David McMullan, the International Editor of ChinaMotor Magazine, offers his analysis of the motorcycle market trends from China. An Englishman covering the Asian market for almost a decade, McMullan notes the first half of 2012 show a decline in production and sales, which are at a six-year low. – MCUSA Ed
Motorcycle duplication has become a big problem for some major manufacturers in Chongqing and has yielded huge profits for those producing the cloned machinery.
Mr. Liu Chengguo, chief of Loncin's Intellectual Property Rights Department (IPR) is shocked, stunned and not a little amazed after discovering that Loncin motorcycle models are being duplicated by other Chinese motorcycle manufacturers for export. Liu Chengguo told me that his investigation indicated that Loncin motorcycle duplicates found overseas are made by fellow Chongqing motorcycle manufacturers.
Last November Liu Chengguo received a text message revealing that a batch of Loncin general purpose engines had been cleared by customs for overseas export. As no such export had been scheduled Liu Chengguo and Loncin security made a mad dash for the port. On opening the suspect container the Loncin team were amazed to discover clones of their engines badged with the ‘Loncin’ tag. Liu Chengguo fumed “I should be happy as this batch of products is made in Chongqing, so we can file a lawsuit against the Chongqing duplicator in China."
Loncin filed a lawsuit against the duplicator at the end of last year. According to the verdict released in September, the duplicator will compensate Loncin to the tune of 700000 RMB for the attempted export of 400 engine clones.
Liu Chengguo is far from happy though "This is just a tip of the iceberg. We only hunted down and seized one of 3 containers of duplicates that day. My estimation is that the duplicators made a profit of tens of millions of Yuan by exporting Loncin general purpose engine duplicates.”
Most duplicates are sold overseas
According to statistics from Chongqing Customs, the export value of Chongqing’s moto/auto trade in the first half of 2012 was USD $25.04 billion up 70% year-on-year with Chongqing comfortably remaining China’s number 1. IPR infringement has become a common issue in the auto and motorcycle industries.
Investigations have shown that most of the IPR infringements are perpetuated by fellow Chinese motorcycle manufacturers. Mr. Chen Guanyi and Mr. Li Song, Chief of Chongqing Southwest Trademark Bureau Patent Department and Chief of the Company's Foreign Affairs Department stated that ‘the patents and trademarks of most of the major Chongqing motorcycle enterprises are being regularly infringed upon with only a few of the 'infringed' overseas patents and trademarks successfully reclaimed.
Mr. Wang Hu, the Head of Chongqing Patent Bureau Laws & Regulations Department, told me that the perpetuators are mostly Chongqing or Chinese motorcycle manufacturers and that at least 70% of the overseas IPR infringement cases that the department handled last year were involved with Chinese motorcycle enterprises.
Mr. Zhu Xiaoman, the Deputy General Manager of Lifan Motorcycles stated that Lifan have also encountered the same problem."What we fear most is to encounter our motorcycle duplicates abroad. Loncin was not the only company to have encountered motorcycle duplicates overseas, big motorcycle manufacturers such as us and Zongshen have had the same experiences.”
It is very easy to duplicate, but very hard to get a license
Once duplicates are made they're generally shipped overseas. Major Chinese companies like Loncin, Zongshen and Lifan have all been affected by the issue.
“It is no surprise that the duplicators are Chinese” Zhu Xiaoman continued "It's very easy for a company to duplicate. Chongqing's motorcycle industry is greatly developed, and motorcycle parts makers know one another. One can tell which part is made by a particular maker just by knocking down the motorcycle. So, it's very easy for duplicators to duplicate a motorcycle. They purchase a motorcycle, knock it down, and find out the parts makers, and then duplicate a great deal of motorcycles.”
Most enterprises haven't applied for overseas patent rights
Chen Guanyi reports “many Chongqing enterprises haven't applied for patent rights protection overseas, and this makes it impossible for them to take action. The high costs are the major reasons that stop enterprises from applying for IPR protection as it will cost about RMB10, 000 to 20,000 to apply for a trademark, and cost up to RMB 200,000 to apply for an intellectual property right for an item.
In addition, some enterprises worry that their patents will be 'cloned' by others once they publicize their patents. It is very costly to reclaim their technical patents or trademarks, and also can take up to 2 or 3 years. "They may as well not apply for a patent or intellectual property right as it is still hard to safeguard their legal rights even when they have patent rights and IPR,"
Li Song continues "Some SMEs (small to medium entities) don't show foresight as they only apply for core technology patent rights in China. It'll be too late for them to protect their technical patent rights when they start to export their products. Besides this, a lot of Chinese enterprises' money spent on IPR and trademark protection goes to waste as they are not familiar with the overseas IPR rules. Some may have to pay extra money to maintain their patent rights if they happen to choose the wrong agents. The efforts made by enterprises may be in vain as they don't know full information for overseas patent rights application. Their application may be rejected if the patent rights are already taken.”
Work together with partners for patent application
Mr. Chen Guanyi stated that it's very hard for consumers and local governments to tell real products from counterfeits if products don't have patent rights and trademarks overseas.
"SMEs should learn about the local intellectual property laws, products' related IPR information when they do foreign trade, and also apply for overseas patent rights and IRP as early as possible." Mr. Li Song said that it is very necessary for enterprises to make plans for patent rights and IPR application, especially for the application of their major products and their core technology patents. Patent application can use the same way. Enterprises can apply under the 'Paris Convention for the Protection of Industrial Property', and then directly apply patent rights in the convention's 167 member countries. The Chongqing Municipal Government provides a subsidy of RMB 10,000 to 20,000 per patent right. For further information go to the Chongqing intellectual property rights protection centre.”
My opinion? Pot, kettle and black spring to mind.