China
Intellectual Property Protection
IP theft in China is
a serious issue.
Are American
companies turning
a blind eye to the IP
theft issue due to
the fact that they
are making huge
profits in China?
by Dan Watson
China Correspondent
watsoncw@rodpub.com
When you talk with the executives of most U.S. companies the subject often turns to the global market and the
opportunities for growth that countries like
China offer. However, as that conversation continues the next thing you often hear is a deep
and abiding concern over the theft of Intellectual Property (IP) that occurs in China.
The ability for most American industries to
satisfactorily compete in the global market is
mostly based on the strength of their IP. There
are two distinct forms of IP—explicit (patent,
trademark, copyright, etc.) and tacit (critical information that is not divulged in patents and
usually is retained in files or by a few key company employees).
The potential theft of IP presents a serious concern for any company wishing to do business in
countries such as China. A recent report by PwC
said “the urgent need to protect intellectual property has forced 92 percent of surveyed companies
operating in China to plan budget increases on information security in the next 12 months.”
Chinese firms and the government have been
under fire for either forcing companies to hand
over patents and designs, or acquiring them
through other methods, when it comes to products such as high-speed trains, auto designs, mobile phones and wind turbines. The
International Intellectual Property Alliance estimates U.S. trade losses due to piracy in China
of at least $3.5 billion in 2009.
China presents the fastest growing market in
the world. For the coatings industry it is the
fastest growing and is the world’s second largest
producer and consumer of coatings, and the
fourth for ink production. China is the largest
coatings market outside of the U.S. Unfortunately it also presents a serious problem that any
company attempting to enter into the Chinese
market must resolve—protection of technology
from theft.
Almost on a daily basis the U.S. news media
reports on some nefarious China IP related issue
ranging from copyright, trademark or patent infringement. Most of us are aware of the “knock
offs” that flood the U.S. market that come from
China, including fake designer handbags,
watches, apparel and designer sunglasses among
others. What we may be less aware of are the
counterfeit auto and industrial parts that are
now flooding the U.S. market. Although fake
