Microsoft in India and China Microsoft: Strategy in India and China

Microsoft's Strategy in China

Although the Chinese Trademark Law is now largely in conformity with the TRIPs Agreement, the benefits of protection may not be realized for some time. At ground level there is a general culture of acceptance of counterfeit goods, partly because it makes previously unobtainable foreign goods affordable and partly because there is a lack of interest in enforcing IP rights that are largely owned by foreign companies. In this environment, counterfeiting will always seem attractive as it allows those involved to access an already existing market with low entry costs. In the meantime, however, foreign entities could take an active role in furthering the protection of their rights.

Licensing of IP rights to Chinese nationals and establishing joint ventures would be advantageous. The foreign party would have the benefit of local assistance in navigating legal red tape, and the Chinese party would be encouraged to protect its IP rights through economic incentive. Increased Chinese ownership of IP rights or licences would not only increase public awareness, but also compel enforcement agencies to be more vigilant in carrying out searches.

The Microsoft Corporation has been investing in joint ventures involved in building manufacturing enterprises, research and development projects and training programmes at universities for this reason. The Corporation's strategy is that by building friendships with the Chinese ministries and local computer manufacturers, these entities will become more committed to working with Microsoft in the future and protecting its products.

Similarly, courtesy calls on customs officials and IP enforcement agencies are also an effective way of ensuring greater protection. If officials are given descriptions of the trademarked goods, details of the particular counterfeiting problems and are informed of the 'broader implications such as the potential harm to human safety from fake goods' and damage to the international reputation of China from IP right violations, then the IP right-holders have a greater chance of preserving their rights.

An interdisciplinary network of experts to assist officials at the provincial level in developing concrete programmes to combat counterfeiting, or perhaps establishing a mobile working group of legal experts, would be extremely useful in protecting IP rights. Organization and support for regional and international symposia that bring together representatives of non-government organizations, policy-makers and others to discuss contemporary IP issues would increase awareness of IP problems. Even the TRIPs Agreement recognizes that effective enforcement cannot be achieved in isolation.

Article 69 indicates that countries should 'be ready to exchange information on trade in infringing goods, and should promote the exchange of information with regard to trade in counterfeit trademark goods and pirated copyright'. 'Sharing "difficulties," "successes," general implementation strategies and practical steps that each jurisdiction has undergone will assist in improving the enforcement environment' and alert each state to practical issues that they must tackle.

Nevertheless, it would appear that any of the above-mentioned measures require a backbone of enforceable legal rights to offer any real protection to IP rights.

Conclusion

In the past decade China has made great progress in reforming its economy and becoming a major player in the world economy.

It has also made advances in adopting and enforcing intellectual property rights in a short period of time. The Chinese Trademark Law, in substance, is not far from meeting its obligations under the TRIPs Agreement, although certain provisions, including criminal and civil penalties, need to be expanded. At the same time, foreign trademark owners must accept the challenge of defending their rights in China. The difficulty is that in China statutes and regulations sit alongside social, cultural and economic norms specific to China, and do not clearly prove determinative in a given case.

Despite the growth in counterfeiting and deep-rooted cynicism about law in China, there is reason for optimism. The creation and ongoing development of the Chinese intellectual property system has seen the acquisition of IP rights by ordinary Chinese citizens. The assertion of these rights in court and in the world market will then pave the way for an effective intellectual property system. As the great Chinese scholar Ying Shaowu once said, 'Whatever is rushed to maturity will surely break down early. Whatever is accomplished in a hurry will surely be easily destroyed.'

Cooperation or competition

The preceding discussion of new material practices in 'Greater China' helps to resolve the question of whether the...

In respect of Taiwan, it can be argued that the relocation of industries to Mainland China and the upgrading of its own technological base enables the island to concentrate more on research and development, the global connections of its computer and IT companies and possibly on the supply of Internet content as well. In the case of Hong Kong, its role as a traditional entrepot city is declining with the emergence of other ports in the Pearl River Delta, and the Asian 'crisis' has also exposed an over-dependence on property and financial markets. The territory is thus repositioning itself as a 'logistic, financial and digital centre' with hard and soft infrastructure for Internet services (broadband networks, e-commerce, business consultancy, data centers, content distribution, marketing skills, venture capital, GEM) and project finance. Given that Taiwan is relaxing restrictions on investments in Mainland China, where the demand for investment and venture capital is only likely to increase with WTO accession, Hong Kong is strategically positioned to act as a gateway and fund-raising centre for the whole 'Greater China' region. Likewise, Shenzhen and the Pearl River Delta are well placed to continue their concentration on electronics and IT products, as well as offshore software sites for Chinese-language and multilingual products.
Despite these possibilities for stronger cooperation and the rebuilding of cross-border governance mechanisms along the Silicon and informational supply chain in 'Greater China', however, competition also exists among the various incubators that are being developed. As shown above, the number of software parks in the region is growing, and their similarity may well lead to mutual competition. This can be seen in a number of areas, such as the provision of facilities to house software companies specializing in, for example, Chinese-language applications, or the incubation of local small start-up firms for joint ventures and market listings. The same can be said of the shared aim of attracting global players such as Microsoft, IBM and Oracle to relocate, 45 in the hope that other overseas and local technology firms will be drawn along in their wake. There will also be intense competition to lure talented personnel from other provinces within China and from among the overseas Chinese student community to work in the parks or elsewhere in the economy. As Shenzhen mayor Li Zibin put it in a May 2000 interview in Asian Affairs, '[Hong Kong] needs to attract talents from overseas and it is targeting the same sort of people as Shenzhen'.

Strategies for the Private Sector

In lieu of government-to government action, the private sector has a number of options open to it. 18 Unfortunately, there is considerable disagreement over the strategies involved, depending on both type of industry and size of individual firm within an industry. Each firm has to evaluate its strategy according to its own often unique circumstances. One general rule on which consensus exists is that a physical presence in the PRC is crucial, usually in the form of a representative office or a joint venture with a PRC firm (it is still quite difficult and quite rare to set up independent operations in the PRC). For example, a number of companies -- Microsoft, Compaq, IBM, and Hewlett Packard -- all have branches and representative offices in Beijing's Haidian district. Sometimes that is necessary because the law requires it. For example, even to file for a patent in the PRC, a commercial enterprise must have a habitual residence or business office, according to Rule 34 of the Patent Law. Moreover, a foreign patent owner is not allowed to prosecute a patent without a local attorney or patent agent.

In the second place, and more important, having a strong physical presence in the PRC is crucial to the effective monitoring of infringement and the development of a strong brand name or loyal customer base. Economists in the PRC remark, for example, that by having a substantial presence, a company can develop a "marketing network in hopes of defeating cheap and poor-quality smuggled or counterfeit laser discs with good-quality and low-priced copyrighted ones, complete with excellent post-sale services" ( Yang Xinbin 2008). Some savvy companies are also fighting IPR infringement in more creative ways. Microsoft, for example, recently teamed up with a Hong Kong-based company, Go East Entertainment, and held a promotion to create a popular song "to educate people about the evils of pirated products" (Wei Ke 1998, 6 ).

Joint ventures or close relations with manufacturers or licensees can also help to create an indigenous base in favor of strong IPR protection, and to lower the transaction costs of gathering information. Microsoft, for example, has signed six Chinese independent software vendors to adapt and sell its products (…