As one of the largest consumer markets worldwide, China is attracting ever more foreign firms to conduct business in the Far East. However, in recent years numerous foreign companies in China are increasingly struggling with legal rights issues, such as violations of intellectual property rights (IPR).
With growing Chinese competition, such legal issues have gradually become one of the biggest obstacles for foreign firms with business operations in China. According to the Business Confidence Survey 2014, a study conducted by the German Chamber of Commerce in China, more than 57% of German companies (up from 41% in 2012) regard the protection of intellectual property as one of their main business challenges in China.
As we have been conducting trade fairs in China for more than 15 years, Messe Düsseldorf (Shanghai) Co., Ltd. is aware of this problem. In order to raise awareness and offer solutions for this issue, the organizing team of C-star is initializing the C-star Fair Competition Initiative. The Fair Competition Initiative will be jointly organized by Messe Düsseldorf (Shanghai) Co., Ltd. and the law firm Schindhelm Rechtsanwaltsgesellschaft mbH Shanghai. Schindhelm is an internationally active corporate law firm and advises medium-sized enterprises and international corporations from Europe on their projects in China as well as Chinese companies and investors on their market entrance in Europe.
C-star will feature a designated Fair Competition Initiative information point. There, exhibitors will not only be able to sign the Fair Competition Initiative Agreement, a symbolic act to show their support and raise awareness for IPR related issues, but will also have the unique opportunity to seek first-hand advice on legal issues from Mr. Raymond Kok and his team. Mr. Raymond Kok is a German lawyer and managing partner of the Schindhelm Shanghai office. He advises European companies on their investments in China including corporate law, M&A, IP law and contract law. Moreover, Mr. Kok advises Chinese companies regarding their entry into the European market.
The C-star team has met with Mr. Kok to ask him more on the subject of legal issues foreign companies often face in China.
C-star: Mr. Kok, you have been advising foreign companies in China for many years on legal issues. Speaking from your experience, what are the most common legal issues and challenges for foreign companies conducting business in China? Are there any "China-specific" issues?
Raymond Kok: As the fastest-growing major economy in the world, China continues to offer global companies attractive investment and business opportunities. However, doing business in China often turns out to be a difficult undertaking for foreign companies due to China’s unique historical, political and cultural background. From the legal perspective, intellectual property rights is an area that has been notoriously difficult in China, although this area has been greatly improved. All foreign investors, international corporations or SMEs encounter infringements of patents, trademarks, copyrights or trade secrets when doing business in China. Thus, companies must carefully plot their corporate strategies to navigate the terrain of China’s IPR landscape successfully.
C-star: How can foreign firms, conducting business in China or seeking to enter the Chinese market, prepare or protect themselves against IPR infringements in China?
Raymond Kok: The best protection is prevention. Companies can take several main steps to protect their IPR in China. First, they should establish internal controls to identify and protect IPR, factor IPR issues into their exchanges with suppliers and customers and most importantly register IPR in China to take advantage of the legal protections. Concurrently companies should conduct surveillance and due diligence to uncover infringements.
C-star: Despite some reforms in recent years, critics often accuse the Chinese judiciary system as insufficient. What is the current legal status regarding legal security for foreign firms facing legal issues in China? Are there any trends and what is the general future perspective?
Raymond Kok: We observed that IPR infringements have been seriously tackled by the central government. However, the measures taken to date have not been sufficient to deter IPR infringements nationwide yet. With the increasing public awareness regarding the economic and social impact of counterfeiting and piracy and the rising numbers of Chinese companies fighting against IPR infringements it is only a matter of time, until IPR infringements drastically decline.
Source: Messe Düsseldorf GmbH
