It’s always difficult for me to find something interesting to say about the American Chamber of Commerce’s annual China business survey. The content itself is often of marginal value, with only a couple significant trends hiding away down in the data to be ignored by the mainstream press. Speaking of which, the domestic newsies like to tout optimism stories, while the foreign press enjoys highlighting pessimism, higher costs, IP infringement, and so on. This year is no different in that regard, although there are a couple of items worth mentioning.

The Chamber itself has to be neutral and careful with its rhetoric, so you always get the same vanilla pronouncements. Here’s this year’s message from the Chairman, perfectly written to put folks to sleep:

This year’s Business Climate Survey reflects the new realities of operating in China and the associated uncertainty, but also the optimism and confidence among AmCham China members that the country’s leadership is set on reform and that foreign business has an important role in China’s future.

{non-judgmental yawn}

No one will be surprised by most of the trends highlighted by the survey. Higher costs, lower revenue, cautious attitudes about economic slowdown and government reform — yeah yeah, we know. It’s probably worth your time, however, to take a close look at the material on labor issues. Higher compensation is an old story, but I was surprised just how difficult it is these days for companies to find qualified staff. #1 problem for many companies — didn’t know it was that bad out there.

How about Airpocalypse? Any pollution-related stuff here? Yes, indeed. Almost half of respondents say they’ve had trouble with recruitment and retention because of air quality. In 2010, that number was less than 20%. Has the air gotten that much worse in the last few years? Worse, yes, but that huge swing in responses must be in part a factor of changing public perception.

And I can’t talk about perception without touching on IP. A majority of respondents say that IP enforcement is either ineffective or totally ineffective. Given that the highest response type back in 2010 was “Don’t Know,” I find it difficult to ascertain what people actually understand about this issue. A clear majority also say that IP enforcement has improved or stayed the same in the last five years. So the bar was so low five years ago that even with improvement, the system is still completely useless?

There is a clear trend here of a rising sense that the system is ineffective. This has risen from 33% of respondents in 2009 to 54% this year, dropping slightly from a high of 58% in 2013 (the “totally ineffective” numbers have risen as well). That would be utterly depressing (if I thought it an accurate reflection of reality). Has the system deteriorated significantly over the past few years? I’m not a private practice IP lawyer any more, and yet I think I would have heard about such a dramatic shift, particularly when legal reforms are still proceeding apace. Again, I have to wonder whether there is a perception/reality gap here.

Additionally, respondents are much more favorable towards administrative enforcement over court action when it comes to infringement cases. No surprise there — the admin route is the one you take when you want quick action and don’t care so much about money. Procedure is straightforward and quick; if you have a trademark or patent, you hire an agent and apply for a raid, and you’re off to the races. If you end up in court even with a winning case, you’ll still have a judge trying to force you into a settlement. And even if you get a favorable judgment, you might not even recoup your costs.

With respect to specific types of IP issues, respondents highlighted company name protection and trade secrets as being of particular interest these days. I’m afraid I don’t understand what the problem is with company name protection. Many managers I know do not even understand the difference between a company name and a trademark, and it would surprise the hell out of me if a large number of respondents are embroiled in disputes over their company name registrations. Something screwy with this one.

On the trade secret/hacking front, a sizable majority see the risk either increasing or staying the same, and yet over the past three years, only about 1/4 of respondents say that their info has been stolen. By the way, asking folks whether their proprietary data or trade secrets have been stolen is perhaps not a good way to frame the question. Who hasn’t had an ex-employee take some info on his way out? So I’m thinking these numbers might make the problem look much worse than it is. Coupled with all those sensational hacking and industrial espionage stories floating around out there, I’m not surprised at the heightened perception of risk.

Before signing off, here’s my usual advice for anyone reading these surveys: take ‘em for what they are, and don’t read media summaries that attempt to make sweeping generalizations. Look for significant trends and issues that appear to be important to management types, but do not then automatically assume that their perceptions are always an accurate reflection of reality. (That obviously applies to my opinions as well.) :)


© Stan for China Hearsay, 2014. | Permalink | No comment | Add to del.icio.us
Post tags:


Visit the original source and full text: China Hearsay