China has big plans for growth in science and technology innovation, and is fast becoming competitive is an array of high-tech fields. But with a relative shortage of home-grown research talent, the demand for IP from the West is high. And despite the poor reputation surrounding IP rights and protection there, that barrier to technology transfer has been significantly improved in the last few years, according to Ting Zhang, founder and CEO of China Business Solutions. The huge market represents significant opportunity for licensors, but pure tech transfer is a recent phenomenon that remains “primitive, inefficient and lacking high value transactions,” Zhang says. Recent research carried out by his firm shows that pure patent licensing and know-how based technology transfer is much more difficult to promote in China than whole system/solutions and commercial-ready technologies, and a significant proportion of the patent licensing deals to China in recent years have been based on patent pools and assertion models.

Several key barriers remain, including an inability to restrict licensees from carrying out IP enhancement, and severe warranties required of licensors regarding the utility of the licensed technology. In addition, know-how is hard to protect, and post-contract risks also exist, such as difficulty collecting royalties. “Last but not least,” Zhang notes, “there is a cultural and historic mindset about the value of IP that needs to be kept in mind. However, protection of intellectual property rights is possible through a carefully drafted contract and, more importantly, through effective implementation and ongoing monitoring.”

Universities looking to do business in China, he adds, should focus on technical collaboration, which is regarded in the Chinese business world as a “shared risk.” Areas of particular interest in China include pharmacology (application of drugs on a nano scale, stem cells, bio-medical science, biotech and biophysics), climate change, alternative energy. Zhang summarized these “critical factors for successfully licensing technology to China”:

• Knowledge about doing business in China;
• The right technologies that are valuable to China;
• A tailored business model that is based on long-term partnership;
• Flexible approaches to cater to the varied needs of Chinese partners;
• The right level of “Guanxi” (connections);
• A solution to provide local technical support;
• The right partner.

“Be cautious, but not because of IP risk. Instead, one should find the right business model to work with Chinese partners and ensure that there are mutual long-term benefits,” he concludes.

Go to: Cambridge Network

Posted January 7th, 2009 under Tech Transfer

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