Hake IPRinChina

IPR in China – Industry Perspective: 

IPR in China – Industry Perspective Rick Greene Senior Vice President Kater Hake V.P. Technology Development Delta and Pine Land Company

The Big Picture: 

The Big Picture Differences in GDP by Sector & Employment by Sector lead to alternative political strategies regarding National self sufficiency China USA Source: Wall Street Journal 4-28-07, CIA Factbook 2006 Estimates Ag Services Industry GPD Labor GDP Labor

D&PL in China: 

D&PL in China Second largest cotton planting market in the world Began exploring business opportunities in 1993 Two Rep Offices in Beijing Two JVs formed and approved in 1996 and 1998 One JV signed in 2001, but never approved by Chinese government Significant Government Regulatory issues

Challenges in China : 

Challenges in China The government owns virtually everything Our JV partners are government entities Our main competitors are government owned seed companies Many industries are highly regulated Limitations on foreign ownership and participation in IP protection Government Approval of Investments, contracts, Operating Agreements, etc. General Government requirements for normal operations For example, 7 governmental agency approvals needed to pay a dividend Government approval needed for accounting reserves, destruction of obsolete inventory, etc. Operating Permit and other issues- i.e., not just paying a fee and getting a business license Key to Success- hiring people who have and maintain “Guanxi”, i.e., relationships- who you know

Challenges in China : 

Challenges in China China’s government appears to be impervious to world political pressures Unwillingness to devalue currency No real progress on Intellectual Property Protection Issues Even though WTO member, little follow through on some commitments U.S. soybean imports issue

IPR Challenges in China: 

IPR Challenges in China Almost no respect for IP ownership local enterprises often do not follow the rules, the playing field is rarely level for all parties IPR is sometimes acknowledged but rarely enforced Occasional displays of IPR enforcement but mostly for propaganda

Seed Challenges in China: 

Seed Challenges in China National independence asserted Parochial self-interest to remain independent Chinese policymakers have stated: “There are unacceptable risks of being dependent on imported technologies for food security” and that China would not commercialize a biotechnology trait if there was not a Chinese equivalent Quote source: ISAAA

China - Business Best Practices: 

China - Business Best Practices Take the time to learn the Business Culture In the U.S., it’s mostly about the Bottom Line and getting the job done In China, relationships and hierarchy are more important In China, be prepared for Banquets and Beijo (caution- you may have to eat the fish head) Surround yourself with trusted locals who have knowledge and influence (Chinese Guanxi) Former government employees sometimes make the best consultants Do your Due Diligence Talk to competitors Recognize the local practices Remember “no deal is better than a bad deal”- don’t be afraid to walk away Most importantly, prepare yourself to BE PATIENT!!!

China- Seed Best Practices: 

China- Seed Best Practices Plan for potential loss of IP and develop strategies to minimize (delay) exposure of key IP Cycle products rapidly, offering value and improved products every 3 to 4 years Utilize multi-layer systems to protect your IP hybrids test and seed increase with trusted partners proprietary seed conditioning and treatments register trademarks, brands anti-counterfit measures on bags and products Patents & PVP (4/24/07 GAIN Rpt. on PVP in China) http://www.fas.usda.gov/gainfiles/200705/146281012.pdf