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Story URL: http://www.silicon.com/research/specialreports/china/0,3800011742,39161701,00.htm

Asian firms 'starting to see the value of IP'
Are China and co warming to intellectual property?

By Aaron Tan

Published: Tuesday 22 August 2006

Intellectual property - or IP - is valued by Asian companies, albeit in wrong and varying ways.

That's the conclusion of a panel discussion, held this week at the inaugural Global Forum on IP in Singapore, during which industry experts generally agreed Asian businesses do recognise the importance of IP as they compete in the global landscape.

Gordon Smith, chairman of US-based business consultancy Aus, said there is market evidence Asian companies recognise the value of intangible assets such as IP. For instance, he noted, a sample of 18 companies listed on the Singapore stock exchange stated that at least one-fifth of their total assets are in intangible form. That fraction is even larger at consumer high-tech companies, where intangibles comprise 75 per cent of total assets.

Smith said: "There was not a single one out of those 18 companies that did not have some portion of their total value in intangible assets. Investors are certainly recognising it, and especially in the consumer high-tech industry, a large portion of intangible assets are represented by intellectual property."

Gordon McConnachie, board chairman of the Intellectual Assets Center in Scotland, said the value of IP goes beyond dollars and cents - such as the way some businesses make money from licensing their IP assets.

He said: "It can add to the value of a company in the way it positions itself in the market. But ultimately, it affects people, their jobs, lives and countries."

McConnachie noted that in Asia, institutions such as Singapore's IP Academy and Indonesia's Society of Intellectual Capital, have already been set up to assist businesses in managing their IP assets. In China, there is also a "clear awareness" of the benefits of intellectual property among businesses.

Despite this, he noted, most IP developments in Asia revolve around IP institutions, which are "sporadically" encouraging businesses to create inventories of IP assets.

McConnachie said: "The key issue is education at the company level, and businesses have to realise that new rules are coming from the knowledge-based economy. They also have to understand how vital it is to systematically create, manage and leverage IP as part of the value of an organisation."

While he acknowledged that major Asian companies are creating IP depositories and looking at ways to benefit from them, there is generally "no complete understanding of the true value of IP".

This view was shared by Jari Vaario, director of IP rights strategy programme at Nokia, the world's largest handset maker.

While Chinese businesses have progressed from the days when IP used to be viewed in the same way as "stealing a book is not a crime", Vaario explained that much of the IP developments in China are still copied from what is already available in the marketplace.

Vaario said: "In the telecommunications field, I would say that Chinese companies have been infringing on Nokia's patents. There is no Chinese telecoms company that does not infringe on some of Nokia's patents."

But with the succession of China into the World Trade Organization, Chinese companies now find themselves having to face counterparts in a global playing field that have established IPR management. Vaario said: "This has put some pressure on them to respect IP."

Weerawit Weeraworawit of Thailand's Ministry of Commerce, however, said Asian companies do understand the value of IP - just not in a way that IP owners want them to understand it. Weerawit added that Asian companies "know the value of trademarks and blockbusters, and that's why they choose the easy way out - copying".

Weerawit said: "It may sound paradoxical but I'm optimistic about the value of IP in Asia. There is a certain level of entrepreneurial spirit [in recognising IP], though in the wrong way - they have management skills in putting the counterfeit goods into the market, not only domestically but also internationally."

It is unfortunate that this entrepreneurial spirit has been misused, particularly since Weerawit - an associate judge of 10 years - noted that software piracy has been detrimental to Thailand. He recounted how a Thai software company had its product already targeted by software pirates the same day the software was launched.

Weerawit said: "A lot of education is needed among the population at large to convince people that it's better to earn a living from our own creation and innovation, than copying from someone else."

Aaron Tan writes for ZDNet Asia