Should Foreign Companies Look at China's IP Protections in Good Faith?

For so long, ever since the Chinese “door” became open to foreign investment, IP protection or lack-thereof, has been a recurring challenge. Foreign investors have complained about this issue to their embassies, consulates, and chambers of commerce. They did this hoping that these institutions would advocate on their behalf and demand better national laws and consistent enforcement of the already agreed commitments China made with regards to IP protection upon joining the WTO in 2001.

China, not having much IP produced locally as it does today, failed to take this matter as a top priority for a long time. Some foreign companies lost cases before Chinese administrative authorities and had long fruitless legal battles in court.

Despite the above concerns and challenges, foreign investment continued to pour into China relentlessly, as it has during the ongoing COVID-19 pandemic and despite travel restrictions. In fact, as reported by state news agency Xinhua, “foreign direct investment (FDI) into the Chinese mainland is expected to register “double-digit growth” in 2021”. This has been confirmed by Fitch Ratings.

Coming back to IP protection, recent developments show reason for optimism. China has led the world in the number of patent filings since 2011 and is working to improve its regulatory regime governing IP protection.

In this article, I will briefly summarize China’s commitment to IP protection and explain what it means for foreign companies in China.

To prove that China is really prioritizing IP protection, let us look back at recent reforms.