China Software Revenues Rising. IP Protection Following?
Xinhua just came out with an article entitled, "China's software revenue up 22.9% in first eight months," both touting the increased growth in this area and making clear more remains to be done if China is to become a true powerhouse. The article reports China's software industry booked nearly 46 billion dollars in revenue for the first eight months of this year, "according to the latest statistics from the Ministry of Information Industry." Of this, "software products accounted for 121.25 billion yuan, up 24.1 percent; system integration made up 84.05 billion yuan, up 18.5 percent; software technological services was 55.81 billion yuan, up 23.9 percent; embedded system software was 74.26 billion yuan, up 24.5 percent; and IC design collected 8.52 billion yuan, up 27.6 percent."
Though this performance is impressive, China still has a long way to go in the software industry. An Information Ministry spokesman noted "China's software industry lags far behind the international advanced level, with less than six percent of the global software market share, and it even cannot match the development of hardware manufacturing in the country." One reason often given for China’s poor performance in the area of software development is the poor protection provided for software under China’s IP system. Currently, much of China's software development has been in those areas where strong IP protection is less important. The projected changes in the software industry will require Chinese companies to expand substantially beyond those areas, but to do so software IP protection will need to follow.
As China's software industry continues to develop, China's protection of IP in software will also improve. Unlike many other industries, a strong software industry absolutely requires strong legal protections. It is clear China has made the commitment to grow its software industry to an international standard. Development of the IP regime to increase protection of software will be an essential element in that development program. Ironically, foreign companies in the software business that compete with Chinese developers will reap the benefits of the improvement in the domestic system. To reap those benefits, however, foreign software developers will need to learn the system and aggressively employ it to protect their product.
