Your IP in the Chinese Automotive Industry
The automotive industry in China has seen rapid expansion over the last decade; the automotive parts market alone was worth RMB 1.5 trillion (€179 billion) in 2010 and the increasing volume of vehicle sales in the country predicts that the trend is set to continue. There are clear opportunities for European businesses to profit from this booming market but precautionary steps must be taken to meet the challenges that China poses.
When it comes to Intellectual Property (IP) protection, international small to medium-sized businesses that invest in the local automotive industry should be aware of the IP risks that they run when operating in China, and the main tools at their disposal to protect against those risks.
Currently, the most important factors that allow international automotive businesses to operate in Chinese Tier 1 and Tier 2 markets, are their established contacts with global car manufacturers (the Original Equipment Manufacturers, or OEMs who produce parts or components for sale to other manufacturers to market under their own brand name – for more information you can watch the China IPR SME Helpdesk webinar on OEM in China), their technological capabilities, and their reputation for quality. This gives them an edge over many Chinese competitors that are relatively new and lack the regimented processes that are required to guarantee a high level of quality. Therefore IP – in particular with regards to new technologies and the ability to protect this technology from Chinese competitors – will be a key factor in the battle for market share. Continue reading “Protection of IPR in the Automotive Industry in China” »
Businesses in Europe have increasingly benefited from Customs authorities acting to prevent counterfeit products from entering their borders – seizures of products infringing on others intellectual property (IP) make news stories around Europe every week. Not many businesses, however, realise that unlike most countries the Chinese Customs authorities not only have the power to examine and seize criminal imports, but also exports. China Customs have the authority to protect IP rights by confiscating infringing goods and imposing fines on infringers. If the infringement of IP rights exceeds a certain threshold, then the Customs authorities will also arrange for criminal proceedings to be brought against the infringing party.
Prior trade mark registrations, also called ‘bad-faith registrations’, are a significant problem that many European companies encounter in China. This process commonly involves a Chinese company first registering the trade mark of a foreign company in China with the express intention of selling it back to the foreign company at an inflated price. Finding out that a Chinese company has registered a bad faith trade mark is one of the biggest complaints of European Small and Medium Enterprises (SMEs) trying to enter the Chinese market. These prior registrations can limit the foreign company’s freedom to operate by restricting its ability to enter the China market or even to source goods from China.
