14th Webinar - Anatomy of China’s Innovation Ecosystem: the STAR Market and IP Exchange

Report by Prisca Mirchandani

For our fourteenth webinar, European Guanxi had the pleasure of listening to Dr. Jili Chung on China’s innovation ecosystem. From working in international companies to multiple degrees, Dr Chung’s background allowed him to provide us with a unique perspective of China’s IP innovation strategies. This webinar was focused on the STAR Market, which gives insights regarding China’s innovation and how China has grown in IP exchanges. The moderator of this webinar was Valeria Fappani, from the European Guanxi webinars team.

Taking the temperature of a person’s body is easy but, when it comes to understanding China’s innovation ecosystem, a thermometer isn’t a sophisticated enough tool. Dr Chung started by pointing out how the trade war between the United States of America and China affects everyone: individuals must choose to join or enter the competition. The core is technology: from 5G to the development of new technology, China is growing at a high speed in this sector, engaging in competition with the United States.

However, the development and innovation activities happening in China are hard to seize. Most of the information is available in Chinese, making it difficult for companies to understand China’s position in technological growth. To understand China’s innovation ecosystem, Dr Chung turns to IP (intellectual property). Indeed, every technological development is crystallized into IP with legal rights to protect it under the law. Crystallization changes the utility and allows for the development of this business model to create more value. A few points were made by Dr Chung to understand China’s innovation: it is better that the information is in English to understand, the index value should be closely related to technology, and finally the information should be simple but not too simple, as it should stay sophisticated to reflect the current situation.

Dr Chung analyzed a series of observation points to help any professional entering the locus of the US-China conflict to investigate China’s innovation ecosystem. The STAR Market is the Sci-Tech InnovAtion BoaRd in Shanghai. This market focuses on high gross rates from innovation to scientific development and impressive financial data or selection of financing in the capital market and IP. Because of this special focus on the trade market, companies and individuals can see what is going on regarding innovation in China, despite difficulties accessing the relevant information. Many insights were mentioned regarding the STAR market. Firstly, the investment hot zone: focus on the trading volumes of the different sectors of the industry. If the investment is high, it means that the capital market is looking into the sector, and it is easier to collaborate where most of the money is located. Secondly, the contemporary issues: understanding the relationship with the government and the market on one hand, and, on the other, the focus of development (understanding the regulatory changes and focusing on the government and how its legislation affects the market).

IP exchange is the transfer by sale of the IP. Just like the stock market with stock exchanges, IP exchanges require an effort to facilitate their transfer and rules to guide these exchanges that are mostly done by the government in China’s market. IP exchange is much harder to operate, and each piece of information should be standardized for its distinction. The Chinese government has an important role in IP exchanges. It has created regulations that have allowed IP exchanges to grow at a rapid speed in China, and have facilitated the exchange of patents and IP: the sector needs the government’s support. Many IP exchanges are built under national campaigns such as the Belt and Road or the military-civil collaboration. With IP monetization models, China is creating new models with the pledge of security and not losing the ownership of the company but having enough cash resources to complete other operation tasks.

To understand Dr Chung’s notions, demos and examples were given with information from the STAR market and reports made for the participants to have a preview on how China’s market is analyzed.

The final part of the webinar was the Question & Answers segment. According to Dr. Chung, we need more information to understand the activity in China and should look more into how IP is created and used in China with the STAR market. With cultural expectations, Dr Chung points out how we can understand the exchanges happening. If we can resolve the language issue, it is an interesting business model. A very interesting phenomenon is happening in China that isn’t taking place elsewhere: the discussion of the current deal in innovation and the structure innovation in IP secularization with students before entering the market.

Dr Jili Chung gives a unique perspective on China’s innovation ecosystem and how STAR market and IP exchange make it easier to understand China’s market. China has picked up the secularization of IP and the business is increasing rapidly. The Chinese government is providing more resources and encouraging new business models in IP secularization. To gain more in depth knowledge about the STAR market and China’s market, you can find the full webinar on European Guanxi’s YouTube Channel, as well as all other European Guanxi webinars up to date.