The American Chamber of Commerce in China (AMCHAM) released its 2013 China Business Climate Survey Report. The report is a compilation of survey feedback received from 325 respondents in varying sectors: 31% Services; 28% Manufacturing; 22% Other; 10% High-tech; 8% Information technology and information services; 1% Retail, distribution, and logistics.  

The numbers of respondents are relatively few, which has led a Ministry of Commerce official to label them as “debatable”.  However, AMCHAM has been conducting these surveys for many years and has frequently used the same set of questions.  Thus even if a small pool of respondents answer the survey each year, the survey is valuable in showing the attitudes of some of the more vocal or engaged respondents in the US business community based in China and also is helpful in looking at how AMCHAM hopes to engage the Chinese and US governments on these issues.  The 2013 survey was conducted in November and December of 2012.

This year IPR was once again not on the list of top business concerns.  The survey identified rising labor costs and slower growth of the economy as top issues.  Overall labor-related issues held three of the top slots as issues of concern, if one considers shortages of qualified employees and management as labor related issues.

The fact that IP had once again been displaced as a top six concern, as was also the case in 2010 and 2012, does not necessarily reveal a rosy picture. 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 IPR as ineffective (58%).  While there was a slight increase in those who rated it as “effective,” (17% from 14%) there was an even bigger rise in the percentage that classified it as “ineffective” and “totally ineffective (72% from 59%).   In addition, the number of respondents who indicated that IP infringement has caused “material damage” to China operations or global operations has increased steadily from 18% in 2010 to 48% in 2013.

Notably, the level of satisfaction with the actions of Chinese courts has decreased (52 percent this year, compared to 63 percent a year ago) while satisfaction with administrative actions has remained steady (58 percent this year, compared to 61 percent a year ago). This may be a result of increased efforts to improve administrative IPR enforcement through the work of China’s IPR Leading Group.    Overall, almost half (47%) of the respondents believes that IPR enforcement has improved over the past five years.

AMCHAM also looked at some of the more recent issues which have elicited US attention, such as forced technology transfer, data security and trade security theft.  AMCHAM identified forced technology transfer as a condition of market access as an issue of concern to US industry by 35% of respondents, with 37% saying that the issue is increasing compared to 27% who said it was increasing last year.   In addition, 46% of respondents expressed concern over data security in migrating data to the cloud in China, 42% said the risk of data breach to their China operations is increasing, and 26% have said that proprietary data or trade secrets from their China operations have been stolen.

In a recent survey, the US-China Business Council, identified trade secret issues as the IP infringement of greatest concern (36%), followed by trademark (29%), patent (26%), and copyright (6%).

Whether or not the results are statistically “debatable”, the US China Business Council conducts an end of the year survey, which reflected similar business concerns in 2012.  According to their survey, 36% of respondents surveyed viewed trade secrets as their first priority in IP protection, followed by trademarks (29%), patents (26%) and copyright (6%).    Ninety-five percent of its members were either “concerned” or “very concerned” about IP infringement.    Slightly over half (51%) said they had seen some improvement in IP enforcement over the past year.   Intellectual property enforcement ranked number five of the top ten issues of surveyed companies, the same as last year.

Prepared by Mark Cohen and Jae Zhou.

Full disclosure: Mark Cohen was formerly chair of the IP Forum of AmCham and helped develop some of the questions used in 2009 and 2010.  Of course, the statements in this blog also do not reflect the opinion of any US government agency, or any other third party, but are the authors’ own.