Can you trust China with your Software IP?
The current street price of MS Office in China is 50 Yuan, about 73cents, and that doesn't please Frank Huang, General Manager Microsoft China, who has invested in a large R&D center and global support group in China (which represents just 1% of Microsoft's global revenue).
However this type of rampant software piracy often clouds the picture when considering the general question of software IP protection in China.
As Frank Yu, COO and President of Augmentum pointed out at ATRE2004 in Shanghai, the MS Office piracy is more straight property theft than theft of intellectual property. Noone buying the 50 Yuan copy of Office is set on reverse engineering or re-creating a competitive product.
Yu says that protecting enterprise-class software is a whole different matter, and one that is complicated but solvable in China. And in fact George Hara, a former Chairman of Borland, says laughingly that they used to let people copy their software in China because to use it stimulated the sale of professional services. So one key in thinking about this issue is to differentiate between the street vision of copyright theft and the development and protection of enterprise-class software.
Another key, according to Yu, is to differentiate between prevention and enforcement.
As in most fields, the key is prevention. Augmentum pays intense attention to putting in place best practice in prevention measures, which are not dramatically different to elsewhere in the world, and include employee contractual restrictions and obligations.
The perception that enforcement is difficult in some ways arises because of inadequate prevention measures that have previously been accepted in China. Whereas although India has a 10-year start in establishing a reputation that enforcement is not an issue, in practice the enforcement is equally uncertain due to parochial influences. In China, attention to prevention and an avoidance of enforcement debacles will lead to it having the same reputation as India.
China cannot build a 10-year reputation overnight. But proof of the pudding in the quality of prevention measures lies in Augmentum's blue-chip base of clients, which include 20 leading global software companies. In many cases Augmentum is producing software central to the core of these client's IP, not at the fringe.
The lesson to be taken from Augmentum is that by having the right relationships, and the right commercial and legal approach to prevention, China is a place where your software IP can be protected.
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