Law tightened to boost corporate confidence in business environment

China will continue to strengthen punishments for intellectual property infringement and provide equal IP protection to foreign investors and foreign-funded companies, according to the new China Foreign Investment Law.

The revised law, which came into effect on Jan 1, states that government agencies and officials are prohibited from forcing any technology transfer or disclosing confidential business secrets to others.

As part of the effort to improve the country's business environment, the amended law also includes provisions that protect foreign investors' legitimate interests in China, including profits, capital income and IP licensing fees.

Li Shunde, a senior researcher with the Institute of Law at the Chinese Academy of Social Sciences, said: "Inclusion of such provisions into the law indicates further opening-up in our country, which has brought the foreign investment issue to a new height."

"IP is a crucial factor in improving the business environment; the law is a means to promote international trade in China and to develop the country's science, technology and productivity," Li said. "Foreign investment refers to more than capital－it also includes investment in the international service trade," he added.

With the ongoing trade negotiations between China and the United States, emphasizing IP protection helps to encourage foreign investment and is conducive to regulating companies' development in the country, Li said.

Chen Liming, chairman of IBM Greater China Group, said that multinational companies have brought investment, advanced products, technologies, management philosophies and high-level professionals to China.

China has seen great progress in more than 40 years of opening-up, Chen said. "The law provides a better legal safeguard for foreign companies and helps us to ensure fair competition in a more equitable, stable, transparent and predictable environment for rule of law."

Xu Jiyun, director of the IP department at Air Liquide China, said the country has seen rapid development in IP protection. Especially in the country's coastal and economically developed areas over the past few years.

The expertise and professional attitude of judges are trustworthy and the country's law enforcement has been strengthened year by year, Xu said.
"The law is praised by foreign companies," she added. "Its part addressing IP royalties in export is what foreign companies expected, which gives them more confidence to introduce new technologies to the country."

According to Xu, the French-headquartered industrial gas and service supplier runs its business by providing customers with value-added tech services and adopting advanced technologies in its engineering operation.

Air Liquide generally protects its IP assets by filing applications for patents. It uses a defensive strategy to fight infringements on patents or commercial secrets.

IP is a shield for the rights and interests of most foreign companies investing in China, Xu said.

"With the improvement to the judicial system and an increase in the statutory compensation, we are more willing to take more active strategies," she added.

Huang Tianqiang is president of Corteva Agriscience in China, which is a US-based company engaged in agricultural technology.

China has made significant improvements in IP-related legislation and enforcement in recent years, Huang said.

"The country remains as a core business location for Corteva. We have already created two joint ventures and established industry-leading capabilities in research and development here," the executive said.

"We are thrilled to see the law finally come into force, which will help us continue to build local partnerships and deepen collaboration with our Chinese partners to address the rapidly changing market needs in China," he said.

Strengthened IP protection is a vital part of an increasingly transparent and rule-of-law-based business environment in China, Huang said.

"It will better support us in delivering the best portfolio of innovative solutions, greater choices and competitive prices for China's agricultural market," he added.