China loses billion through poor IP protection

China claimed that it has lost US$1 billion in disputes overintellectual property (IP) rights since it joined the World TradeOrganization (WTO) in 2001.

Science and Technology Minister Xu Guanhua told the state-runXinhua News Agency Thursday that IP disputes have been a”devastating blow” to parts of the Chinese economy. Disputes haveinvolved products including televisions, MP3 players and digitalcameras, he said.

Xu claimed that 99 percent of Chinese companies don’t apply forpatents for their inventions, according to the report. As a result,”Chinese firms have to pay 20 to 40 percent of the price of everymobile phone or computer to an overseas patent holder,” hesaid.

The statement may be an exaggeration. Mobile phone manufacturingroyalties typically run 5 percent to 7 percent of the wholesaleprice.

Xu’s remarks represent the Chinese government’s first attempt tomake a public case for encouraging “independent innovation,” or thedevelopment of products that do not depend on technologies fromforeign companies, said David Wolf, chief executive officer of WolfGroup Asia Ltd., a Beijing-based technology consulting firm.

The call for independent innovation is included in the latestFive-Year Plan, in which China’s government outlines its goals forthe coming years.

“Minister Xu is outlining China’s IPR strategy in the comingfive years: research heavily, patent aggressively, use localinnovations when you can, and foreign innovation only when there isno other choice,” Wolf said.

The new strategy has implications for foreign businesses. Chinahas attempted to introduce its own technology standards in order toavoid paying royalties for foreign patent holders, including WLAN(wireless LAN), optical disc formats, and mobile phone systems.

So far these efforts have been largely unsuccessful, althoughthe TD-SCDMA (Time Division Synchronous Code Division MultipleAccess) mobile system is still under consideration for adoption asa 3G (third generation) technology in some markets.

“Foreign IPR holders are facing a new battle, one where theywill be forced to fight harder for mere adoption of theirtechnology,” Wolf said.

Would you recommend this article?


Thanks for taking the time to let us know what you think of this article!
We'd love to hear your opinion about this or any other story you read in our publication.

Jim Love, Chief Content Officer, IT World Canada

Featured Download

Featured Articles

Empowering the hybrid workforce: how technology can build a better employee experience

Across the country, employees from organizations of all sizes expect flexibility...

What’s behind the best customer experience: How to make it real for your business

The best customer experience – the kind that builds businesses and...

Overcoming the obstacles to optimized operations

Network-driven optimization is a top priority for many Canadian business leaders...

Thriving amid Canada’s tech talent shortage

With today’s tight labour market, rising customer demands, fast-evolving cyber threats...

Staying protected and compliant in an evolving IT landscape

Canadian businesses have changed remarkably and quickly over the last few...

Related Tech News

Tech Jobs

Our experienced team of journalists and bloggers bring you engaging in-depth interviews, videos and content targeted to IT professionals and line-of-business executives.

Tech Companies Hiring Right Now