Intellectual Property Protection -- China is Getting Serious

Recent Reuters story reports on China Vice Premier Wu Yi's vow last week to intensify China's fight against illegally copied goods -- not to fend off complaints from the United States, but to spur China into becoming a technological power.  Wu told a meeting of Chinese business executives in Beijing that fighting piracy was crucial to China's own plans to become a technological powerhouse, fueled by its own inventions. 

"Without intellectual property rights protection, there cannot be homegrown innovation," she said.  "We must be crystal clear that our country still has far to go in protecting intellectual property rights."  She went on to say that China's IP problems constrain China's economic development and reduce China's attractiveness for foreign direct investment (FDI).  At the meeting, two of China's leading businesses associations vowed to reject pirated goods and to neither buy nor sell counterfeits. 

According to The China Daily, Vice Premier Wu also announced the Chinese government would be increasing its own enforcement of Intellectual Property rights (IPR).  "We'll leave violators nowhere to hide," she told the conference.  Wu noted that the Chinese government has been "sincere and serious in protecting IPRs," but admitted "China still has a long way to go in its efforts to eliminate IPR infringement." 

In a previous post, we opined that Chinese counterfeiting would decrease over time as China's wealth increased and as Chinese companies stepped up their calls for greater IP enforcement:

Like everywhere else, those in China who can afford the real thing, prefer to buy the real thing.  As Chinese wealth increases,  and as more and more Chinese companies seek to protect their own brands, counterfeiting will decrease.  This is what happened in both Japan and Korea, both of which were at one time, notorious for counterfeiting. 

Though we are mindful that Ms. Wu's speeches favoring strong IP protection is coming out of China only two weeks after the United States created the position of Chief Counsel for China Trade to monitor and report on exactly these sorts of things, we still believe the Chinese government is sincere about its intentions to toughen IP enforcement.  The Bottom Line: toughening IPR enforcement in China is increasingly in China's own interests and it will continue and its continuation will be good for foreign businesses in or involved with China.  Whether these changes in IPR enforcement are the result of the forces of which Vice Premier Wu speaks or as a result of U.S. political pressure is (for business purposes, anyway) irrelevant. 

Comments

[Micah]

Be careful not to fall into the view of a monolithic China. It is in the Chinese government's best interest (and therefore the Party's as well) to promote IPR protection as an economic driver, but there are still large segments of the population who will not benefit from IPR protection just yet.