Help us out
By Cong Mu / Source: Global Times
In Shanghai’s pilot program, the VAT rate is 11 percent, higher than the 3 percent business tax, but companies are allowed to reclaim part of the VAT with their purchasing receipts.
However, for many of Shanghai First Food’s purchases of agricultural products, they do not get any receipts, so its logistics unit now pays 3 percent more tax than before, Xu said.
Several companies interviewed by the Global Times in May also complained that the VAT program had actually increased their tax burden.
IP issues
The lack of stringent IP protection also compromises the environment for innovation in China, forum participants said.
“There needs to be a good IP protection mechanism to encourage innovation, or else people will copy rather than create,” said Wu Jian, vice president of DuPont China.
From October 2010 to June 2011, Chinese police dealt with 43,550 cases of IP and trademark infringements, which in total accounted for products with a market value of over 500 billion yuan ($78.5 billion), the State Intellectual Property Office said in a white paper in April.
The central government has the resolve to crack down on IP infringements, but what matters are the IP law enforcement in local areas and improvement of the legal processes, which should heighten the costs for the perpetrators, Wu said.
In the absence of significant regulatory improvement, companies are forced to come up with their own ways to protect their IP rights.
“In the US, the IP strategy is all about the legal process, so you need to use patenting in a legal structure to protect your IP. In China you need a different strategy,” Latta of Amina said. “For us, in our collaborations, it does complicate things.”
Instead of paying hefty fees to IP lawyers to protect the patents, according to Amina’s experience, a company needs to work with multiple, selected partners in China, and choose what information to share and what to withhold from a particular partner.
Thus, every partner shares only a limited amount of know-how, but if the process is well coordinated, faster and more cost-efficient innovations than in the US are still possible, said Latta.
Amina is collaborating with Shanxi-based Gemeng International Energy Co on a coal-to-chemical project and sharing IP on 50-50 basis, he said.
Time to hire
For SMEs there is a silver lining to the ongoing global economic slowdown, according to Tony Goodwin, CEO of London-based recruitment firm Antal Ventures.
“When the larger companies start worrying about the market, they stop hiring quite quickly, but that means that the talent that would have normally gone to them is available to the SMEs. So, really, it’s a talent acquisition opportunity for the SMEs,” Goodwin told the Global Times last week.
“It’s actually the smaller companies that are going to get us out of recession, that are going to come up with new ideas, new products and new services that people are going to buy, and that will eventually turn into big companies,” said Goodwin, giving the examples of Facebook and Zara.
“We have to use our economic policies to nurture and encourage this entrepreneurial spirit and thinking.”
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