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Chinese Pirates Like Chinese Brands Too

A great deal of time is given over to discussion of the hurt felt by foreign companies whose products are pirated in China (e.g. Pfizer [1], NEC [2] , and Starbucks [3]). Less time is given to consideration of local companies. But all that is starting to change, not least due to the emergence of Chinese brands that offer the opportunity for what we might call a “pirate premium”. One such example is highlighted in an article by Mercury News. The paper reports on Foshan Rifeng Enterprise Co., which is a manufacturer of flexible tubing systems in Guangdong:

More and more Chinese companies, like Foshan Rifeng, are following the lead of the foreign brands, hiring lawyers, and taking the pirates to court:

Mercury notes that civil lawsuits involving intellectual property in China rose 32 percent in 2004 and by 20.6 percent in 2005, bringing the total for that year to 16,583 cases – of which only about 5 percent involved foreign companies (though the figure may not reflect the value of those cases).

As I have reported before, one of the reasons for this is the growth in Chinese patent applications [4](up 44 percent in 2005 to an estimated 2,452 – against international growth of 10 percent to 134,000. Another, related reason, is that the Chinese government has value-creation high on its agenda, and is keen to promote innovation and R&D. They are well aware that the investment will not come unless protection is also offered.

Of course, no article on this issue would be complete without a quote from the guys at China Law Blog [5]/ Harris & Moure…and Mercury was able to provide one:

While intellectual property rights (IPR) abuses remain a real risk when doing business in China, it is clear that the legal environment is improving, and that the courts are increasingly willing to enforce judgments against infringers. Although the size of the fines imposed may not yet be commercially significant, the trend certainly is.

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