INTELLECTUAL PROPERTY AND THE COMPETITIVENESS OF SMALL AND MEDIUM-SIZED ENTERPRISES IN THE TEXTILE INDUSTRY IN CHINA CAO Jinyan, Deputy Director General Intellectual Property Development Research Center State Intellectual Property Office of China November 30, 2005

Contents Status Quo of Textile Industry in China Market Position of the Chinese Textile Industry in Domestic and International Markets IPR Protection in Textile Industry Patent Protection in Textile Industry in China Chinese Textile Industry’s Susceptibility to IPR Protection Self-Discipline of the Chinese Textile Guild Influence of IPR Protection to the Development of the Chinese Textile Industry

Status Quo of Textile Industry in China During the first nine months, the amount of export of clothing and accessories from China is about billion USDs, 22% increase over the first nine months in previous year; the amount of export of yarn, textile and manufactured products is about billion USDs, 24.8% increase over the first nine months in previous year.

Market Position of the Chinese Textile Industry in Domestic and International Markets Small and medium-sized enterprises (SMEs) over 99%. –standard of SMEs Less than 2,000 employees; Sales revenue less than 300 million Chinese Yuan (about 30 million Euros) ; or Total assets less than 400 million Chinese Yuan (about 40 million Euros).

Market Position of the Chinese Textile Industry in Domestic and International Markets One of the traditional manufacturing sectors which offers the most job opportunities –18 million employees in textile industry, and more than 100 million employees in the related sectors. One of the most important powers for export of foreign trade in China –export of textile products 95.1 billion USD in 2004, accounting for 16% of the total export in the year, and accounting for ¼ of the total trade of the textile products of the world.

IPR Protection in Textile Industry Patent (invention, utility model and industrial design) –Material, equipment and process –Design, color and pattern of textile products –Finished products Copyright –Design, color and pattern of textile products Trademark Trade secret

Patent Protection in Textile Industry in China Patent applications of invention

Patent Protection in Textile Industry in China

Industrial design

Chinese Textile Industry’s Susceptibility to IPR Protection International textile trade dispute mainly in low-end or medium-end products. Advantage of high-end products in design, innovation, brand, financial resource, advanced marketing techniques and distribution channels. Low or medium end products less susceptible to IPR. High-end products more susceptible to IPR.

Self-Discipline of the Chinese Textile Guild Shanghai Declaration on the Intellectual Property Protection for interTEXTILE- home

Declaration 1. Acknowledging the effect of the intellectual property protection on the long-term development of the Chinese home textile industry, the Chinese home textile industry respects and maintains the intellectual property rights and opposes against any infringement for the intellectual property rights.

Declaration 2. The Chinese home textile enterprises observe the Chinese laws, administrative regulations and department rules and abide by international conventions to which China has acceded, regarding the protection of intellectual property rights.

Declaration 3. The Chinese home textile enterprises promise to comply with the rules set up at the exhibitions, held both home and abroad, related to the protection of intellectual property rights, to avoid any action of infringement to the intellectual property rights and not to demonstrate any products involved in counterfeiting issues.

Declaration 4. The Chinese home textiles enterprises strengthen the self-discipline, mutual monitoring with each other for the purpose of promoting the intellectual property protection.

Declaration 5. The Chinese home textile industry carries out the principle of innovation in depth among the enterprises, encourages the original designs for the products by organizing the home textile design competition, promotes positively the implementation of the brand strategy, safeguards the fair market competition environments and protects the self-owned intellectual property of the enterprises.

Declaration 6. During the time period of the exhibitions when the home textiles enterprises are gathered, the dissemination, spread and education of intellectual property knowledge will be conducted and the awareness of intellectual property should be enhanced, making the respect and protection intellectual property become the conscious action of the enterprises.

Declaration 7. The fair and free trade should be enhanced while the intellectual property is protected.

Declaration 8. The Chinese home textile industry strengthens the communication and cooperation regarding the intellectual property protection with the foreign counterpart.

Influence of IPR Protection to the Development of the Chinese Textile Industry Having IPR Protection Awareness is Imminent –Strengthening IPR will encourage enterprises increasing innovation and design ability, build up strong brands, upgrade the tiers of products.

Influence of IPR Protection to the Development of the Chinese Textile Industry IPR Protection, a Choice of All –IPR protection, is called for by more and more textile companies, foreign and Chinese. Chinese companies, with the increasing attention to IPR protection, have come to realize the importance of respecting others’ rights and protecting their owns.

Thank You!