How IP can give China a brighter future
With China’s economy struggling, Boon Xie, Xuhui of WTOIP.com explains how the rise of businesses that place greater importance on IP will provide growth in the future
In April 2016, we can sense spring in the air. In China, which has the world's largest population and the second largest economy, the economic battle has begun afresh.
The current economic situation in China and the rest of the world can be compared to the Beijing smog. China's economy is thought to have been going through a hard time. What are the main reasons? Many people see that it is due to the international situation, which is far from ideal. In my opinion, the international situation is not the only reason. The more important one is the strategies that China utilized for the economy development, including promoting extensive-investment-driven and real-estate-driven development in the past 10 years and even finance-driven development today.
China experienced an economic downturn in 2015, and it is estimated that the GDP increase for this year will be only 6.9%. However, I predict that the GDP in 2016 may be even lower, and we should not be too optimistic about China's economic situation in 2016. Whether the current situation is bad does not matter. What matters most is whether we are well prepared for it.
Innovation driven development
Before the Eighteenth National Congress of the CPC, the concept of innovation-driven development had never even been heard of. Not until the Eighteenth National Congress of the CPC did the government propose this policy. In this case, how could business grasp this opportunity to develop in the market and acquire stronger competitiveness under the new strategy of innovation-driven development?
I think that IP is one of the key elements. IP, once a rarely-used word in China, is now becoming part of the core competitiveness of enterprises. If IP begins and ends with registration, it is not enough to support an enterprise's development. In fact, I strongly advocate the commercialisation and monetisation of IP. I hold as a firm belief that IP can help to enhance the core competitiveness of enterprises if it is used effectively.
The commercialisation of IP in my opinion refers to the practice of treating IP as a common commodity and maximising its value in the market, which creates the flexible distribution of global IP resources. The term "industrialisation" of IP refers to the practice of using IP in enterprises' products, services and businesses and to assist enterprises with their industrial upgrading and development. The term "financialisation" of IP means that capital is used to encourage innovation, so that financial rewards can be given to investors as enterprises grow rapidly. This means that commercialisation serves as the basis, industrialisation as the path, financialisation as the drive, and popularisation as the ultimate objective as well as the ultimate value of IP.
The financial nature of IP should be explored and used. It is a field worth significant investment on a long-term basis, which is a fact that has been already proven by Wall Street and Silicon Valley for almost two decades. Shrewd investors show great enthusiasm towards companies with core IP or innovative business models.
I first suggested the concept of the IP-savvy businessman in the context that many enterprises paid inadequate attention to their core competitiveness, and had become addicted to discount sales online and had gained market share in China solely through price wars. The IP-savvy businessman (知商) is a term that has gradually been popularised in China in recent years. It refers to any individual, enterprise or entrepreneur who creates, protects and utilises IP, and the ecosystem constituted by them is known as the "IP business circle". In my view, only when a business is started with innovation at its core can it be regarded as entrepreneurial. A business without any innovation will end just in failure in the age of the knowledge economy.
Innovation is hugely important for enterprises and businesses, so another question is how to integrate innovation with the development of enterprises. The model of the sharing economy will be a good method. The sharing economy can take a variety of forms, including using information technology to provide individuals, corporations, non-profits and governments with information that enables the optimisation of resources through the redistribution, sharing and reuse of excess capacity in goods and services. This can be shown in articles such as Ride On! Mobility Business Models for the Sharing Economy (Cohen, Boyd; Kietzmann Organization & Environment, January 2014), The Sharing Economy: Why People Participate in Collaborative Consumption (Hamari, Juho; Sjöklint, Mimmi; Ukkonen, Antti, Journal of the Association for Information Science and Technology, 2015) and From Zipcar to the Sharing Economy (Arun Sundararajan, Harvard Business Review, January 2013)
Finally, I have to say that with the rise of China's middle class, the current e-commerce model based on inferior products will not last long. Because of the increase in consumer power, expectation of products and services quality will surely be higher. Enterprises can no longer rely on business models that involve selling fake or defective products at a low price to attract customers. I strongly believe that strengthening enterprises' innovative abilities and helping them get their own IP should enable enterprises to regain their core competitiveness and embrace a brighter future.
Will there be more IP-savvy businessmen popping up in China? Let's wait and see.
Boon Xie, Xuhui
Boon Xie, Xuhui graduated from China University of Political Science and Law and is the founder and CEO of WTOIP, the vice chairman of the China General Chamber of Commerce, an executive council member of the China Enterprise Confederation, one of the “Top 10 Economically Outstanding Figures in Guangdong”, and the “Leading Entrepreneur of Tianhe District in Guangzhou”.
Xie founded LianRui Intellectual Property (formerly UTC) in 2009, and established a leadership position in the field of IP protection in China. LianRui is now one of the top three Chinese trade mark agencies in terms of application volume of Madrid international trade mark registrations. In 2013, Xie founded WTOIP.com, and opened up a new prospect in the field of IP commercialisation and monetisation in China. WTOIP.com is an online-to-offline innovative resources platform, and raised the concept of “知商” (IP-Savvy Businessman) in China, committing to demonstrating the commercialisation, industrialisation, monetisation and popularisation of IP. In 2015, Xie established the first online IP crowd funding and IP loan platform in China – I2P.com, a new model of financing with IP. By evaluating the value of IP for IP owners who are in need of funding, I2P.com helps IP owners acquire financial support for development.