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Chinese enterprises stop copying, start creating as patent strategy(12/06/03)

Two years after its World Trade Organization entry, China is eager to expand its share of the world's intellectual property reserves as Chinese enterprises, under WTO rules, have to pay huge money to use or "copy" foreign patented technologies.

   Machines for playing EVD, or enhanced versatile disk, have been showcased in the biggest malls in Shanghai before this Christmas.

   The machine is eye-catching, not only because it is the world's latest development in video technologies, but because it was independently developed by nine Chinese companies including leading Shanghai General Electronics Co. Limited and Shinco.

   EVD technological standards have been in the approval process of the International Organization for Standardization and are expected to be erected as global international standards to be followed by video item producers worldwide.

  Another union of eight Chinese companies is working to make industrialization of TD-SCDMA come true. TD-SCDMA is one of the three internationally acknowledged standards by the International Telecommunications Union for 3G (third generation) mobile phones.

  TD-SCDMA was developed by Datang Microelectric Corporation, one of the eight Chinese companies trying to put the standard into industrial production. So far another two 3G standards, developed by the United States and Japan respectively, have been in production.

Japan's leading newspaper Yomiuri Shimbun wrote of China's own 3G technology that Chinese enterprises have felt a strong sense of threat that lacking self-developed technologies will only benefit overseas enterprises.

  Zhang Naigen, director of the Intellectual Property Center of Fudan University in Shanghai, said that China has finished adapting its laws in accordance with WTO rules as part of its WTO entry commitments.

  He said Chinese enterprises are operating by the laws and in conformity to market rules. As a result, the amount of money that Chinese enterprises paid to foreign patents owners soared, and those enterprises without self-developed intellectual property have come under great financial and technological pressure to survive.

  Statistics show that Chinese enterprises as a whole have spent over 10 billion yuan (1.2 billion US dollars) in purchasing and using foreign patents in production. For DVD production alone, Chinese enterprises had to give 4.5 US dollars in patent fee for each DVD machine they produced to the union of six DVD technology developers that include Hitachi, Panasonic and Toshiba.

   To avoid huge expenditure on DVD technology, more than 250 domestic DVD producers discontinued use of the DVD union's technology and looked for new technology for a substitute.

   The EVD union of nine Chinese companies spent only about four years to get from launching research to final production. Max Fackeldey, vice president of the British newspaper Daily News, called the nine-Chinese company union's success a "miracle speed" and said it showed Chinese enterprises' great potential in invention patents after they said good-bye to the traditional way of following so-called secret recipes handed down from previous generations.

    Dr. Lopez-Claros Augusto, chief economist of the World Economic Forum who visited China last month, pointed out that China input 60 billion yuan (7.2 billion US dollars) in research and development of new technologies in 2002, and China for the first time exceeded Germany to become the third largest country, after the United States and Japan, in terms of its investment, or 2.5 percent of its GDP, in research and development projects.

   Although China currently owns only 13 of 18,000 international standards, Augusto believed that the country's technological competitiveness will come out in front in five to six years.

   At the 16th National Congress of the Communist Party of China in 2002, the party made its first ever announcement on having self-developed intellectual property, showing its stress on technological invention and innovation.

  And in the economic work guideline passed at the third plenary meeting of the CPC Central Committee last October, it was stressed to develop new technologies and foster Chinese enterprises' ability of creating own brands.

   "After suffering from lack of patents and benefiting from inventing own technologies, Chinese enterprises have known that ' copying' will lead to a ruin of creativity, and to develop their own intellectual property is a safe way to stand in the long run," said Xu Zhanglin, deputy director of the Shanghai Intellectual Property Bureau.


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