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The war of Intellectual Property in China

The US has three big trade wars running and demanding the intellectual property ( IP ) protection, market access and ending subsidies. Leo Austin, the UK based businessman who has decades of experience in China gave us this comparison, between cultural attitudes to intellectual property protection.  China is having the best interests to get it right when one of these wars happen, Leo predicts that it will be the war of IP.

The middle income trap is the most feared by the Chinese. The risk of becoming just a production house or little more is what keeps them cautious. The Chinese gave the example of Thailand, which is called as the “Detroit of Asia”, which is the 12th largest auto-manufacturing hub in the world. But majority of the brands and technology are foreign-owned and Thailand ranks the lowest of being 81st in GDP per capita.

In 2017, the Chinese filed for almost 1.3m patents, 6.4m trademark applications and 860,000 industrial designs. Which concluded that they do believe in IP. They intend to raise domestic content in fields like IT, robotics, Aerospace, maritime equipment, rail, alternative-energy vehicles, power, pharmaceuticals, and agriculture too. The ‘Made in China’ plan for 2025, their industrial strategy caused such an alarm and was also viewed as a global threat. But China’s investment in core science has not worked that well for them. The conference board analysis showed some intangible investment in China tripled as a share of gross value was added from 1995 to 2016. But the same level of investment would have got triple the returns out in the United States. The Chinese country has been plagued by an inefficient state sector and politically directed lending. State-owned enterprises still captured 82 per cent of all bank loans in 2018. That Is said to improve, but let’s see.

More than 5 million Chinese citizens have studied abroad, and only some 3 million of them have returned home. According to the Chinese job site Liepin, 75 per cent of all employees in the Chinese internet industry in 2017 were educated abroad. This implies that the total breadth and weight of the learning system has already passed the tipping point, this also means that the localities now can come together to join forces and start innovating without the need of foreign help.

The e-commerce revolution, where the Chinese found that the highest returns came through new business models, and not through this protectable IP. As it was difficult to effectively defend these models through legal systems, China came up China-speed competition as their defensive tool. Now China wants to invest at the top of the exploration chain. Once Huawei was left out from the Android ecosystem, it boosted the investment in a huge project to develop its own operating system. It was expected to license, wherever it can, as a direct competitor straight to Google. Many other Chinese companies are trying to “own” IP across their Industry chains, but none of that will be worth anything if it can just be stolen and subjugated by others. In the years of 1970s and 80s, Taiwan was known to be the ‘pirate kingdome’ by the Us, as they huge rates of IP infringements. It was an ongoing economy, famous for light industry and leather manufacturing. By 1989, the US Special Trade Representative put it on the Special 301 Priority Watch List for failure to protect US intellectual property rights, and prevented its entry into GATT, the predecessor to the World Trade Organization.

The Chinese court system can work for IP security, but it’s still not easy. Detection is too hard, damages have been too low. Yet there are now 18 IP tribunals round the country, and the Chinese are suing each other in record numbers. The Shanghai IP court had completed almost 6,000 cases by mid-2018. It awarded France’s Dassault Systemes $2.2m in damages last year in a case against a Chinese rival. But, there is still hope.

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LexisNexis risk solutions study reveals sharp rise of financial crime compliance costs

Decision makers inside banks, investment firms, asset managers and insurance firms identify the drivers impacting financial crime compliance. LexisNexis® Risk Solutions revealed that the results of its annual True Cost of Financial Crime Compliance Study for the U.S. and Canada. The total projected cost of financial crime compliance for the region is approximately $49.9 billion. The survey illustrates the sharp increase in financial crime compliance costs.

The study projects the average annual cost of financial crime compliance for U.S. financial institutions with $10 billion. Pandemic Continues to Spur Growth. The pandemic continues to negatively impact compliance operations. Sixty eight percent of U.S. respondents report longer times required to complete due diligence. Fifty five percent of U.S. respondents report reduced productivity compared.

More U.S. financial institutions now rank real estate and hospitality as top money laundering risk segments. Crime involving digital payments, trade-based money laundering and money mule schemes are on the rise. Digital currency is a growing problem for Canadian firms. Crimes involving digital payments have the greatest impact on compliance costs. Cryptocurrency crimes have the greatest impact on compliance costs for Canadian firms. The survey results demonstrate that financial institutions are battling a broader set of issues.

Survey respondents indicate that a lack of current and extensive data tops the list of Know Your Customer (KYC). Leslie Bailey, vice president of financial crime compliance strategy for LexisNexis Risk Solutions stated that the study shows clear linkages between the pandemic, digital crime and increasing regulations. Hence, financial institutions need to prepare for expanded compliance obligations and risks from emerging financial crime. Bailey added that digital transformation is a game-changer for financial crime compliance operations.

This will require a sophisticated approach that incorporates insight into digital behaviors. This study surveyed 145 decision-makers in the U.S. and Canada. Responses were collected in June 2019, August 2020 and June 2021. Organizations such as banks, investment firms, asset management firms and insurance firms. The total annual cost of compliance across firms was calculated using survey data. The spend amount was generated by multiplying the average percent allocated to financial crime costs.

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COP26 delegates agree on need to deliver on $100 BLN climate finance pledge

Delegates heading to the COP26 U.N. climate summit in Glasgow. These delegates agreed that they must deliver on the $100 billion per year pledge. COP26 president Alok Sharma said that, it is to help most vulnerable nations for tackling the climate change.

After many days of meetings at the pre-COP26 climate event, which happened in Italy, Sharma said that there was a consensus to do more. Which is to keep the 1.5 degrees Celsius target within reach, adding more needed to be done collectively in terms of national climate plans.

The COP26 conference in Glasgow aims to secure more ambitious climate action. This is from nearly 200 countries, those all that have signed the 2015 Paris Agreement for limiting the global warming, well below 2.0 degrees Celsius. And to 1.5 degrees, above pre-industrial levels.

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City’s exposure to Evergrande is very minimal-Hong Kong finance Chief

Hong Kong’s exposure to debt-laden developer China Evergrande Group is very minimal at 0.05%. This is of banking assets, South China Morning Post reported, citing the city’s finance minister. Financial Secretary Paul Chan told the newspaper that it is very minimal and won’t cause them any systemic risks. He added that he had arrived at the conclusion after a recent audit of the local banking sector’s exposure to the company.

Chan also said that the Hong Kong’s stock market was inevitably subject to some volatility. This is amidst a recent mainland crackdown on some industries. But still he believed any setback would be temporary. With liabilities of $305 billion, Evergrande has sparked concerns its cash crunch could spread through China’s financial system. This may reverberate globally and that is a worry that has eased with the Chinese central bank’s vow, to protect homebuyers’ interests. Evergrande has missed two bond interest payments. Bondholders have said this and its offshore debt, amounting to about $20 billion, trades at distressed levels.

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