China offers Western firms a huge opportunity, but those operating in the country should be very mindful of introducing key technologies.
This was the message from Todd Dickinson, VP and chief intellectual property counsel of General Electric (GE), whose Healthcare, among other divisions is operational in China.
"We are experiencing a lot of success in the region, although there are of course clauses in the intellectual property legislation that are some cause for concern and do require clarification by the authorities," he said, speaking at the recently-held China intellectual property conference in London.
Employee versus employer ownership of inventions was one grey area highlighted by Dickinson.
"Currently the law leans towards the employee, which is not ideal from a business perspective," he said.
Another concern is that if the R&D for an invention is carried out in China, the draft patent must first be filed in China before it can be filed anywhere else and if the patent isn't used within three years, the government has the right to claim the patent for itself under the compulsory licensing law, Dickinson explained.
"This throws up all kinds of issues, considering the amount of time normally needed before a patent is filed until a final product is ready for the market."
"Of course, filing the patent in China then also immediately exposes the invention to counterfeit," he said.
In order to sidestep as many pitfalls as possible, Dickinson highlighted some of the initiatives GE are undertaking when operating in China.
"First and foremost it is important to make sure our relevant patents are actually registered in China, and registered in Chinese, not just English," said Dickinson.
"Patents not filed in Chinese have a tendency to be disregarded."
"My biggest cost in regard to patent filing now is not the actual filing process itself but the translation involved, however, the cost of not doing this can be much higher," he said.
Other efforts the company is making include trying to make sure its goods are as affordable as possible so as to discourage counterfeits, as well as being conscious of not upsetting any local Chinese firms by unknowingly infringing their patents.
Additional tips given by Dickinson include making sure customs are aware of you and your product, conduct lawsuits when your patent has been infringed and "be very mindful of introducing your key technologies into China - at the moment it is just not worth it."
Meanwhile, recent actions by China's State Food and Drug Administration (SFDA) are an indication that the country is beginning to take a hard line on drug manufacturers who produce substandard or counterfeit medicines.
At the end of September the SFDA carried out 35 unannounced inspections of drug manufacturing facilities and revoked the Good Manufacturing Practice (GMP) Certificates of 15 companies and imposed fines, while ordering 13 others to rectify production defects.
Commenting on the incident, SFDA spokesperson Zhang Jixiang, said that "companies should think very seriously and run their business honestly and stick to the law."
He accused local drug authorities of "deficient supervision" and urged them to begin making more unscheduled inspections in order to stamp out the "glaring problems" among China's drug manufacturers.