The Hong Kong tour guide tells us she's taking us to a shopping bazaar called The Stanley Market, which specializes in "cheap" knock-offs -- a place which sells the stolen intellectual property rights of such names as Burberry, Calvin Klein, Ralph Lauren, Louis Vuitton and many others. She explains that the goods are made with inferior materials and less carefully constructed designs. Coach bags are made of plastic, not leather, for example.

She says there's another bazaar which specializes in selling high quality knock-offs -- where Coach bags are made of real leather instead of plastic. But that trip is for another day. The cheap knock-off bazaar is jammed with tourists from all over the world, as well as those from other Chinese provinces.

It is remarkable that Hong Kong could go so far and so openly in the promotion of stolen brand marks. To create an economic stratification of stolen intellectual property rights is a demonstration of how deeply corruption is imbedded in the Asian marketplace.

But are the Chinese the only ones who have been stealing?

In 2007, the USA leads the world in research and development and, as a result, makes a great effort to protect intellectual property. The USA's legal system is effective in protecting such rights domestically.

But China is trailing in R&D and, as a result, allows its capitalists to steal intellectual property, which fuel economic growth. When it comes to patents and intellectual property rights, China is actually living in the early 19th century -- a time when American companies commonly stole such rights from European companies. It was also a time when we ignored our own patents and refused to protect them from theft.

There is an old poem about Boston, Massachusetts:

So here's to dear old Boston
Home of the bean and the cod
Where the Lowells speak only to Cabots
And the Cabots speak only to God.

Francis Lowell made his fortune by stealing intellectual secrets from England. In 1812, he returned from a tour of English factories with the secrets of the power loom, which moved the U.S. Industrial Revolution into high gear. This theft made the Lowells a very rich family.

Eli Whitney invented the cotton gin in 1793, which jump-started our Industrial Revolution. His 1794 patents should have made him a very rich man. But he almost became a pauper, victim of all the companies which stole his patents and produced their own cotton gins.

Corrupt legislatures and weak courts were uninterested in patent enforcement in those days and John Marshall had yet to come on the scene to make the U.S. Supreme Court an effective branch of government. Whitney later invented the first mass production system for muskets. Refusing to get into another patent mess, he built a musket factory instead. After becoming poor as an inventor, he became rich as manufacturer.

Whitney observed, "When a patent becomes too valuable, it doesn't benefit the inventor." Which is why America's R&D patents are so valuable to other countries and so vulnerable to piracy. With China's 2007 legal system as weak as the U.S.'s 1794 version, it would be very difficult for Beijing to eliminate patent piracy.

By 1803, the U.S. Supreme Court under John Marshall began a major thrust to make the Central government more powerful than state governments. His decision in Marbury vs. Madison (1803) was the first to establish the primacy of Federal law over state law. That law is still the legal basis for many decisions involving power and rights in the U.S.

By 1840, the U.S. was finding that copyright patent theft was hurting the economy more than it was helping. With that observation, the U.S. moved squarely into the camp of intellectual property rights protection.

But it was a slow process.

American companies continued to publish British books without permission. Payments were rare. Intellectual property piracy continued until American authors like Mark Twain became popular in Europe.

Hats, gin and paper were counterfeited in the U.S. and carried labels of reputable European manufacturers.

127 cigar factories in Key West turned out "authentic" Cuban cigars.

But by the dawn of the 20th Century, new laws and a strong court system assured inventors, writers and artists that their works could be protected.

Intellectual property rights theft is a common outgrowth of industrialization. It is not a "flaw in Chinese character," as some say. After all, the biggest theft in history occurred when the British stole the Chinese secrets for silk manufacture. History books claim that the famed "Silk Road" connecting China with Venice disappeared because water transport was cheaper.

Maybe. But I believe that the Silk Road died when Europe found it could buy silks from England instead of having to go all the way to China for the material.

Last year, the United States filed the most Intellectual Property Rights theft claims against Chinese companies.

Guess who was the second largest claimant against Chinese pirates?

It was China.

Now that Chinese companies are stealing from Chinese companies, Beijing will soon see there is far greater value in protecting intellectual property rights than allowing piracy to continue.

In order to protect China's intellectual property rights, the nation must establish legislation and a strong central government court system.

But will it?

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