IPR needs a holistic approach
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IPR requires financial institutions to be innovative with their system, too, Llewelyn says. Traditional banking focuses on physical property, and it is usually difficult for intellectual property owners to obtain capital from the financial market. Ways should be found to channel capital to companies that have the innovative capacity but face fund shortage.
He says China should introduce a pilot project to allow companies to use their intellectual property as collateral to acquire bank loans. Similar projects have been implemented in other countries, including the US, and experience shows that bankers have to be educated about the concept of intellectual property.
Employment plays a big role in the IPR issue. Sometimes local governments are reluctant to curb the production of pirated and fake products because they are afraid that if the factories making them are shut down many workers could be laid off. But contrary to popular belief, investment in innovative industries could create more jobs.
Llewelyn says IPR with its many aspects is more like a complete economic system, formed by authorities enacting and enforcing IPR laws, companies keen to make innovative products, consumers aware of trademarks and copyrights, and financial institutions ready to channel funds to intellectual property owners.
Shanzhai (or imitation) products violate IPR, he says. Using a product that looks like an established brand may confuse consumers and make them accept the counterfeits as the real thing.
Hence, such products should be declared illegal. Shanzhai products prevent the companies making them from winning over the market in the long run. If a company builds its product line by copying some other companies' products, it can never be innovative or creative. Hence, Llewelyn suggests that companies start creating their own brands. "If a company can develop its market position independent of another brand, it can have a long, sustainable life".
Singapore is a good example of an economic system that favors intellectual property, Llewelyn says. Its government focuses on industries that make high value-added products, for which it has invested heavily in R&D.
But the conditions of Singapore, a city state with only about 5 million people, are very different from those of China. Unlike Singapore, it is a lot more difficult for China, with its different regions at different stages of development, to enforce a nationwide IPR strategy, he says. Nevertheless, protection of IPR will benefit all parts of China.
The problem is that some Chinese companies see intellectual property as a liability, though many have learnt to treat them as assets by creating their own trademarks, designs and patterns. In fact, many Chinese companies - a few in even less developed regions - have begun to capitalize on intellectual property.
As early as 2004, Shenzhen-based Netac Technology Co that invented USB flash drive took Beijing-based Huaqi company to court for IPR violation.
Contrary to popular belief that only Chinese companies violate IPR, some foreign companies have also been caught in the act.
In recent years, Chinese companies such as Wahaha and Huawei have fought against foreign companies to protect their IPR. If this practice becomes the trend in China, the country will achieve its goal of changing the "Made in China" tag to "Created in China'.
