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

2.1 IP rights enforcement in China
China is often criticized as having a poor record in the protection of IP rights (see Wang, 2004;
Maskus, Dougherty and Mertha, 2005). However, an examination of China’s IP laws (Appendix 1)
and the international treaties it has acceded to (Appendix 2) put China at par with the more
developed economies. 6 Two factors may explain the discrepancy between written laws and common
perception.
The first is that most of the IP laws in China came into existence in the relatively recent period.
Almost all of the items listed in Appendix 2 were either enacted or amended after 2001, which
might be attributed to China’s membership in WTO that began in 2001. It may take time for the
laws to work and for the perception to adjust. Figure 1 shows the amount of licensing fees in U.S.
dollars paid by Chinese enterprises to foreign countries from 2004 to 2008: the licensing fees grew
substantially, increasing from $13.86 billion in 2004 to $27.13 billion in 2008. The large numbers in
Figure 1 suggests that there exists significant IP rights protection in China at least in the recent
period, contradicting common perceptions.
Insert Figure 1
The second is that the effective protection of IP rights depends on both the existence of IP laws
and the enforcement of the laws. Even though the applicable IP laws and international treaties are
the same within China, there exist significant differences in the local enforcement of the IP laws, as
we find in our study. One has to consider local differences in enforcement to assess effectiveness in
protecting IP rights.
6 Of particular importance is the membership in the three major agreements as identified by Park and Ginarte
(1997): 1) the Paris Convention, 2) The Patent Cooperation Treaty (PCT), and 3) International Convention for
the Protection of New Varieties of Plants (UPOV).
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