IP Protection in China - How Does the Chinese Really View IP and Why?

Author: Joy Huang

According to the 2011 China Business Environment Surveyconducted by U.S.China Business Council, Intellectual property rights enforcement is one of the biggest issues for U.S. businesses in China. Despite the recognition that big improvements have been made in the last year, 93% said that they were either somewhat or very concerned about it.

The IP rights issue frequently put China in the spot light in the U.S. news. The common perception is that China blatantly violates IP rights. But why does a nation that is so concerned about "saving face" want to "lose face" so publicly in front of the rest of the world? What have shaped the Chinese's view on IP rights, and why is it so different from the west?

A Story About Singapore

A professor at a top business school once told a story about his experience teaching the same class in the U.S. and in Singapore. He asked the students, "What would you do immediately after you've found the cure for cancer?" The U.S. students answered that they would "file for patent and protect their IP". The Singapore students, on the other hand, did not find the IP a top concern. They wanted to "share the cure with many people". Singapore is one of the most westernized Asian countries where IP protection enforcement is touted as one of its competitive advantages against China. At the same time, Singapore has a predominantly Chinese population, and the students' answer reflected the deep-rooted cultural perception of what IP means from the Chinese view point.

Chinese Views on IP

Three things have helped shaped the Chinese view and practice on IP protection today in China. 

1. Group - oriented risk averse culture

The traditional Chinese value places the needs of the group above the needs of the individual. The Chinese have always generally taken it for granted that inventions and ideas are to be shared. And plagiarizing other people's good ideas tend not to bring as much social stigma as in the U.S. 

Another cultural influence stems from the Chinese's tendency to be more risk-averse.  They prefer using an idea that has already been tested and proven successful to experimenting with a brand new one.  They view it as a safer and smarter way to deal with uncertainties.

2. Low - Key is Key

There is a Chinese saying "The bird that sticks its head out gets shot first".   This is in sharp contrast to a saying in the U.S. "Squeaky wheels get the oil". The Chinese prefers a low-key approach where blending in is the key to survival. If someone makes a marvelous invention, it is the pride and joy for the person himself and for his family. But to stick it out so much that he also seeks fame and fortune from such invention is drawing unnecessary attention. This thinking extends to the attitude towards patents and trademarks and such.

3. A Relatively New Modern Economy

It was not until only 30 years ago, in the mid 1980's, that China started the economic reform with free-market economy. The speed with which China is changing is truly phenomenal considering all that it has had to learn and adapt to international business. Until today, China is a highly under-legalized society compared to the U.S. To change the mindset and practice from the rule of men to the rule of law is a transformative process that will surely test the patience of foreign investors. 

The good news is, few argue that China has made significant improvement in IP protection in a relatively short period of time. New laws are being put in place constantly. Today there is a new appreciation of IP rights from the Chinese government. It has realized how IP issue is also reversely affecting Chinese global companies' competitiveness around the world. This is perhaps the single most important incentive for the government to more strictly enforce IP violations. And for the average Chinese business and population, the traditional values take time to change, so it is only wise that you have a proactive plan in place to protect your IP. 

 

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