China’s intellectual property rights legislation has developed swiftly, yet it still diverges from Western practices, notes our CEO Timo Helosuo in his blog. With deep knowledge of the Chinese market, Helosuo describes the country as a true "Wild West" when it comes to brand protection.
At the end of October, a group of Finnish business leaders joined President Alexander Stubb on a state visit to China. During a press conference, the President encouraged Finnish companies to engage in trade with China. But what kind of IPR environment do Finnish companies investing in China face?
Having followed Chinese business and the IPR landscape for years, I am particularly interested in this topic—not just as Kolster’s CEO but also as Chairman of the Finnish-Chinese Trade Association.
China has rapidly developed its IPR legislation, and it is now approaching the standards we are accustomed to in Europe.
However, the overall system cannot yet be compared to those in Western countries. While the legislation itself is improving, the functioning of the judiciary remains a key challenge. The legal system differs significantly from the independent courts of Western nations.
Local Knowledge and Strategy Are Essential in Disputes
In dispute situations, understanding the local environment and adopting the right negotiation strategy are particularly crucial in China. The handling of IPR issues at the local level varies greatly.
The China National Intellectual Property Administration (CNIPA) highlighted industry insights in its 2023 report. A positive development is the rapid professionalisation of the field, but the quality of work remains a challenge.
A striking 41% of China’s patent agencies have been established within the last three years, and one in five patent agents has less than a year of experience in the field. Naturally, such limited experience cannot yet ensure high or consistent quality. In intellectual property, experience is invaluable. On the bright side, this expertise is steadily growing, and the situation will likely look very different in a few years.
When it comes to brand protection, China is still the Wild West. The country is home to over 35,000 companies registered to handle brand protection, but fewer than 5% of these are professional IP law firms.
A peculiar issue in China is the indefinite stalling of disputes mid-process. Unlocking these gridlocks requires an understanding of the Chinese mindset and the intricate web of local dependencies.
Kolster has handled over 5,000 assignments related to China. While new challenges continually arise, extensive experience in the region is, of course, a significant advantage.