When a foreign company wants to construct a new building in China, it is required to work with a so-called “design institute,” a Chinese company that must approve every part of the design. Although this is ostensibly a simple process, US companies have found a number of challenges that frequently arise when working with design institutes. These can include theft or misappropriation of intellectual property (IP), requirements to procure from specific vendors, and poor service.
Intellectual property has received high-level attention from the Chinese government in recent weeks, with government agencies actively touting progress on intellectual property (IP) issues, particularly increased enforcement activity and a growth in registered patents, trademarks, and copyrights through the first half of 2014. China has also actively engaged foreign partners on IP, sending two delegations to the United States for negotiations and training, which included several industry programs hosted by the US-China Business Council (USCBC).
Overcapacity, or a glut of production capabilities, is a growing concern for US-China Business Council (USCBC) member companies in their China operations, according to USCBC’s 2014 business environment survey. For the first time since 2009, overcapacity made the top 10 list of challenges, with almost 50 percent of respondents saying that in recent years the issue has gotten progressively worse.
American companies doing business in China are experiencing continued pressure on profit margins, driven by increasing local competition and rising costs, according to the US-China Business Council’s (USCBC) 2014 member survey. The survey, which will be released next week, shows that uncertainty about China’s policy direction is also coloring perceptions about the business environment.