China’s regard for intellectual property protection is an urgent issue!

It was at the end of January 2010 that foreign firms operating in China got their shock in the form of the China government’s new condition for those bidding for government contracts. The new condition is that those who want to bid for government tenders must not only have their intellectual property registered in China, but will also have to them registered with a Chinese as one of the inventors. As if it is not already a hassle to register their IPs in China (it has to be translated into Mandarin), foreign firms will have to part with their IP to an ‘indigenous’ citizen of the Republic of China. In short, China is telling all those interested in getting a part of the 50 billion dollars annual tender to get real.

Since then, there has been a hue a cry especially from US firms having business set-ups in China. They had brought up the case, seemingly serious to President Obama. But what can the president do? It is after all the host country’s right to change its rules when it deems fit. Apparently the ruling was put into place during a time of weakness in the US. With run away debts, and a weakening dollar, Washington was in a weak position to pressure for China to return to status quo, as far as trade practices are concerned. Bearing in mind that Washington was trying to force China to revalue upwards its Yuan, China must have waited for such an opportune time to strike back.

Of late, officials from Washington have been flying in to China with accelerated frequency. And the main issue is always China must revalue upwards its Yuan so that Washington could continue to sell goods back to China. But we all know that China need not accede to any giveaway now since it has a large amount of its reserve parked in Washington. Just with a mere mention of transferring away of its reserve holdings will shake the dollar to tumble out of control! Then again, China could revalue its Yuan but counter work with other subsidies just like Washington subsidizing its cotton growers at the expense of others. Trade issues are always dynamic, and the Chinese have learn a lesson or two from the west, so no matter how much Washington use arm twisting techniques, it won’t work with the Chinese. Perhaps buying less for a longer duration might work!