One of the hidden costs of having molds built in China is the potential theft of intellectual property (IP). This includes theft of mold designs, mold components, product design and the products themselves. IP theft is a story that PlasticsToday has been writing about for almost three decades, and there's no end in sight. Tariffs on Chinese-built molds for U.S. OEMs just might have prevented some of the ongoing IP theft that costs companies millions of dollars every year. However, the Trump administration announced at the end of the year that it would suspend the 25% tariff it had placed on injection molds made in China.
The Alliance for American Manufacturing noted in a blog post on Jan. 8, “Bi-Partisan Support for Stronger Protection Against Intellectual Property Theft,” that senators Mark Warner (D-VA) and Marco Rubio (R-FL) have introduced a bill to “create a White House Office of Critical Technologies and Security that would advise the president and coordinate the government’s response to IP theft and supply chain risks.”
In a press release commenting on this bill, Rubio said, “China continues to conduct a coordinated assault on U.S. intellectual property, U.S. businesses and our government networks and information with the full backing of the Chinese Communist Party. The United States needs a more coordinated approach to directly counter this critical threat and ensure we better protect U.S. technology. We must continue to do everything possible to prevent foreign theft of our technology, and interference in our networks and critical infrastructure.”
Finally, the government is recognizing this problem. But is it too little, too late?
I’ve written many articles over the years citing case studies of companies, large and small, that have battled this problem of IP theft. Smaller companies sometimes only discover that a Chinese competitor has stolen their product after seeing duplicates at trade shows! Trade enforcement officers have raided the booths of these counterfeiters, confiscated their goods and sent them packing, but it hasn’t stopped the ongoing problem.
Tariffs on molds, perhaps, would have given incentives to many companies to build their molds in the United States, saving millions of dollars lost to counterfeiters. Many smaller companies and private inventors had their molds built in China to take advantage of deep discounts only to discover that their IP had been stolen. Suddenly the true cost of a China mold increased by many thousands of dollars.
Maybe some OEMs or large plastics processing companies believe that there is a big advantage to be gained by placing mold programs in China, but in the long run it hurts everyone. Tariffs help level the playing field. They could have helped U.S. mold manufacturers gain new work that would have otherwise gone to China.
Admittedly, some mold work has stayed in the United States, as moldmakers have become more competitive. Trust is a huge issue in this business, and some OEMs have discovered that U.S. mold companies can be trusted to do the right thing and build a high-quality mold that provides long-term productivity. U.S. moldmakers, for the most part, stand behind their work. That in itself is worth more than the cost savings of having a mold built in China and risking IP theft.