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China indigenous innovation policy could stifle innovation, foreign investment

There has been a flurry of press about China’s Indigenous innovation policy, which will threaten US intellectual property rights. The policy requires companies to develop their intellectual property in China if they want to qualify for preferences under that country’s government procurement program. U.S. companies are concerned that they will lose big, and President Obama has even stepped in to work with Chinese officials to come to some sort of agreement. He also plans to address the piracy taking place against US filmmakers and musicians, which has been happening for many years, with little success by US officials to stop the criminal activity.

Google and GoDaddy have abandoned their business in China due to the government’s strict regulations. Are we going to see more US companies abandoning China? Is the Chinese government pushing foreigners out to allow domestic companies more success? Here is a great piece from CNN about Microsoft’s battle in China. Microsoft has often said that their business in China has brought them tremendous revenue and the growing economy has paid off for the company. The battle was tough but worth it in the end.

While many companies are worried about the increasing regulation and changes brought forward by the Chinese government, the opportunity to invest in a growing economy like China, is too good of an option, and has not stifled their intentions to invest in the county. Like Microsoft, the road may be a bumpy one with many hurdles, but pay off in the end. It will interesting to see if Google put its tails between its legs and goes back to China, and conforms with censorship requested by the Government. Hopefully, President Obama and his team will be able to hash out an agreement that will not prevent foreign companies from investing in China and will also put a damper on piracy.

Software vendors are well aware of the issue, as is the BSA, who has been very busy in China, cracking down on piracy!

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