Changing Attitudes to IP and Product Quality Issues in China – Part 1
By Ross Parsonage
It is no secret that protecting intellectual property rights (‘IPR’) and maintaining good product quality in China is a challenge. Recent media coverage of controversies like tainted cough syrup, toxic pet food and lead poisoned toys has raised general concern about the Chinese legal system and its apparent inability to reduce problems with piracy and the maintenance of product quality.
These recent controversies and the ever-present problem of counterfeiting have damaged the ‘Made in China’ label. Public perception about Chinese-made products is not particularly favourable and it will take some time to repair the damage. This is at least in the short term bad news for Chinese firms and foreign ventures manufacturing in China. It is no wonder then that companies that have yet to make the move into the Chinese market are currently hesitating; unsure of the impact that a move into the Chinese market will have on their business.
The fact is many IPR and product quality problems (or at least those widely reported) are, in part, self inflicted and arise from a poor understanding of China’s legal and regulatory system, an inadequate supply chain management, poorly drafted contracts and a failure to register key Intellectual Property (‘IP’).
While the legal framework for protection and enforcement of IP in China is becoming increasingly sophisticated, it is important to remember that China is still a developing nation. Foreign manufacturers are able to protect their rights in China but must be proactive in preventing the manufacture of counterfeit, pirated and poor quality products.
By addressing a number of the most commonly held misconceptions about intellectual property management in China we provide some simple recommendations for maximising the commercial and investment opportunities presented by doing business in or with China, while minimising risks.
“There are no Intellectual Property laws in China”
Before China’s emergence back onto the world trading stage in the 1970’s the two main concepts underpinning average Chinese attitudes to personal intellectual property were Confucianism, which regarded copying as a hallowed act and the ultimate compliment to an innovator or creator, and Communist ideology, which contended that all creative and innovative works were owned by the people as a whole.
Thirty years on and China has adopted a responsible attitude and played an active role in promoting and advancing IPR protection, going to great lengths to introduce laws to protect the ‘western’ concept of intellectual property in an effort to encourage foreign investment and conform to existing international treaties and conventions.
In the lead up to WTO accession in 2001 China enacted its third set of revised laws to protect different types of intellectual property including trademark, patent and copyright. These laws are now widely acknowledged to be of “international standard” and comply with the WTO Agreement on Traded-Related Aspects of International Property Rights (TRIPs).
Further revisions to the IP laws, increased resources and training of enforcement officials, more public education and greater emphasis on creating an innovative economy are currently underway in China and will help further speed up and strengthen the enforcement process required to increase respect for IP and reduce the scale of the infringement problem.
The Rule of Law is still a long way from reality but with a real commitment from the Government (which is taking constructive steps to promote and reward innovation) and foreign and Chinese rights owners (looking to commercialise higher value-added goods) positive change to the IP system is slowly being brought about.
Ross Parsonage, Rouse & Co. Ross joined Rouse China in 2004 and has worked in a range of IP areas; he currently manages the IP portfolio and enforcement strategies for one of the largest multi-national FMCG companies in China.
This is the first part of “Changing Attitudes to IP and Product Quality Issues in China”, next week we will publish the second part.
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May 26th, 2009 at 8:52 pm
Dear Sir
Thank you for your time.
After reading your articles, I found that you totally misunderstanding the laws and law system of China, especilly the Intelletual Property law systems in China.
I don’t know why you will make such conclusion down in your articles, but from your articles I just found that you may conducting your business on these website,especially on http://www.chinasuccessstories.com.
Well, after China enters the WIPO, a lot of issues have change during the last ten years,especially in Patent, Trademarks,etc.
Let me have an example:
We all know that, trademark protection all over the world are mainly two rule, use first and filling first. There is hard to say who is much better than other. The U.S is mainly the first use, well, have you ever check it out all over the nations in our planet, there are more countries adope the first filling rule than the first useing rule. Probally it is now in the US.
So,how can you blindly blame one nation without given out you criticals.
Man,you have to understand, you are right now working as an ip worker, you have to be carefull.
May 28th, 2009 at 1:14 pm
Ross, Your well-grounded summary of IP and related questions is insightful and knowlegeable. The rampant theft of IP in China remains a huge problem.
While the steps the government has and continues to take to comply with World / International standards are admirable and well-received, you rightly point out they still have some way to go.
One of the traditional arguments put forth inside China is that “China is a developing country, so it’s okay for us to take whatever we need, especially from the rich countries’ people; we should not have to pay them anything. We can copy whatever we like.”
However, the combination of China joining the WTO and beginning to develop original IP, has caused much greater weight to be given to protecting right-holders.
Perhaps more significant than becomming a responsible member of the international community is that with the ongoing development in China, more and more IP rights-holders are Chinese.
Chinese businesses are no more interested in funding expensive research and product development only to have their work stolen, reproduced, and marketed as “genuine copies” than anyone else.
On a more local level, the question can be asked: “Is it okay for you to enter your neighbour’s home and steal their property because you believe they are richer than you and you want what they have?”
July 16th, 2009 at 7:39 am
Dear Ross,
your article is giving a good insight of the problems, foreign IP right-holders currently face and experience in China.
I find David’s comment quite irritating. It’s not ok to steal, because others steal, too. China might be on a good way, but there is still a lot to be done. Whereas, I agree with Terri. China will probably switch from “steal” to “protect”, as soon as their own IP right-holders’ lobby is strong enough to have the existing laws finally fully implemented and controlled in a proper way.
keep up the good working.