While the recent Alifest, an annual e-commerce summit hosted by my employer, Alibaba Group, in Hangzhou, may have lacked some of the star power of years past (Kobe Bryant and Arnold Schwarzenegger weren’t back), it arguably offered much greater substance. The panel discussion on intellectual property protection in China revealed the changing attitudes toward IPR and the new efforts to root it out.
That a discussion of the troubled modern history and uncertain future for IPR in China took place just before the weekend’s crescendo–Jack Ma’s closing address to Chinese SMEs–speaks to how important Ma himself takes the issue and hopefully signals a sea change in a market rife with counterfeits and occasionally comically shameless idea theft.
Former U.S. Undersecretary of Commerce Frank Lavin led the panel at Zhejiang’s Great Hall of the People in Hangzhou. Joining him onstage were Mike Ellis, the Asia president of the Motion Picture Association of America, Zhang Yuxiang, Chairman of the Nanjiren (Shanghai) Knitwear Technology Co. and Jack Chang, senior intellectual property counsel for General Electric Asia and chairman of the Asia-based Quality Brands Protection Committee.
Notably, Ellis’s MPA, which represents big players like Paramount, Fox and Disney, is fresh off an agreement with Alibaba’s Taobao to help eliminate copyright infringing materials from the C2C platform’s many shops. Lavin now serves as CEO of ExportNow, which aims to help US brands and exporters reach China’s growing consumer base through the B2C e-commerce platform, TMall, giving both he and TMall ample reason for protecting these companies’ brands and intellectual property.
Lavin began by phrasing the issue of IP theft as a matter of basic morality—whether it’s your child taking a bicycle from the neighbor’s kid or your company copying a rival’s product. However, when it is a question of profitability or bankruptcy for Chinese businesses, the simple bicycle principle is easily and willingly forgotten.
It’s important to note that a distaste for copying is not something unique to Western businesses trying to succeed in the Chinese market. At the Silicon Dragon conference in Shanghai on Thursday, September 13th (more on that later), CEO of Guangzhou-based YY Inc. David Li said that his company’s style was very “understated” when compared to that of its angel investor Lei Jun, the aggressive CEO of the more flamboyant Xiaomi.
“You have to keep a low profile in China because so many people are ready to copy you.”
YY’s combination of gaming and video entertainment (which includes the ability for 100,000 users to simultaneously watch someone sing karaoke) is credited as a highly unique internet concept with no American equivalent. Though it rose quietly from 4 employees in 2006 to 1,000 in 2012, YY may seek the spotlight soon if rumors of IPO aspirations are true.
Building on the theme of domestic discontent for copying, Alifest panelist Zhang lamented how China’s more innovative companies (his company being China’s most successful underwear brand) are also victims of idea theft and called for those who ignore IP laws to face the consequences. The audience loved it, but GE’s Chang was less optimistic for the efficacy of legislation, stating that China’s culture simply does not have the mentality for IPR protection yet.
Importantly, the panel noted that there are other benefits to protecting IPR. Lavin offered that ensuring IPR will enable innovation—something strongly desired by the Middle Kingdom’s policy makers and a key part of their strategy to avoid a middle-income trap, where a country lacks the low labor costs to supply cheap manufacturing and also can’t compete on the high-end. The government’s innovation push led to a 56% year-on-year increase in China’s patent filing in 2011, but has also had some more comical manifestations, including the city of Ningbo’s plan to develop 1400 new Steve Jobs-like innovators. The relationship between IPR and innovation is thought to be this: once people believe that they will reap the benefits of what they create, they will work all the more tirelessly and passionately to do so—including in valuable collaborations which once might not have been. Social benefits are then a natural byproduct.
But intellectual property protection may only be part of the innovation equation. It helps to set incentives and build trust, but it might not be sufficient to liberate the imaginations of China’s inventors. The question is can a country where the State Administration of Radio, Film and Television (SARFT) imposes draconian rules prohibiting time travel and unfavorable portrayal of police in television programs, simultaneously be a place of great technological breakthroughs? If people can’t make or watch a T.V. show with hover boards and a flux capacitor, won’t they be less likely to actually go invent them? The iPad, after all, began as a prop on the science fiction series Star Trek.
And what about the Ningbo government? Will they withdraw their aspiring Steve Jobs-es from college, put them on buses to an Hindu ashram in India and then entrust their spiritual development to a Japanese Zen Buddhist? Innovation in China will require enforcing the rules that incentivize, but perhaps more importantly, removing those that stifle.
James Hopkins is an American working for Alibaba.com in Hangzhou, China. He previously lived in the tech-heavy district of Nanshan in Shenzhen. The views expressed here are his own and do not represent those of his employer.
tips [at] techrice [dot] com