But not all its products are so benign. The firm also makes key parts for military drones, vehicles, and artillery; its website is illustrated with photos of RAF helicopters, Royal Navy destroyers and Army tanks. And it’s with these products in mind that the team from the China North Industries Corporation, a Chinese manufacturing giant usually known as Norinco, paid a visit in 2015.

The Norinco team, led by Wang Yulin, president of its Development Academy of Machinery and Equipment, and Xiaoqing Cheng, the general legal adviser to its Vehicle Research Unit, were evidently impressed. “They are a large industrial company with 300,000 employees that covers planes, trains and automobiles,” Charlie Bamber, G&W’s business development manager for Asia, later told the Shropshire Star. “There’s no limit to the opportunity.”

Among the possibilities was a “joint venture” — the building of a “mass production entity” that would use G&W’s technology in China. Such a factory, Bamber continued, “can’t be in Shropshire, but parts leading up to it can. It’s clearly an opportunity for the county”.

Yet a crucial detail was left out from his statement. Namely, that the Chinese characters that make up Norinco’s name in Mandarin — 中国兵器工业集团公司 — do not mean “China North Industries Corporation” in English, as the firm implies. What they really stand for is: “China Arms Industry Group Co. Ltd”.

Even so, G&W could not plead ignorance. It is well-reported that Norinco, owned by the Chinese state, is the biggest weapons manufacturer in China, producing tanks, grenade launchers, shells, rotary cannons, drones, missiles and strike aircraft. In 2003, George W. Bush sanctioned the company for selling ballistic missile technology to Iran. It has since been blacklisted in America because of its close relationship with the People’s Liberation Army, following executive orders issued by Donald Trump and Joe Biden.

One might think, then, that G&W would have something to say about its partner’s dubious reputation. Yet when I enquired about its Chinese business, which has grown significantly since 2015, it refused to answer any of my questions, beyond issuing a blanket statement insisting that it had done nothing wrong and always obtained UK government approval. On a brief phone call, Bamber suggested I was xenophobic for even questioning its relationship with Norinco. “I think you’re probably aligning yourself with many people who are extremely racist,” he said. “You’re fabricating a scenario which doesn’t actually exist.”

More from this author

The British weapons expert cosying up to China

By David Rose

In all fairness, G&W’s dealings with Norinco began in the so-called “Golden Age” of Anglo-Chinese relations under David Cameron and George Osborne, when far from being seen as a possible threat, China was promoted by the British government as a rich and generous benefactor.

Since then, however, the political atmosphere has soured dramatically. Hong Kong’s freedoms have been crushed, the Uyghurs have been subject to genocide and China has threatened to invade Taiwan. Fears over China’s acquisition of advanced Western technology have reached an all-time high, as MI5’s Director General Ken McCallum and FBI Director Chris Wray warned in their joint address in London last month. During their press conference, McCullum pointed out that China doesn’t even need to resort to “clandestine espionage methodology” to get its hands on the West’s technological secrets. British businesses and academic institutions are giving IP away in plain sight, under the guise of seemingly innocent commercial deals or academic partnerships.

In recent months, Britain’s politicians have also woken up to such dangers. The National Security Bill — currently going through parliament — would grant further powers to the British government to “combat state threats not just to national secrets but to your intellectual property, your commercial edge, your unique research”. Yet the proposed new law will not be retrospective: intellectual property that has already been shared cannot be taken back. This means the near-decade that G&W has spent working with Norinco is unlikely to come under scrutiny.

It is hard to say precisely when G&W first became involved with China, given its reluctance to talk about it. But it appears to have taken place in 2013, when a company called FLUID Transmission Technology became G&W’s Chinese agent, tasked with looking for business that might benefit from its intellectual property. FLUID doesn’t even try to hide its connection with the Chinese military. Its goal is to promote “military-civil fusion” (MCF), which the US State Department describes as an “aggressive, national strategy of the CCP” to help China develop “the most technologically advanced military in the world”, partly by “acquiring and diverting” cutting-edge technology from around the globe.

More from this author

Does the CCP control Extinction Rebellion?

By David Rose

The most sinister aspect of this MCF strategy is that China is seeking to “exploit the inherent ‘dual-use’ nature” of many civilian technologies that can also be used for defence purposes. In other words, it aims to use seemingly harmless Western technology to strengthen China’s military.

In 2018, FLUID met with the Communist Party leadership of the heavily industrial Minhang district of Shanghai, known to be dedicated to MCF. It was the start of a blossoming relationship. Later that year, Matthew and Edward Grainger, the brothers who run G&W, visited Norinco’s Beijing headquarters along with FLUID’s chief executive, Liu Guosheng.

The visit was a triumph for everyone involved. It paved the way for Factory 616 — a casting plant in the city of Datong — built using G&W’s technology by a firm called Shanxi Diesel, a subsidiary of Norinco. The plant is making parts for high-speed water-cooled diesel engines, which could be used in civilian or military vehicles. As G&W has itself pointed out, such technology is a perfect example of dual use.

G&W seemed determined to conquer the Chinese market. It went on to set up a version of its website in Mandarin. In 2020, however, the site abruptly disappeared — when the Huawei scandal hit Britain. It advertised one of G&W’s most innovative and desirable products: a cast made of Compact Graphite Iron, which set “new standards in terms of weight, size, reliability and most importantly, fuel consumption”. This too could have military applications for vehicles and aviation.

Suggested reading

China can't afford to invade Taiwan

By George Magnus

Then, in November 2019, G&W’s top leadership visited Minghzi Technology, a casting manufacturer in Suzhou. There they signed an agreement, which Minghzi said was “the start of a comprehensive collaboration” — the goal being “to expand business in China and Europe… by tapping the unique strengths of each company”.

When I approached the firm, all it would do was issue a statement insisting everything was above-board: “Each G&W customer opportunity is reviewed for business and commercial fit, moral and ethical soundness, and against UK Government controls. All recommendations and decisions made by the ECJU and DIT are strictly complied with by G&W. In no circumstance is business undertaken in controlled geographic regions or market sectors without the full knowledge and approvals of UK Government. G&W regularly undertake strategic reviews of international operations, taking into account legal, moral, ethical, and geo-political situations.”

Despite their apparent confidence in the deal’s propriety, Matthew and Edward Grainger have refused to be interviewed. Bamber, too, avoided me after our first phone call. After accusing me of racism on the phone, he promised to answer my further questions via email, but never replied.

At some point, though, G&W may have to explain itself. Charlie Parton, a former Foreign Office China veteran and now a Royal United Services Institute fellow, said: “There needs to be a full investigation into what this firm is actually doing… It’s basic: you don’t help a political enemy acquire technology that might be used against you. If that’s what G&W has done, we need to know.”

And we need to know sooner rather than later. As its recent exercises just off the coast of Taiwan demonstrated, Beijing has no qualms with showing off its new weapons. For now, it is preoccupied with its battles in the East. Should its focus shift Westwards, Grainger and Worrall — not to say the UK government — may just find they’ve shot themselves in the foot.

Patents give drug makers a period of time with no competition where they can be rewarded for their innovations, encouraging drug companies to invest in costly research and development that might take years to pay off. The logic behind patents is sound, and drug companies devote billions of dollars to find extraordinary cures that extend our lives.

But intellectual property, once an unremarkable area of law, has exploded since the 1980s. From 1900 to 1982, the number of patents increased by around 138%. After 1982, the number of patents extended increased by an astounding 416% by 2014. Not only did the number of patents explode, the areas they cover has expanded in ways the Founding Fathers never intended.

Over the past few decades, copyright protection has been extended to unpublished works, the requirement to register one’s copyright has been dropped, and copyright terms have grown from 28 years to the life of the author plus 70 years. This is the dark side of patents, when they are often used as a tool to gouge customers. In the case of drug companies, patents allow them to rip off patients. The longer the drug lacks competition, the longer companies can charge extortionate prices.

The cost to society is immense. The United States spends over $3 trillion annually on health care, and 10% is spent on drugs. The average American spends more than $1,000 a year on prescription medications, 40% more than the next highest country, Canada, and double what Germany spends.

Further Reading

Clash of the Titans: Amazon takes on big pharma

By Nigel Cameron

The broadest study done on the reasons for the increase in costs appeared in the Journal of the American Medical Association: “The most important factor that allows manufacturers to set high drug prices is market exclusivity, protected by monopoly rights awarded upon Food and Drug Administration (FDA) approval and by patents.” Generic drugs are the main reason why drug prices have fallen, but access to them is generally delayed by numerous business and legal strategies.

When patents are about to expire, for example, the pharmaceutical industry seeks endless extensions through ‘reformulation’ of their drugs or minor modifications to the methods of delivery. Reformulation involves changing the drug just enough to obtain additional patent protection, while keeping enough characteristics the same, so that previous clinical testing results can be relied on to obtain FDA approval. There is no new innovation, no new discoveries or any greater benefit to patients, yet companies can continue to charge high prices.

For example, the Orphan Drug Act of 1983 regulated the approval of drugs for rare diseases and gave a drug companies even greater exclusivity. In theory, this would encourage drug companies to find cures for diseases that might not have a big market. The problem is that Orphan Drugs are not in fact rare. They make up 20% of all global prescription drug sales. Incredibly, 44% of new drugs approved in 2014 had orphan status, and due to pricing they are almost all the most expensive drugs. Now pharmaceutical companies are taking advantage of these incentives to gouge patients, insurers and the government.

Even once patents expire, regulations and bureaucracy provide another even greater barrier to entry for challengers who might want to bring new medicines to market. All new drugs are approved by the FDA to make sure that they work and are not harmful. This is an essential job. Generic drugs, though, are not new or unknown. They are identical to a brand name drug that is off patent in dosage form, safety, strength, route of administration, quality, performance characteristics and intended use. Yet the current FDA approval process for generics is extremely onerous.

Further Reading

The cosy relationship between big pharma and doctors is killing people

By Charlotte Pickles

Drug makers can charge what the market will bear because the magic of competition is missing. On average, a generic takes between three and four years to be approved. Given how long this process takes, it is no surprise the FDA’s backlog of generic drugs stands at an all-time high. In 2014, nearly 1,600 applications for generic drugs were submitted to the FDA. By the end of the year, not a single drug was approved due to a backlog of over 4,700 generics from previous years. Fast-forward to July of 2016, and 4,036 generic drugs awaited FDA approval, yet very few were even processed.

The bipartisan Creating and Restoring Equal Access to Equivalent Samples Act (CREATES), which has been submitted to Congress, should remove roadblocks to the approval of lower-cost generic drugs. However, lobbying – the industry spends millions of dollars a year – means it has almost no chance of passing and has failed every time it has been introduced.

The ugly truth about regulation is that while big businesses often complain about regulation, they tend to benefit from it. Regulations that are burdensome enough kill small companies but not enough to kill large ones are, in fact, ideal. To big companies, startups are like a horrible cancer attacking them, and they are willing to put up with anything painful that will kill them.

Further Reading

Only lateral thinking can save us from economic stagnation

By Peter Franklin

You can compare its effect with cancer treatment. Chemotherapy has the capacity to kill nearly every cell—tumor or normal. The most common way it does so is to damage DNA, the genetic blueprint of the cell. The damaged cells do not die right away—only when they try to replicate with the damaged DNA do the cells die. Sometimes replicating with damaged DNA triggers cell suicide, called apoptosis.

Normal tissues can repair damage because they have the resources and DNA blueprint to repair damage, even if it means slowing growth. Cancers, on the other hand, grow at the expense of any DNA repair. When they try to grow with damaged DNA, they then undergo cell death, through apoptosis or necrosis. Hence, the basis of selectivity of chemotherapy.

Bigger companies favour regulation because, like the normal tissues, they can divert energy to repair and maintenance (lawyers, compliance officers, lobbyists, etc). Big companies are not in the exponential phases of growth like many startups are. (Interestingly, most toxicity in normal tissues come from tissues that grow rapidly: intestines, skin, hair, bone marrow.) These smaller companies need to grow and do not have the budgets to hire an army of lawyers and compliance officers. These fixed costs are a bigger drag on the profitability of small firms than large firms. Hence excessive regulation selectively kills off the small startups attacking big corporations. It is a formidable barrier to entry for any industry.

Today, small businesses are feeling the scorching heat from the chemotherapy of regulation. US companies in 2016 were subject to 104.6 million words of regulation. (The King James Bible comes in around 783,137 words.)

Further Reading

'Government Sachs' keeps adopting policies that favour Wall Street

By Reihan Salam

Researchers have found that a 10% increase in the regulatory restrictions on a particular industry is associated with a decrease of about 0.5 % of the total number of small firms within that industry, with large firms mostly unaffected. The correlation between regulation and higher profits holds across countries. The economist Fabio Schiantarelli looked at OECD countries, and found that high barriers to entry contributed to higher markups. It also explains the loss of dynamism in the economy with fewer startups.This is exactly what has been happening in the US, as industries have concentrated.

If you doubt that regulations can effectively kill any new entrants, consider what has happened to the banking industry. The extensive new regulations introduced with the Dodd-Frank Act have created a protected class of financial firms, with only seven new banks formed between 2009 and 2013. Jamie Dimon, the CEO of JP Morgan has said that Dodd-Frank creates a “moat” around the big banks, while doing nothing to break up America’s largest banks or end the status of banks that are too big to fail. Instead, it has simply kept lawyers, accountants, and consultants busy while choking off competition.

For big businesses across many industires, it’s exactly as one Goldman Sachs lobbyist told Politico in 2010: “We are not against regulation. We’re for regulation. We partner with regulators.”

This is the third of three extracts from “The Myth of Capitalism: Monopolies and the Death of Competition” a new book co-authored by Jonathan Tepper and Denise Hearn.