Marina Machado Subject: Case 2-9 Coping with Corruption in Trading with China Prof - 24/02/20 4

Assume you are the CEO of a new firm that has perfected a package of software applications for medium and large sized companies to help manage intellectual property applications (patents, trademarks, copyrights). Licenses for companies in the nited !tates ha"e sold #riskly, at $ %&&& per company for more than a year. 'ow you ha"e heard rumors that your software is #eing pirated in China. (ronic, isn)t it* +rite a #riefing for your #oard of directors with a specific plan of action to address this leakage of your intellectual property into the Chinese market. !e a"" #now that there are "ots of cha""enges entering the China $ar#et for internationa" co$panies% &irst' we need to consider the two broader issues' estab"ishing if the co$pan( either shou"d or not bring its products to China% !e ha)e to consider that China is e)o")ing in techno"og( and inno)ation' and that pro)ides a $easure of hope for a"" techno"og( owners% *t is a ris# and the co$pan( shou"d be prepared to fight it% * a$ here to address this pirac( prob"e$ that our co$pan( $a( ha)e and address so$e certain precautions that can substantia""( "essen the ris#% &or e+a$p"e' setting up a so"e"( owned foreign co$pan( where possib"e to $anufacture the product is a better a"ternati)e' rather than entering into a joint )enture% * sa( that once it pro)ides $ore contro" o)er who has access to the techno"og( and #nowhow% ,rea#ing the $anufacturing process into se)era" discrete operations that are "ocated in different faci"ities can pre)ent an( sing"e group of e$p"o(ees fro$ seeing the who"e process% -nother good wa( to pre)ent techno"og( "ea#age is to $anufacture $ore co$ponents' where $uch of the techno"og( is contained' in house' rather than outsourcing% %

-"so' we ha)e to consider the di"e$$a that faces e)er( co$pan( that has good techno"og( and a "arge $ar#et share outside China toda(% *f the co$pan( does not "earn to co$pete with its upco$ing co$petitors in China' it $a( soon be batt"ing these sa$e co$panies on its own turf% *n ,ra.i"' we ha)e this soccer pro)erb that the best defense is a good offense and this has p"ent( of app"ication here% !e ha)e to be tough and attac# with efficienc( to succeed into the Chinese $ar#et% &urther$ore' China is changing and its cu"ture is e)o")ing and being $ore conte$poraneous% This is a p"us for occidenta" co$panies' such as -$erican ones% *n addition' China beca$e the one of the wor"d/s top patent fi"er in the "ast (ears' fo""owing the 0nited States and 1apan as the countr( steps up inno)ation to i$pro)e its inte""ectua" propert( rights trac# record% This wi"" be )er( benefitia" and cou"d he"p to transfor$ itse"f fro$ a 2$ade in China3 to a 2designed in China3 $ar#et' with the go)ern$ent pushing for inno)ation in sectors such as auto$obi"es' phar$aceutica"s and techno"og(% Therefore' as $ore and $ore Chinese co$panies beco$e patent ho"ders' the( wi"" then ha)e a consigned interest in protecting their techno"og(' just "i#e their internationa" counterparts which brings $ore credibi"it( and confidentia"it( to co$panies in genera" tr(ing to produce things in China% More than an( other factor' this trend wi"" dri)e the future of inte""ectua" propert( protection in China%