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Asia business team gears up for China IP boom

21 November 2018. Posted by Ceri Wells.

Doing business with China is never far from the headlines in New Zealand.

Already our biggest trade partner, China makes the news for a wide range of reasons – immigration, student numbers at our tertiary institutions, effects on the housing market, milk powder sales, investment in New Zealand and new businesses being established here.

There’s a rich and growing record of activity in New Zealand involving the world’s most populous nation.

Intellectual Property (IP) advisers James & Wells have had a front seat to that compelling growth in the last few years.  Founding Partner Ceri Wells says the firm’s specialist Asia Business team, set up five years ago with one employee, now employs eight – six fulltime consultants and two support staff.

Wells, who heads the unit, says the journey from those early beginnings has been full of surprises.

“When we started the team, we’d basically identified that China was becoming such a big and important market that there would be a number of NZ companies wanting to do business there. Exporters would need assistance with trade marks and generally protecting their IP in a country that had a reputation for copying.  The biggest eye-opener for us was just how many companies wanted to do business in China.

“We were fortunate to have a bi-lingual patent attorney, Johnathan Chen, who was educated in New Zealand but raised in a business focussed Mandarin-speaking family.  We charged him with supporting those New Zealand businesses; developing his knowledge, expertise and contacts in China and Taiwan, linking up with good businesses there and promoting our services.

“But we were also quite surprised at the high level of work that arose from Chinese companies wanting to do business in New Zealand.”

Wells says the firm found there were many Chinese-owned businesses in New Zealand, who faced issues in getting business done, often for language reasons. “So they sought our language skills.  But equally they were often looking at getting New Zealand goods into China too and needed help in securing trade mark rights.”

“We arrived at this very brisk, two-way advisory business and have hardly had time to gather breath – and have had to double the size of our team over the last six months.”

Language capabilities within the team are not just China-focused either.  Six of the team speak Mandarin, four speak Japanese, two speak Korean and the team can also cover Taiwanese and Shanghai dialects. Most speak more than one Asian language.

An unexpected call on their services arises directly from their language proficiency, says Wells. “Clearly our main role is to assist with the IP needs of businesses but we were increasingly asked to assist with negotiations – that was a bit out of the blue.  That’s not just about language, however; it’s also about understanding the different business attitudes between the parties involved.  Often it just requires a telephone conversation to identify the issues and sort out a solution.

“That cuts both ways. Dealing with agents in China is not always easy. But having someone available to talk on the phone who’s fluent in the language and aware of the cultural and business context can make a world of difference.”

Wells says his team often also get asked by Chinese companies to match-make – to link them up with NZ businesses providing seafood, nutraceuticals, wine or other local products for sale in China. “Connectivity has been a strong element of what we offer.  We introduce New Zealand companies to wealthy buyers. We don’t charge for that though; it’s not our core business.  But it’s an indispensable part of what we do. It creates opportunities for our clients which is ultimately good for our business.”

Recruiting the new team members did pose a challenge, Wells says. “We needed Asian people who were raised in New Zealand, who did most if not all of their schooling here, and who understand New Zealand culture.  But at the same time, we needed their Mandarin to be “business-level” strong, and if they came to New Zealand too early that might not be the case. Someone with excellent fluency, coupled with a great grasp of the kiwi vernacular – that was the sweet spot.

“Our success has attracted top shelf people – like Ye Miao, who is a commercial lawyer with IP experience. Ye is Assistant Head of our Asia Division and he has freed Johnathan Chen up to be more involved in deal making.

Looking to the future, Wells says the IP scene in China is changing dramatically. “There’s been a huge shift in the number of patent applications being filed in China as they move from being copiers or licensing in technology, to being inventors and exporters of new technology.   The US is still number one in the world in terms of patents filed, but China is rapidly closing in and is expected to be the world’s largest patent filer in the near future.”

At the trade mark level, China is also setting a cracking pace.  In 2017, Chinese companies registered 5.7 million trade marks, up from 3.6 million the previous year.  Second place last year was the US – who registered 600,000 trade marks.  “There are massive financial incentives in China to develop and patent new technology.  They want to own, control and profit from the technology they use, rather than license it in. And they do this by using the patent system.

“For businesses in New Zealand that means competition may get tougher in China, and if you’re developing new technology you’ll need to pay close attention to what’s going on there and take even more care in securing your IP in China and elsewhere if you’re targeting overseas markets.

“The implications of this for our business are going to be significant.  The impact of all that new IP for both countries will be hugely interesting.”