By Xiong Weisheng 

 

BEIJING, Nov 28 (China Economic Net) – In an effort to transform the country's intellectual property (IP) into products and services, China is pushing for IP financing to bridge gaps in supply chains.

 

IP financing is an innovative strategy that allows companies to use their IP assets -- patents, trademarks, and copyrights -- as collateral to secure loans and generate revenue. This move comes as global markets increasingly recognise IP's dominance, with such assets accounting for up to 90% of a company's value in major indices like the S&P 500, as per the World Intellectual Property Organisation (WIPO), UN's IP watchdog.

 

In 2023, China's patent and trademark pledge financing reached 853.9 billion yuan, marking a year-on-year increase of 75.4%, benefiting 37,000 enterprises, said Ma Bin, deputy chief of IP operation and management division under China's top IP regulator, at an IP forum held on Thursday during the ongoing second China International Supply Chain Expo (CISCE) in Beijing, 

 

The growth trajectory appears even more dramatic in 2024. "Figures from the first three quarters have already hit 790 billion yuan, a 60% year-on-year increase," Ma revealed, projecting that year-end totals will break the 1 trillion-yuan threshold for the first time.

 

Following the 2022 Patent Law reform which allows patent holders to offer their patents for use at pre-determined fees, regulators have moved swiftly to streamline the IP financing process by formulating a guide on patent valuation.

 

"We have worked with the Construction Bank of China (CBC) to explore how to determine the value of a patent," Ma said, "We compiled data from tens of thousands of patent licensing contracts from the past five years, and gained insights about market prices of licenses across different industries."

 

With such data, the bank has developed an in-house valuation model that can automatically determine the value of a patent without relying on third-party valuation agencies, and "thus expedite the financing process and reduce costs for enterprises," Ma noted.

 

While the valuation model makes progress, data collection remains a key challenge. "We're in urgent need of (licensing contract) data," noted Ba Te, deputy general manager of Shanghai International IP Operation and Management, a company under China's top IP regulator. He explained, "Traditionally, such transactions are considered ‘commercial secrets', so many are unwilling to disclose them." 

 

"To address this, efforts are underway to create a centralised database, with national authorities gradually publishing practical guidelines. While the database may not yet cover highly specific details, it will provide broad recommendations that can be refined over time," the deputy general manager said at the forum.