Succeeding in today’s global economy requires more than business and legal acumen. It also requires the ability to communicate across cultures – to understand the values, practices and beliefs that underscore countries’ business and legal systems. Nowhere is this understanding more important than in the area of international intellectual property protection, where success depends upon acquiring and commercializing rights in countries that may seem very different from our own.
Culture impacts every aspect of the intellectual property process, including the way we draft applications, the countries we choose for intellectual property protection, how we interact with foreign associates, the manner in which applications are examined, and perhaps most significantly, the negotiations and ongoing relations we maintain with foreign counterparts. I recently attended a meeting of the American Intellectual Property Association in which the importance of cross-cultural awareness was discussed. While the meeting took a global view, it focused particular attention on China. China was highlighted not only because of its importance in the intellectual property arena, but also because Chinese culture starkly contrasts with US culture in many ways and thus requires particular sensitivity.
The presentation by Shengtao Hu, the Director of IPR Policy at Ericsson China, was especially impactful. Ms. Hu began by citing Geert Hofstede, a Dutch social psychologist who identified certain dimensions of culture that influence our legal and business values and practices. Among those are individualism, long-term orientation, and power distance, and the differences in the ways that China and the US embrace each dimension are notable. While the US scores exceptionally high on individualism, with its focus on individual rights and self-reliance, Chinese culture is highly collective, emphasizing collective responsibility and loyalty to the group. In the area of long-term orientation, the US ranks very low, which generally reflects the country’s short-term preference for getting things done efficiently with a quick turn-around time. China, on the other hand, ranks very high, which attests to the value that the country places on long-term commitments and its respect for tradition. Lastly, while the difference in the power distance dimension is narrower than with respect to the other dimensions, that difference is also revealing. China scores high, which means that Chinese culture tends to accept a hierarchical order in which everyone has a place. The US scores substantially lower, an indication that US culture seeks to equalize the distribution of power and looks for justification when power is unequal.
So what does this all mean for seeking, commercializing, and enforcing intellectual protection in China? The practical lessons are significant. First and foremost, we need to recognize that establishing long-term, personal cooperative relationships with Chinese counterparts is essential, whether those counterparts are Chinese associates, licensees, distributors, or manufacturers. In addition, we have to accept that decision-making and reaching agreement may take longer than expected, and that what we may consider a done deal may be the start of an evolving long-term relationship in the eyes of Chinese counterparts. The implications of all this are considerable. For example, while the Chinese view of contracts is changing (particularly among younger Chinese and in the larger cities), contracts have traditionally been perceived as tools to set forth agreement on main principles and terms, with specific matters to be determined on the basis of consensus as they arise, rather than as the final say. To make matters more complex, it is sometimes difficult to identify those with actual decision-making authority because of the nature of collective consultation and China’s high power distance culture. Recognizing that aspects of Chinese culture create challenges for success should not, however, deter us from engaging in China; instead, understanding the cultural differences and the reasons why they exist should allow us to engage with Chinese counterparts with the knowledge, patience, confidence, and flexibility needed to maximize the benefits of intellectual property protection.
It is often said that doing business in China is a marathon, not a sprint. While there can never be a guarantee of success, it is extremely important to run the race carrying an awareness of Chinese culture and supported by culturally aware counsel.
If you have questions about international IP protection, contact Jay Erstling at 612.349.5771 or erstling@ptslaw.com.