China’s economic and industrial transformation is occurring so rapidly that foreign companies often fail to appreciate the risks of doing business in the country. This is particularly true in the sphere of intellectual property (IP), where companies now enjoy much greater protections but have simultaneously been tripped up by competition regulators’ increased scrutiny of their patent and licensing practices.

China’s ability to protect patents has grown after decades of non-existence and non-enforcement. In 10 years, the number of patent litigations filed has more than quadrupled, with close to 10,000 cases submitted last year.

The Chinese government’s new specialised IP courts now provide companies with an enforcement mechanism comparable to, if not better than, those in Europe and the US. Litigation in China also offers many advantages to patent owners, including win rates above 75 per cent (and even higher for foreign patentees), injunction rates above 95 per cent, short time to trial, scant discovery and low costs (less than one-tenth of those incurred in the US). Most importantly, because so many supply chains pass through China, a single litigation can effectively impose a global ban on sales of a disputed product.