Report on “Survey on Global IP Firms of Chinese-related Business” and IP Firms Recommendation
 
Release Party: China IP Magazine
Research Staff: Tommy Zhang, Kevin Nie, Jane Jiang, Monica Zhang, Angela Wang, Emily Tan
 

I.Background

With the rapid growth of knowledge-based economy and accelerated development of world economic integration, the amounts of transnational IP applications and disputes have both soared, which lead to a dramatically increasing demand for corresponding IP services. Therefore, with the fast growth of the IP business some outstanding international IP agencies and law firms have emerged. 
 

Meanwhile, as the Chinese market continues to open up, Chinese enterprises are also accelerating their internationalization. Statistics of recent years shows that, both PCT applications and trademark applications filed by Chinese enterprises have increased sharply; the Chinese copyright protection system has been brought further in line with international standards; Chinese enterprises began to be involved in IP wars around the world. 
 

Against such a backdrop, a growing number of international IP service agencies are turning their eyes to China. By virtue of their expertise and experiences in the industry, these agencies constantly seek to expand their business space and scopes in the Chinese market.
 

In order to get a better understandings of the business status of the aforesaid agencies, China IP and China Daily co-launched “Survey on Global IP Service Agencies with Chinese Business,” which aimed to collect comprehensive first-hand information on details such as the agencies’ strength, scale, personnel structure, featured services, promotion modes and China-related business status, etc. 
 

The survey was carried out for 5 months, from August 1st to December 31st 2012. During the period, over 2000 questionnaires were sent out, covering IP service agencies from 52 countries. More than 502 agencies replied with valid statistics. Meanwhile, we also received 121 recommendation forms filled by industry insiders from in-house IP departments, scientific institutes, the Chinese judicial system and various IP related organizations. These recommendations ensured the authority and objectiveness of the final report. The report was delivered in the 3rd China IP Annual Forum through multiple media channels and had received warm responses from Chinese readers.
 

However, limited by time, territory, trade secrets and other factors, the report may have some drawbacks. We sincerely ask for understandings and forgiveness from readers and relevant units, and promise to do our best on future projects with our experiences gained from this survey.
 

II.Survey Results
 
1. Branch offices
According to survey data, international IP service agencies (agencies) from countries with large amounts of patent applications for invention in China, such as Japan, U.S., Germany, South Korea, France, Holland, Switzerland, Sweden, U.K., Italia, Canada, Australia, Singapore, etc. tend to have more China-related businesses. Most of them have 1-3 branch offices in China, far surpass the average number of Chinese offices set by agencies from countries with less patent applications and grants in China. It also suggests that agencies from these countries develop better and are more competitive in the Chinese market. Among all countries, IP service agencies from the U.S., U.K., Japan and Germany have the most Chinese offices.
 

2.Location selection
According to the survey, most agencies choose to set their Chinese offices in Hong Kong, Beijing or Shanghai. Large agencies with more Chinese businesses incline to open new offices in cities emphasizing on R&D and innovation such as Guangzhou, Shenzhen and Chongqing etc. so as to further explore the Chinese market.
 

3.Personnel structure
Viewing from personnel structure, agencies with Chinese offices normally have at least 2 Chinese staff. Some of the large agencies have more than 100 Chinese employees. Meanwhile, over half of the agencies have non-Chinese staff who can communicate fluently in Chinese.
 

4.Case volumes
Case volumes of the agencies under Survey differ greatly, which ranges from 0 to over 100 per year. There are three reasons for the difference. First of all, the size of the agencies and their business development degree in China vary. Secondly, the trade status between the agencies’ home country and China often exert a great influence on their case volumes. Thirdly, the status of IP and the level of innovation in the agencies’ home countries also contribute to the difference. For instance, large agencies from the U.S., U.K. and other developed countries where IP is treated as a valuable asset often enjoy high case volumes with hundreds of patent applications and litigations as well as thousands of trademark applications. However, agencies from Southeast Asia, Africa and some Latin America have significantly fewer cases.
 

5.Services
It is worth noting that most agencies still focus on traditional IP services like patent and trademark applications as well as litigations in their Chinese businesses. Large agencies have a wider range of service scope; their additional practice areas include domain names, trade secrets and unfair competition, etc.
To build their own brand and attract clients, a number of agencies have developed featured services. Common featured services are patent translation, consultation for in-house IP management, reverse engineering, due diligence, etc. With the trend of IP capitalization worldwide, new services such as patent-related products analysis, licensing and IP (especially patent) asset valuation also spring up.
 

6.Advantages and expertise
In terms of competitive advantage, the majority of agencies under investigation have expertise in particular areas, such as machinery, electronics, medicine and chemicals, and are capable of providing customers with full Chinese services. 
 

7.Clients
An explicit trend is that the clients of these international agencies are shifting from foreign enterprises to Chinese enterprises. At the initial stage of their exploration of the Chinese market, their businesses are mainly on helping foreign companies build IP systems in China, applying trademarks and patents and filing lawsuits against the Chinese infringing enterprises. In recent years, more and more agencies began to represent Chinese enterprises to file PCT applications, international trademark applications and deal with overseas IP litigations.
 

8.Performances
To date, for the majority of international IP agencies, profits gained in the Chinese market account for only a small part of their total profit volumes. Over 80% of the agencies participating in the survey admitted their Chinese businesses account for less than 10% of their total business volume. However, they do believe that as China’s IP industry develops, there will be a growing market.
 

9.Obstacles
Survey results show that while exploring the Chinese market, agencies have encountered some major obstacles such as differences in the legal environment and culture. While for agencies which have just stared their Chinese-related businesses, they have found difficulties in recruiting talented staff and raising funds.
 

III. IP Service Agencies Recommendation

Based on the Survey, China IP concluded “Recommendation of Global IP Service Agencies with Chinese Business.” It takes into consideration of the following aspects of the agencies: number and size of their Chinese offices, number of Chinese employees in the home offices, number of non-Chinese employees with Chinese language abilities, employees based in China, patent and trademark applications as well as litigations in mainland China, average business volumes of the last 5 years, recommendations and so on.
Since the survey data involves trade secrets of the enterprises, to fulfill the obligation of confidentiality, China IP will not reveal the statistics of any agency but only provide recommendations instead.
 

Disclaimer:

1.       This list of recommendations serves only for reference; China IP reserves the right of final explanation.
2.       If any errors are found, please contact the research team of China IP (Email: chinaip.survey@hurrymedia.com)
3.       Recommended agencies are categorized by country and listed in no particular order; agencies that have Chinese names enjoy priority recommendation.