China questions Canadian cleantech companies should consider

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Is my Intellectual Property (IP) safe? 
For small, innovative cleantech companies, IP is often all they have to offer and hence protecting it is job one, and so a workable IP strategy is often a pre-requisite for China entry. Common tactics include a robust patent portfolio in China, “blackboxing” the essential codes or recipes, keeping the latest 15% of knowhow in-house while licensing the rest, breaking up essential knowhow in separate ‘silos’ across various supply chain partners, and utilizing clear rules and procedures for non-disclosure and non-competition in staffing and 3rd-party contracts.

New Climate Group’s Littlewood offers sound advice. He agrees that one’s IP strategy is critical, yet must be flexible, and cautions that “even with a smart strategy in place, in today’s global world, if you’re not constantly developing your IP then you are going to be dead in the water anyway. The best long-term solution is a strong Chinese partner in a well-defined relationship that is properly structured to make it in your partner‘s interest to also protect your IP.” As an example, Littlewood points to products or services that require continuous support or upgrading to remain competitive, “if you as the Canadian partner are not the ones able to, or agreed to, provide that, then you basically have no lasting value for your Chinese partner, and they will look to move on without you.”

Interestingly, western company executives with extensive time and experience operating in China, more often than not, place IP protection rather far down the list of issues and priorities. Much more of their time is occupied handling operational issues such as difficult administrative approvals, non-transparent market information, local protectionism, talent retention, and the speed of market changes and competitor moves. These same executives often stress that many of the most compelling opportunities that collaborating with Chinese firms can offer—squeezing out unnecessary costs, fast scale-up, or exclusive customers—can be lost to companies that maintain less flexible or over-zealous focus on 100% IP protection.

How do I approach China? 
Have something ‘special’ to showcase. In many cases, Canadian offerings (innovative, niche, high-tech) will be competing with other western countries’ offerings (high tech, high performance, high cost) more so than with Chinese competitors (often lower-tech, less functionality and lower pricing). Cleantech innovation developed within Canada’s traditional forestry , mining, and oil and gas sectors are just a few examples of particular strengths that Canada is developing to deliver cost, quality and environmental performance at home. These are three very important sectors in China that must adopt more sustainable technologies to meet increasingly stringent environmental targets.

Get visibility in front of the right potential partners Peter Corne, Managing Partner of Dorsey & Whitney LLP in Shanghai, points out that “the market situation here is very fluid and very much driven by whom you meet and the way you follow up who you meet. Chinese companies can often be run like little fiefdoms so it is essential to reach the decision makers at the top. This is difficult to do, especially for SMEs with limited resources.”

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