The new regulations on personal data in China have sent shockwaves through the business community, pushing companies to make adjustments to the already existing business models we have today. This comes with implications within China’s domestic sphere, but also for those doing business with China from the outside. It is best to stay informed and better yet to understand from a cultural perspective, why these changes are occurring.

No matter your political stance, China's growing economy can't be ignored. The following introduction to China's counterpart to Nasdaq -- the Science and Technology Innovation Board (the STAR Market) is based on Dr. Jili Chung's presentation at European Guanxi's Webinar, "Anatomy of China’s innovation ecosystem: the STAR Market and IP exchange" from May 22, 2021.

Governments and businesses all over the world operate on an unspoken foundation of various unique and distinct cultural characteristics. Different parts of the world will naturally have different cultural values, such as that of individualism or collectivism. We’re going to dive into the different cultural values that affect the government and enterprises in China, providing different examples about what works and what doesn’t when doing business with China.

Every four to five years, countries all over the world hold public elections, bringing in new leadership, new trajectories, and movements.

​China is well-known for its unique planned economy – national leadership is not directly elected by the public, but instead indirectly elected through the National People’s Congress. Sometimes it is referred to as a socialist-based market economy. The political leadership then issues a new Five-Year Plan (FYP) detailing the desired trajectory and goals of the government within the following five years.

On May 22nd, Dr. Jili Chung, author of Innovation’s Crouching Tiger and founder of an online course about China (coming soon) was the featured speaker in the webinar “Anatomy of China’s Innovation Ecosystem: the STAR Market and IP Exchange”, organized by European Guanxi and moderated by European Guanxi’s Valeria Fappani.

​In the past month, the Ministry of Industry and Information Technology (MIIT), (the regulation body for the internet in China) released notifications regarding user rights violations to dozens of apps.  

MIIT highlighted that these apps have collected personal information beyond the authorized scope and demanded rectification with the coming month.*

This notification is MIIT's continued effort to regulate use of personal information.  In recent months, this tightening control appears to have become a new norm in China's innovation ecosystem.

From Shanghai to the World

Last month an announcement attracted attention from global IP professionals. An international patent portfolio had settled in Shanghai.  According to the source, it is the first of its kind in China. 

The announcement indicates that this patent pool covers more than 50 technical fields and has an international patent portfolio of more than 12,000 patents. It targets Chinese SMEs which need to upgrade their operation with more advanced technologies but fall short of developing their own.
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The pool will operate with standardized licensing terms.  Available licensing durations are one year, three years, five years, and ten years.

NFT mania in the IP arena

Blockchain-based digital artwork has experienced a craze in western countries.  The global monetary inflation further drives investors to seek unique assets across borders, even into cyberspace.  Now the tide reaches China. According to the Financial Times, “Digital art – including NFT (Non-fungible token) – is enjoying an upsurge in Beijing.”
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However, as some mainstream fashion observers point out, Chinese regulations may stand in the way of large-scale adoption.  Numerous regulatory and intellectual property issues have not been tested in Chinese courts,  “there is simply too much unknown from the Chinese law perspective.” *

Stars are falling
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This March, the US Securities and Exchange Commission (SEC) sent shockwaves across the Pacific Ocean, shaking global capital markets.  It adopted the Holding Foreign Companies Accountable Act passed by the Trump administration.  As a result, the SEC now has the authority to demand US-listed companies to affirm that they are not owned or controlled by a governmental entity in a foreign jurisdiction.

 In March 2021, the Fourteenth Five-Year Plan for National Economic  and  Social Development and the Outline of 2035 Long-Term Goals (the "Outline") by the State Council received attention in the global innovation community.  The Outline reveals a major shift in IP policy.  It affirms that funding for intellectual property applications has entered into history. In addition, the resource so saved will apply to strengthening support for IP's subsequent transformation, utilization, administrative protection, and public services in the next stage.

The affirmative position signals that China's innovation ecosystem is turning over a new leaf.