The Importance Of IP-Protection In China

Joint ventures (JV) are a popular method of foreign market entry because they theoretically provide a way to join complementary skills and know-how, as well as a way for the foreign firm to gain an insider’s perspective on the foreign market. Since China began its market opening in 1978, joint ventures have been the most commonly used form of foreign direct investment (FDI), with about 70% of FDI in China in the 1980s and 1990s taking the form of joint ventures (Qui, 2005, p. 47). The Chinese company, as well as the foreign investor, has since 1978 been drawn to the joint venture form. Walsh, Wang & Xin (1999) note that from the Chinese

Summary: Part of the problem with intellectual property is clearly defining its value. In fact, many countries to this day bicker when defining their intellectual property laws and the extent to which any type of intellectual property should be protected. There have not been any studies conducted in the last 20 years on the actual value of intellectual property, which makes it even more difficult for countries to define. After sampling United States and Foreign companies, it can be concluded that the greatest measure of intellectual property value is the overall investment that has been placed within the company since the invention of that information. Additionally, the greater protection a country offers for intellectual property, the more foreign businesses will enter the country.

What is intellectual property? Intellectual property or IP for short is creations of the mind, such as; inventions, literary and artistic works, designs and symbols, names and images used in commerce. Among these IP also includes trade secrets, patents, copyrights, and trademarks. IP and its protection are detrimental to the success of the economy. IPs are the innovations that drive the market forward and they are what created eras like the renaissance and the industrial revolutions. But nowadays it is a lot easier to steal one 's idea and pass it on as your own. There lays a major problem that the United State and many countries around the world face. Over $300 billion have been lost due to the theft of IPs from the U.S. per year.

If the United States is going to stand by and let China break the agreement that we have set then what is the point of having rules or laws in the first place? If we can accept the fact that China is breaking our laws then we can also understand that this behavior can very well lead to a state of anarchy and lawlessness. These are all things that are breed by a lack of law, and also facilitated by a lack of proper enforcement of our current laws. This is a warning also for the future as we show China that the United States will not stand for the flagrant breaking of its laws.

In recent years, Chinese government has also made great effort in executing these laws[1, 12]. Chinese government launched different anti-piracy campaigns almost every year. During these campaigns, Chinese government raided underground markets, confiscated million copies of pirate software, closed factories of manufacturing counterfeit intellectual products and destroyed hundred product lines. In order to fight against piracy more effectively, China established her first national anti-piracy organization, Anti-Piracy Committee, in October 2002[5]. Besides, Chinese Courts granted favor to many international companies in their case to sue Chinese companies for illegally using their patents, copyrights and other intellectual properties[1, 4, 10]. For example, Microsoft sued two Chinese companies for such abuse and won its case in a Beijing court in February 1999[10].

American businesses are losing up to an estimated $60 billion each year in the global market from intellectual property violations. The problem continues to grow as more American companies invest overseas, and more products consist of intangible or intellectual property. American companies face more than just economic challenges: if losses of intellectual property rights continue to go unchecked, businesses may choose not to make foreign investments, customers may be injured, and innovation discouraged.

Let me make it clear, there is no doubt that property rights are a necessary feature of a successful economy. This certainly includes intellectual property rights, which ensure quality and consistency for buyers, and secure incentives for continued production by the sellers. However, intellectual property rights are inherently more abstract than rights concerning physical property, and there has always been a legally interpreted grey area concerning intellectual property.

China is on its way to attaining mega market status as a consumer of technological goods and services. Countries unwilling or unable to compete for a share of this market place put themselves at a substantial competitive and economic disadvantage. The admission of China into the WTO will greatly benefit many companies across the board in the United States. The potential for computer makers, software makers, internet providers and internet service providers are immense and American companies could gain tremendously from their potential. These benefits will not be limited to the big name companies of the United States either. Smaller start-up companies will be on the same grounds now and receive the same benefits as larger firms. The small companies will now be able to sell their products in China where as they could not do so before because of the numerous obstacles that only the larger firms were equipped to maneuver around in China. Thus all businesses working from within the United States will have the fair opportunity to extend their reach into China.

In China "intellectual property" is quite a distant and foreign idea in respect with the treatment it

Not only economically but socially, influences of China has been substantial. Economic and social status of China are firm that it can not be oversighted. However, law related intellectual property rights has been rising issues in China. First step to solve the problem is realize there is one. It is critical to recognize which elements are violating IPR. Basic systematic error of IPR and counterfeit culture in China are main factors for the obstacles.

Copyright, patents, and intellectual property laws are strong in the United States. However, different countries abroad may have lesser laws (or completely ignore) the proprietary usage of these intellectual properties.

Not only do Chinese companies and state-actors steal American intellectual property, they also use this stolen IP to unfairly compete with American companies in the Chinese market. This is done through the China Compulsory Certificate (CCC). All foreign companies must obtain this safety certificate before participating in Chinese markets (Blair). However, when the certification is obtained China demands that companies provide detailed schematics of their products which the Chinese government then provides to Chinese companies, enabling IP theft and counterfeiting (Blair). To solve this problem the DHS proposes that the CCC commision submit itself to a non-partisan international oversight body which will protect the safety of Chinese consumers, the stated purpose of the CCC. Moreover, the oversight body will ensure the CCC is not abused to disadvantage foreign companies. Understandably, political pressure will be needed to ensure that China allows this policy.

China might object to a bilateral agreement encouraging joint ventures because it would place purely domestic Chinese firms at a relative economic disadvantage. However, to persuade China to adopt an agreement, the U.S. could point out that China cannot continue to depend on selling low-value-added goods to Western consumers for economic growth. As PRC officials have stated, China must shift from an export-led to a consumption-based economy by harvesting domestic demand from its growing middle class. Joint ventures would allow China to produce goods domestically for consumption rather than export.

The depth of China’s involvement in intellectual property theft is far greater than I would have ever expected. Prior to taking the business law course, I never thought about what intellectual property theft was or the impacts that it has. The report of the Commission on the Theft of American Intellectual Property, states that “China is the world’s largest source of Intellectual Property theft” (pg 10 & 11) costing the American economy hundreds of billions of dollars per year, along with millions of jobs.

This site contains information on China's patent and copyright law. It goes on to discuss some ethical issues about China's lack of law enforcement on intellectual property protection.