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Are China’s IP protections stronger than business owners believe?

When U.S. business owners want to enter the Chinese market, many of them worry about the safety of their intellectual property. China’s IP laws meet the World Trade Organization’s standards, but many people still worry about IP theft, since these laws are not often strictly enforced.

Chinese lawmakers have improved these laws in recent years, but many business owners are still wary.

A prominent business professor claims concerns are unwarranted

Professor Dan Prud’homme, a business professor who focuses on IP law, published a recent article in the Harvard Business Review that attempts to dispel three common myths that business owners believe about China’s IP laws. These myths include:

  1. Forced technology transfer (FTT) leads to IP theft: The Chinese government requires foreign businesses to give them access to their technology. Many businesses worry that this increases the chances of IP theft, but the article claims that foreign firms do not often experience significant losses when they share their technology. After all, FTT is completely different from hacking into a business’ system to steal IP.
  2. The enforcement of IP laws is weaker than in other countries: There is no doubt that this was a significant – and valid – concern in the past. However, as we previously mentioned, China has significantly improved its IP protection over the years. And it only seems to be getting better.
  3. The Chinese government lacks IP protection: Many business owners largely believe this because they are used to U.S. IP laws and protections. However, Prud'homme states that the form of government a country has does not directly correlate with how well IP is protected.

The article essentially claims that the issues regarding China’s IP protections are often exaggerated and that business owners do not have to worry as much as they do.

However, caution is still necessary

Regardless of whether or not these claims are true, that does not mean that business owners do not have to take steps to protect their intellectual property. Business owners must always ensure they:

It is often beneficial for business owners to consult an experienced business attorney to determine the best ways they can protect their intellectual property and their business’ future when considering a foreign investment.

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