The Chinese government promised to implement stronger relations in the 2020 U.S.-China trade deal, but a report by the U.S.-China Business Council in 2021 shows that half of the member companies surveyed feel that China’s protection of intellectual property is unchanged.
The report said there were four themes from the survey. One was that the tensions between the two countries weigh on American companies, with relations between U.S. and China being the top challenge for the fourth straight year. It also found there is a “an uneven playing field” making it difficult for U.S. companies to compete. A third is that the Chinese market is critical to American companies, with more than 40% surveyed planning to increase resource commitments in China this year. Also, reduced optimism has raised questions about the U.S. future in China due to geopolitical and policy challenges.
“While most companies are not moving their business or supply chains out of China, these challenges raise questions about their future competitiveness in China, particularly if perception challenges intensify and the policy environment deteriorates further,” the report said.
China is being accused of using its court system to block legal recourse in cases of alleged intellectual property theft..
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Intellectual property theft from China has been a hot button issue several years, and most recently the company Xiaomi Inc. has been accused of creating smart phones using patents by Delaware-based InterDigital. According to The Wall Street Journal on Sept. 26, InterDigital was preparing to sue Xiaomi in 2020 alleging patent infringement. Xiaomi is known as one of the top smartphone makers in the world.
Chinese technology firms have been able to convince the Chinese courts to issue anti-suit injunctions that prevent foreign companies from starting legal action to protect their trade secrets. The Chinese court system granted an anti-suit injunction against InterDigital, which prevented the Delaware company from arguing its case, not only in China, but anywhere. Xiaomi sought court relief just before the lawsuit could move forward. There would be a fine of $1 million per week if InterDigital continued its legal action.
There were two other cases that ruled in favor of Chinese companies, including BBK Electronics and Huawei Technologies.
In the past decade, the technology companies Xiaomi, Huawei and Oppo went from being on the low end of the manufacturing world to supplying nearly one-third of cell phone market worldwide.
The Diplomat said in a November 2020 article that by their court rulings, China has no intention of making a process where companies who allege intellectual property (IP) malfeasance have a way to seek recourse.
The article said that creating a discovery process to reveal truths mandates "a philosophical shift in the country's legal system." Greater influences today than process mandates are politics and local protectionism.