What Chinese Companies Want: Intellectual Property Protection

Article excerpt

Chinese-American business relations, long fraught with distrust for China because it was not controlling piracy, appear to be benefiting from a new Chinese respect for intellectual property rights.

As Chinese innovators begin to see that there's money to be made in protecting their own intellectual property, they're becoming more willing to cooperate with big foreign firms.

The result? China's courts are now among the busiest in the world for intellectual property rights (IPR) lawsuits. And Sino-American business relations, long fraught with distrust for China because it was not controlling piracy, appear to be benefiting.

US Ambassador Gary Locke yesterday praised China's progress in expanding its IP protection regime last fall, after much US lobbying, to ensure that China meet international standards in protecting the building blocks of capitalism - copyrights, patents, trademarks, and trade secrets.

"Ten or 15 years ago, most people in China saw IPR protection as something only US or foreign companies cared about, but that is changing as more and more Chinese entities are creating intellectual property of their own," Ambassador Locke said as he opened an IPR roundtable.

Former Commerce Secretary Locke lauded leading Chinese search engine Baidu, once blacklisted for serving up links to stolen music files, for cleaning up its act. Yet theft of IP in pharmaceuticals, biotechnology, advanced manufacturing and entertainment, he said, still results in billions of dollars lost each year.

For every $1 in computer hardware sold in the US last year, 88 cents of software was sold in 2011. Compare that with China, the world's second largest economy, he said, where only 8 cents of legitimate software is sold. Eighty percent of software sold in China is thought to be pirated.

In fact, US companies such as Microsoft report they earn more from legitimate software sales in Vietnam than they do in China, a country whose economy is 50 times larger.

"But for every foreign company calling for stronger IP protection, there are really more Chinese companies calling for the same. Stronger IPR enforcement is essential to protect the work of Chinese writers and musicians and to provide incentives to Chinese firms to invest in research and development," Locke said. "There's still much work to be done, but progress is occurring here in China. We applaud that progress."

China's Vice Minister of Commerce Chong Quan said that now that there are more than half a billion Chinese netizens, the platform for piracy is huge. Online shopping in China rose 66 percent in 2011, outstripping the 11.6 percent jump in retail sales. "Internet development has highlighted China's IPR problems, spurring a crackdown on faked goods sold online," Chong said. …