The root source of the rising conflict between the United States and China is over the protection of intellectual property. More than the volume of trade itself, which is heavily in China’s favor, protection for patents, trademarks, and copyrights has long been considered inadequate in China by the US.
That is changing, however. China has been committed to improving not just its intellectual property law, but the enforcement of it. Like many things in China, it’s not a spontaneous reaction but part of a long-term plan being carefully implemented.
The long-standing dispute
There is nothing new about US complaints that Chinese intellectual property protection is inadequate. What is changing is the level of investment and trade between our nations, making the net value of the material in question rise constantly.
In 2017, the US Trade Representative investigated the value of all the patents, copyrights, and trademarks that it said were not being properly protected by China. The net loss in sales was estimated between $225 and $600 billion annually. That is a tremendous amount of money, and in the middle of the range would equal our trade deficit.
That is why this is no small matter, both for US policy and for companies that are doing business in China. It is important that intellectual property be protected.
Is China stealing?
An understanding of intellectual property is important as it dominates the business relationship between our nations. Is China, the nation, stealing from us?
None of this is a matter of actual policy by the Chinese government, but a reflection of the difficulty it has policing intellectual property. While trademarks are the most common form of intellectual property theft, copyrights cost far more money. This includes pirated movies, software, and games.
It’s not a matter of the nation stealing from us, but a very large and open market freely trading items that can be shared easily. It’s not easy to enforce anywhere in the world, but particularly in China.
What are they doing about it?
China has pledged to step up enforcement, and has made great strides in doing so. The government is increasing the number of officials dedicated to intellectual property protection, for example, and making a big show of it for otherwise wary foreign investors.
In addition, civil cases where one party was sued for intellectual property violations have increased by 47%, a sign that Chinese courts are going to be part of the solution. In the past, the judicial system has been accused of refusing to hear cases like this. So it is a big improvement.
As long as China continues to make a commitment to intellectual property protection, the opportunities for American business will increase. Like China itself, it’s important to work from a long-term plan and gradually realize your goals.
It’s taken quite a while for China to step up its enforcement and protection. If your business has concerns about intellectual property protect, a move into China may now be a much safer bet than it was even a short time ago, and the future looks even better yet.