August, 2018

Chinese scholar: Enhanced IPR protection would be good for tech business

Original article: The Straits Times

Xiong Yu, a professor at Northumbria University's business school, has called on China to foster a better IPR protection environment to boost the country's tech sector. Speaking at a forum in Chongqing, Xiong said that the U.S.'s pushback against Chinese tech initiatives necessitated Beijing cooperating more with other countries to offset missed opportunities.


In recent weeks, Beijing has ordered state media to downplay the controversial Made in China 2025 policy that telegraphed China's techno-nationalist ambitions. Thus far, the move looks more like hasty damage control than a change in policy direction. 

Still, some Chinese scholars are suggesting modest changes in industrial policy. "We have to respect others. We don't have to only stress indigenous innovation, actually a lot of technology can be jointly innovated; only this way will we be able to bring the newest technology from others to our market," Professor Xiong said at the forum. 

Professor Xiong pointed out that Google beat out two Chinese firms to acquire UK AI startup DeepMind in 2014. DeepMind developed the technology that beat the world's top Go player. Go is an abstract strategy board game that originated in China and is popular throughout East Asia. 

One of the reasons Google prevailed is that DeepMind thought its intellectual property rights would be better protected in the US, Xiong said. 

Xiong suggested that if China could foster a better IPR environment, it could establish technology cooperation with other advanced countries such as the UK. That would put pressure on the US, he said. 

We laud Xiong for advocating more robust IPR protection in China. We have long maintained that Chinese firms will be the greatest beneficiaries of a strong IPR protection regime. Meanwhile, if foreign companies feel that their trade secrets are not at high risk of being compromised - such as not being forced to share proprietary technology with local partners - they will be more willing to engage in advanced R&D work in China. 

Thus far, Beijing has not signaled willingness to alter its techno-nationalist industrial policies. A prevailing viewpoint - sometimes parroted by foreign analysts - is that China can simply double down on indigenous innovation, that it needn't try to accommodate the interests of foreign companies; rather that those companies will compromise to ensure access to the huge Chinese market. 

In a July report, Fitch Solutions predicts that Beijing "will continue to pursue unilateral acquisitions or partnerships," citing the April takeover of chipmaker ARM's China operations and patents as an example. Further, "China's research efforts, which are largely centrally organized and financed, remain a key advantage compared to the more fragmented and competitive approach used by Western counterparts," Fitch said. 

In an August 22 Washington Post commentary, Fred Hu, a leading Chinese banker, suggests that China's bid to move up the global value chain will succeed only if Beijing implements far-reaching economic reforms. "Unless Beijing amends its heavy-handed statist approach to economic development, China’s potential as a leading nation in science and technology could be seriously curtailed," Hu wrote.