Does Enforcement of Intellectual Property Rights Matter in China ...

circulated daily, with the main purpose of promoting provincial policies and affecting public
opinions. All provincial government bodies at all levels must subscribe to this newspaper. Its
readers include persons in all fields, in addition to government personnel. Being the only political
Party in China, the attitude of the provincial Communist Party towards IP enforcement is critical in
the protection of IP rights. A stronger advocacy of IP rights by the Party’s official newspaper in a
province is expected to lead to better IP enforcement. We search for relevant articles in the
newspaper using the following keywords: IP rights protection, patent right protection, trademark
protection, copyright protection, fighting against IP infringement, fighting against trademark
infringement, and fighting against copyright infringement. Then we read through the articles to
make sure they indeed advocate IP rights protection. We use the full-text database of “China’s
major newspapers” to search for the articles. A few Party newspapers are not included in the
database in some of the years, which results in 90.9% coverage of all provincial Party newspapers. 8
Insert Table 1
Table 1 (Panel A) shows that the mean of IPP1 is 72.4%. What is most relevant for this study is
its large variation across provinces, ranging from a low of 25% of IP cases won by the plaintiffs in
the courts to a high of 87.5%. The map in Figure 2 demonstrates that this measure of IP rights
enforcement varies greatly within China. Enforcement is best in the coastal region of China, weaker
in Central China, and weakest in the Northeast and Southwest regions. However, even within each
8 One question about IPP2 is that: is it just cheap talk? We have observed that the “talk” does translate to
action. A number of cases reported by the press, including Wall Street Journal, link the Chinese authorities’
promise to enforce IP rules with real actions to protect intellectual properties. One such example involves
Zhejiang province. Zhejiang is one of the provinces with the highest IPP2 in our sample, i.e., it has the highest
number of articles calling for IP protection. The capital of Zhejiang Province, Hangzhou, has “set targets for
enforcement of intellectual-property rights”, and attracted a series of investment from Microsoft, including
two new technology centers and other investments (Wall Street Journal, May, 16 th , 2009).
14