Trade Secrets/IP Theft In China: How Bad Is It?

trade secrets law protecting trade secrets

Trade secrets and IP theft in China has been all over the news, with the Obama administration taking an aggressive stance. There is no question that companies doing business in China must deal with the issue. But how widespread is the problem?

A recent report by the American Chamber of Commerce in China (AmCham China), which represents more than 1000 businesses there, sheds some light. Each year, AmCham China surveys its members and offers “a valuable snapshot of member concerns on China’s regulatory and policy environment.”

Of the 325 survey participants, 26% experienced data breaches or thefts. According to the report,

This poses a substantial obstacle for business in China, especially when considered alongside the concerns over intellectual-property rights enforcement and de facto transfer requirements.

Additionally, 42% believe the risk of a data breach is increasing. Only 5% believe the risk is decreasing.

The report also addresses issues with IP rights enforcement, noting that

For the third straight year in a row, the survey data reflected an increase in the percentage of respondents who listed China’s enforcement of IP rights as ineffective.

On the bright side, however, 47% believe that China’s IP rights enforcement improved over the past five years.

This report supports the perception that trade secrets and IP theft is a real, immediate concern for companies doing business in China. All such businesses absolutely must implement a comprehensive approach for protecting their proprietary information, including consulting with IT and legal professionals. 

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