Showing posts with label China. Show all posts
Showing posts with label China. Show all posts
Monday, May 07, 2012
Keeping an Eye on International IP Rights
More than ever before, protecting intellectual property is a global undertaking. So, how are other nations faring in this endeavor that is so critical to entrepreneurs, small business and their employees, and the U.S. economy in general?
On April 30, the Office of the United States Trade Representative (USTR) released its annual "Special 301" Report. That publication examines how effective our trading partners are in protecting and enforcing IP rights (IPR).
In a statement, U.S Trade Representative Ron Kirk noted, "This year's Special 301 Report is more significant than ever in light of recent U.S. government data showing that IP-intensive industries support as many as 40 million American jobs and up to 60 percent of U.S. exports. When trading partners don't protect IPR, they threaten those critical jobs and exports.
The report looked at 77 countries, and 13 are placed on the Priority Watch List. That list includes the nations that "present the most significant concerns regarding insufficient IPR protection or enforcement, or otherwise limited market access for persons relying on IPR protection."
The 13 Priority Watch List nations are: Algeria, Argentina, Canada, Chile, China, India, Indonesia, Israel, Pakistan, Russia, Thailand, Ukraine, and Venezuela.
The two names that particularly jump out are Canada and China, since they rank first and second in terms of U.S. trading partners. For example, in 2011, total goods trade (exports and imports) between the U.S. and Canada came in at $597 billion and between the U.S. and China, it registered $503 billion.
It's not a surprise, of course, that China is on the Priority Watch List, given their ongoing struggles with enforcing intellectual property rights. While noting some improvements by China, the Special 301 Report, in part, stated: "A wide spectrum of U.S. rights holders reports serious obstacles to effective protection and enforcement of all forms of IPR in China, including patents, trademarks, copyrights, trade secrets, and protection of pharmaceutical test data. Compounding these obstacles is the troubling direction that China s policies in the IPR area have taken recently. These policies include China s efforts to link eligibility for government preferences to the national origin of the IPR in products. In addition, many companies are concerned that Chinese government agencies are inappropriately using market access and investment approvals as a means to compel foreign firms to license or sell their IPR to domestic Chinese entities. Further, for many industries, sales of IP-intensive goods and services in China remain disproportionately low when compared to sales in similar markets that provide stronger environments for IPR protection and more open market access. These concerns, coupled with the size of China both as a consumer marketplace as well as a globally significant producer of a wide array of products, mean that China's protection and enforcement of IPR must remain key priorities for U.S. trade policy."
That's a daunting and troublesome list, to say the least. China remains a land laden with opportunity, along with tremendous IP risks.
But Canada? Why is our neighbor to the north on the list?
The issue largely is about copyright protections. As noted in the Special 301 Report: "Canada remains on the Priority Watch List in 2012, subject to review if Canada enacts long- awaited copyright legislation. The Government of Canada has given priority to that legislation. The United States welcomes that prioritization and looks forward to studying the legislation once it is finalized, and will consider, among other things, whether it fully implements the WIPO Internet Treaties, and whether it fully addresses the challenges of piracy over the Internet."
It's important to keep in mind, though, that while both are on the Priority Watch List, the difference between China and Canada on protecting intellectual property is like night and day. Consider, for example, that on the "2012 Index of Economic Freedom," published by the Heritage Foundation and The Wall Street Journal, Canada ranked second best on the globe in terms of protecting property (both real and intellectual) rights, while China came in 153rd.
Most nations, including the U.S., have gaps in protecting intellectual property, and therefore, need to make improvements that are important to innovation, investment and economic growth. It s just that some nations, like China, have a heck of a lot more to do when compared to other countries like, for example, Canada.
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Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council. His new book is "Chuck" vs. the Business World: Business Tips on TV.
Friday, March 23, 2012
China's IP Challenge for U.S. Small Business
The protection of intellectual property is important to all entrepreneurs, investors, innovators and businesses. And of course, the encouragement that such protection provides for these creators benefits consumers in terms of new and improved products and services.
It follows that if a government wants to maximize opportunity and economic development, then the protection of intellectual property is critical. And while IP protections have been important dating back to the dawn of the Industrial Revolution, it is more so now than ever before given the vast technological changes and opportunities in the twenty-first century.
For good measure, the role that government plays in terms of establishing the rule of law whereby contracts are enforced, and strong rights, protections and enforcement are established in terms of patents, copyrights and trademarks, is more important to small businesses, given the limited resources that smaller enterprises possess. And this goes for domestic and international protections of intellectual property.
That international aspect was highlighted in an interesting article about China in the March 19 USA Today. The piece, titled "Chinese copycats challenge U.S. small businesses," focuses on a U.S. firm, SylvanSport, that has a patent for a recreational camper trailer that "folds to a trailer that can be used to carry boats and bikes on top then converts to a camper with a self-inflating mattress and a tent that sets up in minutes."
A company in China copied the trailer, and now threatens the firm's growth and, ultimately, its survival. According to SylvanSport founder Thomas Dempsey, as noted in the article, "‘Our politicians, when they describe the companies that are necessary for the economic recovery, (they are talking about) companies like ours' ... But because of SylvanSport's lost sales, ‘There's a very real chance that the Chinese company could be the survivor here and we could go out of business.'"
A few important takeaways can be found the piece:
• "Yet in Asia, ‘The Western idea of intellectual property seems not yet fully established,' says Peter Zec, the founder of the Red Dot Institute for Advanced Design Studies in Essen, Germany, and a former president of the International Council of Societies of Industrial Design. The severe copycat problem in China and other Asian nations exposes foreign companies, big and small, to copyright, patent and trademark infringement issues, legal experts say."
• "In the past, it was ‘fairly common' for Chinese factories that produced legitimate products to be used at night to make counterfeit goods using the same raw materials, says Leon Perera, chief executive of Spire Research and Consulting, a Singapore firm that specializes in emerging markets. Today, what's more common is for Chinese companies to reverse engineer a product, or take it apart to figure out how it's made, then order parts to produce a similar product, according to Perera."
• "Only 15% of small companies that do business overseas realize that U.S. patents and trademarks protect them only within the U.S., according to the U.S. Patent and Trademark Office. Companies should file patents and trademarks in countries where their products will be made and sold, as well as where they're based..."
The story and points raised in this article point to the responsibility that the U.S. government has in terms of pushing for strong IP protections in the global marketplace, as well as the potential pitfalls and opportunities that entrepreneurs have to be aware of in that same international market.
_______________
Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council. His new book is "Chuck" vs. the Business World: Business Tips on TV.
It follows that if a government wants to maximize opportunity and economic development, then the protection of intellectual property is critical. And while IP protections have been important dating back to the dawn of the Industrial Revolution, it is more so now than ever before given the vast technological changes and opportunities in the twenty-first century.
For good measure, the role that government plays in terms of establishing the rule of law whereby contracts are enforced, and strong rights, protections and enforcement are established in terms of patents, copyrights and trademarks, is more important to small businesses, given the limited resources that smaller enterprises possess. And this goes for domestic and international protections of intellectual property.
That international aspect was highlighted in an interesting article about China in the March 19 USA Today. The piece, titled "Chinese copycats challenge U.S. small businesses," focuses on a U.S. firm, SylvanSport, that has a patent for a recreational camper trailer that "folds to a trailer that can be used to carry boats and bikes on top then converts to a camper with a self-inflating mattress and a tent that sets up in minutes."
A company in China copied the trailer, and now threatens the firm's growth and, ultimately, its survival. According to SylvanSport founder Thomas Dempsey, as noted in the article, "‘Our politicians, when they describe the companies that are necessary for the economic recovery, (they are talking about) companies like ours' ... But because of SylvanSport's lost sales, ‘There's a very real chance that the Chinese company could be the survivor here and we could go out of business.'"
A few important takeaways can be found the piece:
• "Yet in Asia, ‘The Western idea of intellectual property seems not yet fully established,' says Peter Zec, the founder of the Red Dot Institute for Advanced Design Studies in Essen, Germany, and a former president of the International Council of Societies of Industrial Design. The severe copycat problem in China and other Asian nations exposes foreign companies, big and small, to copyright, patent and trademark infringement issues, legal experts say."
• "In the past, it was ‘fairly common' for Chinese factories that produced legitimate products to be used at night to make counterfeit goods using the same raw materials, says Leon Perera, chief executive of Spire Research and Consulting, a Singapore firm that specializes in emerging markets. Today, what's more common is for Chinese companies to reverse engineer a product, or take it apart to figure out how it's made, then order parts to produce a similar product, according to Perera."
• "Only 15% of small companies that do business overseas realize that U.S. patents and trademarks protect them only within the U.S., according to the U.S. Patent and Trademark Office. Companies should file patents and trademarks in countries where their products will be made and sold, as well as where they're based..."
The story and points raised in this article point to the responsibility that the U.S. government has in terms of pushing for strong IP protections in the global marketplace, as well as the potential pitfalls and opportunities that entrepreneurs have to be aware of in that same international market.
_______________
Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council. His new book is "Chuck" vs. the Business World: Business Tips on TV.
Friday, June 17, 2011
Piracy in China and U.S. Businesses
If a huge firm like Microsoft cannot stop piracy - that is, theft of its intellectual property - in China, then what chances do small businesses have?
As noted in several media reports, Microsoft CEO Steve Ballmer addressed the firm's employees in its Beijing offices late last month.
As reported by the San Francisco Chronicle: "In a speech to employees in China today, Steve Ballmer said that the number of PCs sold in China is about equal to the number in the U.S., but ‘our revenue in China will be about a twentieth of our revenue in the United States.'" It's worth noting that "Ballmer also said that the company earns six times as much per PC sold in India as it does in China, thanks to India's stricter piracy controls."
The Wall Street Journal noted: "In China, copies of Microsoft's core Office and Windows programs are still available on street corners for $2 or $3 each, a fraction of their retail price, despite efforts by the company to curb theft."
And what about the price argument often brought up, i.e., that the price of software generates piracy? Microsoft's Ballmer isn't buying it. The Journal quoted the Microsoft CEO saying, "I'm not saying everybody in China could afford to buy a PC... but if you can, you could afford the software."
Microsoft's strategy to get the government engaged also involves investment in the country. As noted in the Chronicle, Microsoft has invested in joint ventures and local R&D under the strategy "that China will be more likely to enforce piracy laws if it has a domestic software industry to protect."
China, of course, has been promising U.S. officials and companies like Microsoft that it is serious about fighting piracy and making strides in such efforts. But enforcing and protecting property rights - especially intellectual property rights - is a challenge, to say the least, with a communist government and in a nation that has been communist for over six decades - even with the considerable market reforms in recent decades.
The U.S. government has pressured, and needs to continue to do so, the government of China to make real changes on the property rights front. For U.S. businesses, the massive potential of the Chinese market - for example, China's PC market is expected to surpass the U.S. market next year to become the world's largest - must be weighed against the ability and costs of protecting one's intellectual property.
Looking ahead, this is not just a critical issue for U.S. firms - very much including small entrepreneurial businesses - but for Chinese enterprises and for the Chinese economy. Despite its considerable achievements in recent times, without the establishment and full protection of private property, the Chinese economy will never reach its full potential.
_______________
Raymond J. Keating serves as chief economist for the Small Business & Entrepreneurship Council.
As noted in several media reports, Microsoft CEO Steve Ballmer addressed the firm's employees in its Beijing offices late last month.
As reported by the San Francisco Chronicle: "In a speech to employees in China today, Steve Ballmer said that the number of PCs sold in China is about equal to the number in the U.S., but ‘our revenue in China will be about a twentieth of our revenue in the United States.'" It's worth noting that "Ballmer also said that the company earns six times as much per PC sold in India as it does in China, thanks to India's stricter piracy controls."
The Wall Street Journal noted: "In China, copies of Microsoft's core Office and Windows programs are still available on street corners for $2 or $3 each, a fraction of their retail price, despite efforts by the company to curb theft."
And what about the price argument often brought up, i.e., that the price of software generates piracy? Microsoft's Ballmer isn't buying it. The Journal quoted the Microsoft CEO saying, "I'm not saying everybody in China could afford to buy a PC... but if you can, you could afford the software."
Microsoft's strategy to get the government engaged also involves investment in the country. As noted in the Chronicle, Microsoft has invested in joint ventures and local R&D under the strategy "that China will be more likely to enforce piracy laws if it has a domestic software industry to protect."
China, of course, has been promising U.S. officials and companies like Microsoft that it is serious about fighting piracy and making strides in such efforts. But enforcing and protecting property rights - especially intellectual property rights - is a challenge, to say the least, with a communist government and in a nation that has been communist for over six decades - even with the considerable market reforms in recent decades.
The U.S. government has pressured, and needs to continue to do so, the government of China to make real changes on the property rights front. For U.S. businesses, the massive potential of the Chinese market - for example, China's PC market is expected to surpass the U.S. market next year to become the world's largest - must be weighed against the ability and costs of protecting one's intellectual property.
Looking ahead, this is not just a critical issue for U.S. firms - very much including small entrepreneurial businesses - but for Chinese enterprises and for the Chinese economy. Despite its considerable achievements in recent times, without the establishment and full protection of private property, the Chinese economy will never reach its full potential.
_______________
Raymond J. Keating serves as chief economist for the Small Business & Entrepreneurship Council.
Monday, August 09, 2010
Chinese Policies and IP Theft
China is an economic enigma.
On the one hand, the sheer size of the Chinese market would seem to present tremendous opportunities for American entrepreneurs and businesses. In addition, China’s lower cost of production in certain markets presents tremendous savings for U.S. consumers and for American businesses in terms of various inputs.
Unfortunately, though, China also presents many questions. For example, human rights abuses and issues persist. The Communist Party’s continuing control over the political system, and its extensive government management of the economy limit incentives for investing in China. Along these same economic lines, the Chinese government restricts current and future innovation and growth due to a failure to protect intellectual property.
And the Chinese government’s plan to advance “Indigenous Innovation” seems to threaten to make matters even worse...
On the one hand, the sheer size of the Chinese market would seem to present tremendous opportunities for American entrepreneurs and businesses. In addition, China’s lower cost of production in certain markets presents tremendous savings for U.S. consumers and for American businesses in terms of various inputs.
Unfortunately, though, China also presents many questions. For example, human rights abuses and issues persist. The Communist Party’s continuing control over the political system, and its extensive government management of the economy limit incentives for investing in China. Along these same economic lines, the Chinese government restricts current and future innovation and growth due to a failure to protect intellectual property.
And the Chinese government’s plan to advance “Indigenous Innovation” seems to threaten to make matters even worse...
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