The Chinese government’s inaction on intellectual property rights (IPR) violations and counterfeit goods puts American businesses at risk of significant costs including lost sales and reduced market caps, according to a recent statement issued by the Motor and Equipment Manufacturers Association (MEMA).
“Motor vehicle parts manufacturers are innovators, conducting almost one-third of the annual $18 billion investment by the automotive industry in research and development,” Ann Wilson, senior vice president of Government Affairs at MEMA, said. “…Given this investment in innovation, intellectual property rights protection is critical to the sustained success of the motor vehicle parts manufacturing industry. The IPR of a company is among its most valuable assets here in the U.S. and abroad.”
In recent years, the Chinese government has released a number of policies related to technology localization centered on government-led manufacturing plans, calling the initiative “Made in China 2025.” As part of the effort, “new energy vehicles” are cited as a priority, with an overall goal of selling at least 35 million electric vehicles by 2025, with government assistance only given to Chinese industries in order to reduce competition of foreign corporations operating within the country.
“…such policies focused on developing and acquiring advanced technologies raise concerns that foreign companies may be vulnerable to unfair practices focused on technology transfer, which will also make it difficult to compete and protect IPR in China and abroad,” the organization noted.
Other concerns raised by MEMA included a proposed ban on virtual private networks (VPNs), China’s vulnerable data transfer environment, duties and value-added taxes, and enforcement actions that do not adequately protect IPR and allow infringement and trade secret theft to continue.
In response to the Chinese government’s inaction on IPR rights, the Trump Administration launched an investigation in mid-August under section 301 of the Trade Act of 1974, which will aim to determine if certain acts or policies are unreasonable, discriminatory, or restricts U.S.-based commerce.
“Actions like this make a company’s global operations even more susceptible to a broad exposure of its research, development, IPR and trade secrets,” Wilson said.