How IP is changing in China

The issue of IP came up with one of my customers lately. But this was not what you would expect, a situation where a US Company is complaining about a Chinese company taking their design or product. In this case, it was the other way around; I was asking a customer of mine not to copy the designs of a factory I had met and introduced him to. The FTY could not meet my customer’s requirements so my customer, without my knowledge, simply gave the factory’s designs to another China vendor. When I found out about this and approached my customer telling him that I did not think this was the right thing to do, my customer justified his actions as follows: 

“IP is not a one-way street, especially in China, which has a history of such violations…if fact they based 25 years of growth on a copying everything in sight…and still do so.” 

The fact,  however, is that China is changing very fast and IP in China  means a lot more now than it used to.  IP  infringement claims rose 100% from 2010 to 2011 and most of these were domestic on domestic claims. Overseas companies accounted for just under 0.02% of claims filed in 2011.  This tells you that more and more China vendors are taking IP seriously.

A project  last year gave me some first-hand experience on how IP is changing in China. I had been asked by a US company to source a standard office product. It was a non design-driven product that was already being made in China but my customer wanted to find it for a lower cost. A couple of vendors I asked said that the product was very simple but they could not do make it without providing a reason.  Another vendor I asked told me that the product used a patented design of another Chinese company (something unbeknownst to me at the time) and this was the reason why he and the vendors I had approached were unwilling to accept an order.  I was very impressed by this and in fact applauded the response from the China vendors – even though I had to tell my customer they would have to order direct from the manufacturer at a cost they probably did not want to pay. As someone who has been doing business in China for years and has had to listen to countless stories about IP violations,  it was nice to see that China was catching up to the rest of the world in terms of IP protection. IP DOES matter now in China. 

In this climate product development by US companies in China should be pursued with all the respect and legality that it is in the US. As I said to my customer: if you want to do business in China you have to play by China rules.  Those rules now include IP.


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