + 6,251]

Agreed, and I should add that Carly Fiorina regretted having gone to Chinese production because of exactly the same issues. HP IP was stolen so rapidly that by the time their QA shakedown was done, cheaper components with the same changes they had just applied were showing up on Alibaba before they started selling. The technology transfer was not the least of it as China was flooded with copy cat machines and they could barely hold on to market share, not to speak of turning a profit on the China market. While they could stop sales of knockoffs in the US and some Western countries, they lost market share in many others. 

Thinking of it now without the temptation of the "huge Chinese market" and "low costs" waved in front of her face, she said the terms were absurd and she should have rejected them outright and told them to talk to Xerox etc..

As to safety and data security, I think a clear "no Chinese components or assemblies" policy should be taken by all Western governments and applied to all companies handling private data and the cloud and particularly communications, auto parts, medical equipment, aviation and ships. Set it to a date certain at a reasonable effective date to allow reworking supply chains and make it permanent..  

[Tom Kirkman + 8,860]

21 hours ago, frankfurter said:

As noted by others, contracts will have many provisions for performance, majeure, etc. From your notes, I deduce your concern is whether China will cite force majeur to curtail volumes, and the USA will in turn cite non-performance to terminate. ?   imho, Unless the USA turns vindictive, I can't see termination occurring.

 

20 hours ago, 0R0 said:

It is binding. The terms of penalties for breech are normally listed or you go by the law of the contract jurisdiction. Most often, the contract is just as good after the temporary breech as it was before. Some reparation would be made in proportion to losses by the aggrieved side. 

 

Force majeure was declared in the article below, but was rejected by the End Users. 

This is where the specific Terms & Conditions of an individual contract come into play, including what country any contractual disputes will be settled in. 

Good contractual T&Cs also include what happens to the contract in the short term and long term once force majeure is declared, what specific remedies can be applied, length of time with a time limit cap, etc. 

This is where reading and understanding the actual contract and the T&Cs before signing the Purchase Order come into play.

 

https://www.zerohedge.com/markets/tankers-tankers-everywhere-virus-causes-historic-traffic-jam-across-asian-supply-lines

Middle East traders who export crude via VLCCs to China reported weaker demand. VLCC rates from the Middle East to China have plunged since the virus outbreak began early last month.

"In gas markets, a one Chinese company declared force majeure, potentially allowing it to walk away from contractual commitments. The measure was rejected by Total SA and Royal Dutch Shell Plc. There are now 12 empty liquefied gas carriers sitting off the coast of Qatar, one of the world's biggest producers. While the precise reasons for the idling vessels aren't known, the timing coincides with ship diversions, cargo cancellations and reduced demand in Asia since the virus took hold. Oil tankers have been dawdling off China," reported Bloomberg. 

[frankfurter + 562]

18 hours ago, Dan Warnick said:

Aviation IP theft has been massive, and has been happening since at least 1990, from personal experience and memory.  Of course China was able to make airplanes before the theft began, and did, but the problem was one of safety and reliability, not to mention scale, production efficiency and costs.  Western commercial airplane companies have struggled tremendously since that time with how to compete in China without giving up too much of their technology and leading edge production know-how.  It has been a losing battle for the most part.  Time after time they were told they could either transfer their IP and production know-how so that State owned Chinese companies could leap frog up to their own manufacturing, or face the loss of significant sales today.  Well played, China.  Competition for airplane sales is intense involving huge USD currency and values, and the Chinese leveraged Western companies against each other, even though it meant in the long term they were cutting their own throats.  When you see joint venture production facilities in China, those facilities were not built with employment in mind; they were forcefully required by the Chinese government in order to more rapidly transfer IP and know-how to key Chinese government enterprises.

This also happened with military aviation as well, but was more limited to components and systems, I believe.

Then the Chinese government enterprises were able to combine their "acquired" experiences to start up supply chains of critical systems with both civilian and military applications.  Then, because they had not been burdened with R&D, they were able to dump on the markets and force many Western companies out of those markets.  And then you have U.S. Navy ships colliding with civilian ships in the South China Sea (scratch head: how did that happen?  Not once but a number of times?) and, when that started happening, the Navy found through root cause investigations that the "chips" and software that they thought was secure and top secret had Chinese components integrated inside.  Just one example.

U.S. Government estimates of IP theft by the Chinese run as high as $550 Billion/year, and the above examples are just part of it.

I see now what you are saying.  In black and white you state the Chinese set terms for foreigners to come into the China market, and the foreigners agreed to the terms.  

If I have two shovels, and I decide to give one to my neighbour for the right to enter his yard and pick his apples, when the apples are picked do I then claim he stole my spade? 

Your accusation of theft is patently false. 

Have your read Trump's book, The Art of the Deal?  The Chinese have simply followed the play book, and beaten the foreigners at their own game.  Today, the foreigners are crying the blues for their poor decisions and simply cannot take it, So, like the wimps and babies they are, they now cry theft.

What's even worse is the JVs continue, thus continue to add profits to the foreigners, exactly as agreed. yet the foreigners want the entire pie, not the agreed slice.

 

[frankfurter + 562]

The mouse you see and use today has developed from using a ball and later an optic.  An American claims to have invented the mouse: Englebart, 1964.  But did he truly invent, or did he copy?  In 1945, Canadian engineers, working on the secretive DARPA project, invented and produced, for the 1st time ever, a trackball to draw lines on CRT screens. The mouse prototype in 1964 had a trackball and used the exact same concept, hardware, and algorithm as the trackball in 1945. A commercial mouse was developed from that prototype. No credit was ever given to the Canadian engineers and not one penny of royalty has ever been paid. 

This is true theft.  One of hundreds of cases.

[footeab@yahoo.com + 2,192]

7 hours ago, frankfurter said:

The mouse you see and use today has developed from using a ball and later an optic.  An American claims to have invented the mouse: Englebart, 1964.  But did he truly invent, or did he copy?  In 1945, Canadian engineers, working on the secretive DARPA project, invented and produced, for the 1st time ever, a trackball to draw lines on CRT screens. The mouse prototype in 1964 had a trackball and used the exact same concept, hardware, and algorithm as the trackball in 1945. A commercial mouse was developed from that prototype. No credit was ever given to the Canadian engineers and not one penny of royalty has ever been paid. 

This is true theft.  One of hundreds of cases.

Lets assume your story is correct:

1st/2nd grade math.......64-45 = ???

How long do patents last again? 

[0R0 + 6,251]

12 hours ago, frankfurter said:

I see now what you are saying.  In black and white you state the Chinese set terms for foreigners to come into the China market, and the foreigners agreed to the terms.  

If I have two shovels, and I decide to give one to my neighbour for the right to enter his yard and pick his apples, when the apples are picked do I then claim he stole my spade? 

Your accusation of theft is patently false. 

Have your read Trump's book, The Art of the Deal?  The Chinese have simply followed the play book, and beaten the foreigners at their own game.  Today, the foreigners are crying the blues for their poor decisions and simply cannot take it, So, like the wimps and babies they are, they now cry theft.

What's even worse is the JVs continue, thus continue to add profits to the foreigners, exactly as agreed. yet the foreigners want the entire pie, not the agreed slice.

 

Specious argument as usual. The point isn't the contract terms but how the Chinese used it by stealing well beyond what technology transfers were contracted.

The second issue is not a theft one but a mercantile policy issue well executed by China. The technology transfer to the CCP and its selected beneficiaries as a tax on the labor that these companies were seeking to access, where the Chinese government played companies against each other to get them to sign up for such terms at the expense of their low grade labor, which still makes less than anyone else in China but for remaining subsistence farming communities. It is also a criticism of the companies that joined in and undermined their own commercial position in doing so, and the security of their customers.  

[Dan Warnick + 6,100]

5 hours ago, footeab@yahoo.com said:

Lets assume your story is correct:

1st/2nd grade math.......64-45 = ???

How long do patents last again? 

He will have to look that up, since the CCP doesn't recognize IP rights or their value.

[Ward Smith + 6,615]

On 2/15/2020 at 7:57 PM, frankfurter said:

The mouse you see and use today has developed from using a ball and later an optic.  An American claims to have invented the mouse: Englebart, 1964.  But did he truly invent, or did he copy?  In 1945, Canadian engineers, working on the secretive DARPA project, invented and produced, for the 1st time ever, a trackball to draw lines on CRT screens. The mouse prototype in 1964 had a trackball and used the exact same concept, hardware, and algorithm as the trackball in 1945. A commercial mouse was developed from that prototype. No credit was ever given to the Canadian engineers and not one penny of royalty has ever been paid. 

This is true theft.  One of hundreds of cases.

Even if your story is accurate, a mouse is a totally different invention than a track ball, even if logically a mouse is a track ball flipped upside down and rolled around the desk. I have multiple patents, I can put together ten items that are essentially off the shelf, but if I've put them together in a novel way or to accomplish a novel purpose that wasn't envisioned by the original invention(s), guess what? New patent. 

That's not what the Chinese are doing, nor what the Soviets did before them. During WWII the US shipped trucks and even railroad engines to both the USSR and China. Years later, the Chinese had copied them so completely, they even kept the original serial numbers on the copies. Never mind the pervasive IP Theft they've engaged in since. The exact same facilities making Air Jordan shoes by the thousands, are putting out faux Air Jordan's by the millions. Don't think Nike isn't aware of this, which is why they've been moving production elsewhere. 

And don't even get me started on semiconductors and cores, China has been caught red handed thousands of times.