Facing the Real Risk of Theft from Your Bank Account in China

An increasing number of friends are reporting troubling cases of theft from their China bank accounts. One friend, after years of working in China and saving every penny, was preparing to return to the US, but suddenly every penny in her ICBC bank account was stolen. The ICBC bank officials told her that someone had a copy of her card and had taken the money out. She asked how this was possible without knowing her password. No explanation was given, except that it was somehow her fault. She spent five days arguing with them and got nowhere. They said that the thief could have been working with her to perpetuate fraud on the bank, so why should they refund her money? Her only option now is to sue, but she has to go back to the US soon and fears she won’t have the ability to pursue the case. But we’ve encouraged her to work with a lawyer to fight this. She will, and I hope to have good news to report sometime.

Her story has almost exactly the same set of facts that we find in a chilling account, “How I sued the world’s largest bank and won” at Shanghaist.com. In this case, it was a smaller amount, 15,000 RMB that was taken from the author’s ICBC account. He encountered the same helpful consumer service policies and attitudes, and was forced also to sue for something that was clearly not his fault. He won, and it only took 7 months and some modest attorney fees to get his money back.

If you have a bank account with an ATM card, there is a real risk that one day money will begin disappearing from your account. There are some very high risk factors in China you need to understand:

1) The daily limit for ATM withdrawals is much higher than it is in the U.S. and Europe. A thief typically can take out 20,000 RMB a day (over $3,000), which is 5 to 10 times higher than typical US limits.

2) The daily limit may not be over a 24-hour period, but may be based on the calendar date, so if that applies to your bank, then a thief can take 20,000 RMB out at 11:55 pm, and another 20,000 RMB out at 12:05 PM.

3) Banks in China often don’t have effective anti-fraud protection.

4) There are many thieves with card copying or card scanning devices who can make a duplicate of your card. If they or a small video camera can watch you enter your password, having your account number and your password leaves you defenseless.

5) Thieves can sometimes pull money out of your account without using your password. I don’t know how this happens, but it has happened to multiple people in China, and it happened to us with our US bank.

6) When someone pulls money out of your account without knowing your password, it should be the bank’s fault and they should reimburse you. But consumer service attitudes and policies may not be identical to those in your home country. China banks may tend to blame the customer and argue that maybe the thief was collaborating with you, so they might not cooperate unless you take them to court. You can sue and win in China, but it will take a lot of work and the help of an attorney.

Because money in the bank is so vulnerable, I suggest several best practices:

1) Do not keep large amounts in any single Chinese bank. Move a lot of it into US accounts without ATM cards or with two-part authentication, and keep plenty of cash.

2) Use your bank cards as little as possible. Instead, use cash to make payments when possible.

3) Do not let employees walk away with your bank card (they might run it through a card copier device of some kind). Keep your eyes on it.

4) Do not let your card be scanned in any place that seems questionable or seedy.

5) When using ATM machines, look for unusual devices, small video cameras, etc., that might have been added.

6) Keep good records of where you have been so that if the bank says it must have been you that pulled all your money out of your account in, say, Harbin, you can prove you weren’t in Harbin that day.

7) Monitor your bank account frequently, and make sure you receive automatic text messages when money is taken out of your ATM.

8) When you do find a problem, document in detail who you spoke with, what you said, what they said, etc. You will needs lots of documented details if you have to sue the bank to get back missing money.

9) Avoid trusting your money to any bank that has a bad track record of protecting the money of its customers. If you know of banks that have performed well in this regard, please let me know.

These problems are not unique to China, but they seem to be a lot more frequent here and more severe, especially with the high daily minimum that thieves can take out.

If you do online banking, your risks are also high due to hackers. I suggest you use complex passwords that you change often, and only use secure computers to access your bank accounts. It’s good to have a cheap computer that is never used for browsing but only for bank access, and even then keep good firewall and anti-spyware software on it, keep it updated, use more secure browsers like Chrome or Firefox, and don’t use untrusted wifi networks to access your accounts. For added security, use VPN when you access your bank account.

Don’t keep all your money in any one account, and keep a wad of cash somewhere, too. Thieves can get everything, but we shouldn’t make it easy for them.

By |June 17th, 2015|Categories: Business, China, Finances, Internet, Investing, Scams, Shanghai, Shopping, Surviving, Travel tips|Tags: , |Comments Off on Facing the Real Risk of Theft from Your Bank Account in China

St. Gobain Celebrates 350 Years of Innovation with a Temporary Pavilion on the Huangpu River in Shanghai

St. Gobain, one of the world’s oldest companies (350 years!), just had their Innovation Days celebration in Shanghai on Sunday. I was privileged to be a guest and to learn more about this innovative Fortune 500 company, headquartered in France, that produces leading materials like special glasses and abrasives.

To celebrate their 350th anniversary, they built a temporary pavilion on the Bund near the International Cruise Terminal area, just east of Suzhou Creek, and it is now open to the public for a few days. But you have to reserve a ticket for specific times. Make your reservations at http://www.saint-gobain.com.cn/en/350th_anniversary.html.

I especially enjoyed the display with mirrored walls and actively lit glass inside, and the display highlighting the acoustic insulation materials they produce. Booming loud inside, quiet outside.

Here are some photos from the event I attended:

By |January 14th, 2015|Categories: Business, Industry, Innovation, Photography, Shanghai|Tags: |Comments Off on St. Gobain Celebrates 350 Years of Innovation with a Temporary Pavilion on the Huangpu River in Shanghai

Gelato Update: Le Creme Milano at South Shaanxi Road Is Wonderful, But Beware the Rogue Store in Xintiandi

Ever since my visit to Italy a year ago, I’ve been on a quest for good gelato, and have found a couple of fairly good brands here that draw upon Italian know-how.

Gelato was on my agenda following an intellectual property conference in Shanghai, the IP Business Congress Asia 2014, held Dec. 8-9. My wife and I took an IP lawyer from the States and his wife to dinner at the beautiful and delicious TMSK in Xintiandi. After dinner, the lawyer and I wanted to try some gelato, so we went west to Danshui Road to visit a Creme Milano gelato shop, a gelato chain in Shanghai where I’ve had some excellent gelato several times in the past.

When we entered the store, something seemed a little different. No, a lot different. The gelato bins, normally full and carefully groomed, looked sloppy and the trays were mostly empty. What remained looked rather like old relics. We did the best we could by finding a couple of flavors to order from the few surviving bins, but the flavor and texture was unimpressive and the servings were unusually small and stingy. What had happened? Were sales so poor in our cooler weather that the store had just given up and failed to keep up appearances? I was let down.

The next day, I had lunch with another friend and mentioned the bad gelato experience. He knew the people running the business or at least helping to run it. He said he would them give my feedback. He called later that day to tell me surprising news from the owner: the gelato store we had visited was a rogue shop that no longer was getting its product from the authentic source as they were supposed to. I don’t know if the product we had was leftover original gelato or some fake gelato or ice cream from another source. But it wasn’t what I was expecting and what I would find again at the mother store on South Shaanxi Road.

After I sent an email to the owner of a gelato brand in Shanghai about my disappointing experience in the rogue shop and their need to take action to protect their brand from being tarnished, the owner invited me to come to the mother store at 434 Shaanxi South Road in Shanghai’s beautiful French Concession area. We were warmly greeted by the store manager and marveled at the contrast between what we could see in front of us and what we had seen in the rogue shop.

Jeff in front of the mother store of Le Creme Milano

Jeff in front of the mother store of Le Creme Milano

The difference in taste was even more impressive. Gelato is not just another name for ice cream. There are large differences in method of preparation, the ingredients, and even the temperature it is served at. Gelato is more like a rich, very thick fluid rather than the fluffy solid of common ice cream. It takes skill and artistry to make it right, and what a delight it was to encounter real gelato once again. Ahhh!

Real gelato, fresh and delicious, at the South Shaanxi Road station, across from the Shanghai Culture Square.

Real gelato, fresh and delicious, at the South Shaanxi Road station, across from the Shanghai Culture Square.

We ordered some gelato after sampling several heavenly flavors. I ordered a small cup with a little pistachio flavor and a little blueberry yogurt. The small cup was packed to hold about as much as possible, nearly overflowing with goodness, unlike the miserly, well-below-the-rim portion I received in a cup of the same size at the rogue shop. Both flavors were unforgettable. To my dismay, though, after we received the gelato, the manager refused to take our payment. What kind treatment! It was my birthday, but they didn’t know that in giving me this perfect birthday gift on a little birthday adventure.

Experience real gelato at a real Le Creme Milano store in Shanghai. There may be one or more rogue shops out there selling inferior product, based on what I experienced and learned from the owner. How disappointing that there are stores (at least one) with the nameplate of Le Creme Milano that aren’t selling the real product. I hope the other Creme Milanos in town are legit. One way to check is to email the store using their contact page at http://www.lecrememilano.com/#!contact-uk/c2q4.

A small cup with a generous portion of gelato at the mother store on South Shaanxi.

A small cup with a generous portion of gelato at the mother store on South Shaanxi.

By |December 29th, 2014|Categories: Business, China, Restaurants, Shanghai|Tags: |Comments Off on Gelato Update: Le Creme Milano at South Shaanxi Road Is Wonderful, But Beware the Rogue Store in Xintiandi

Update on Tralin Paper (a.k.a. Tranlin Paper or Quanlin Paper): Financing Based on Chinese IP Now Creates Jobs in America

I previously reported a remarkable IP-backed financial deal in China, where Tralin Paper (Quanlin Paper in Chinese, though they use www.tralin.com for their website) used their IP portfolio to back a loan for 8 billion RMB, around US$1.3 billion. Now news  from the office of Governor Terry McAuliffe of Virginia reveals what Tralin is doing with that money. See reports at TAPPI.org and MFRTech.com. Tralin Paper, renaming themselves as Tranlin Paper for some reason, has just signed a deal with the State of Virginia, obtaining state support as Tralin/Tranlin/Quanlin invests $2 billion to create a new environmentally friendly paper mill and create over 2,000 US jobs. In a departure from the stereotypical view of Chinese companies stealing American jobs and IP, here is an innovative Chinese company that has created and protected their own IP, used innovative financial tools (and plenty of solid Chinese guanxi) to obtain massive financing based on that IP, and then brought their money and their technology to the US to create many jobs. At least some parts of this story are going to be repeated in many ways in days to come. The old paradigm of China lacking IP or lacking valuable IP is fading.

After the announcement at ChinaPaper.net, the first report on this story to the English-speaking world, as far as I know, was my original March 6, 2014 report at InnovationFatigue.com followed by an update here on the Shake Well blog that gave a translation of the Chinese story. It was picked up by Intellectual Asset Magazine and by World Trademark Review, but is still a generally unrecognized but important story.

Watch for China to surprise many pundits who decry its lack of IP and innovation. Many Western companies are going to be startled at the tsunami of innovation and IP that will come from the Middle Kingdom, which is rushing to become the epicenter of global innovation and IP value creation. China still has a long ways to go in overcoming its problems and strengthening innovation and IP, but the trends here are remarkable and should not be discounted. Meanwhile, we should welcome stories like Tranlin’s, and watch for many more to come. But for some US companies, this will mean even tougher competition that won’t be easily avoided with restrictive, protective tariffs or antidumping legislation.

By |July 8th, 2014|Categories: Business, China, Industry, Innovation, Paper, Patent law|Tags: , , , |Comments Off on Update on Tralin Paper (a.k.a. Tranlin Paper or Quanlin Paper): Financing Based on Chinese IP Now Creates Jobs in America

Shopping in China: Are the Prices in Department Stores Fixed or Negotiable?

One of the challenges of shopping in China is knowing when the marked prices are firm prices or just an inflated asking price subject to haggling. In grocery stores, the prices are generally the real prices and there is no sense trying to argue anything down. But in many other settings, the marked prices might be negotiable, meaning they could be way too high and you shouldn’t pay that much.

Sometimes a store will have fixed prices on one aisle, and negotiable (inflated) prices on the next. If there are friendly sales people servicing a particular set of products or section of a store, let that be a warning sign. Why does this store have five or six people anxious to help me buy blankets or vitamins, but no one in other sections of the store to help me buy batteries or copy paper? It may be because the people selling blankets or vitamins are on commission. They may not even be employees of the department store, but employees of a manufacturer. They are highly motivated to see you the product for as much as possible. This can happen in malls, department stores, and even grocery

One way to know if the prices are flexible is to simply ask if they can lower the price a little. “Keyi pianyi yidiar?” If they say something like, “Well, since you can speak a little Chinese, I’ll give you the friend discount of 10%,” then you know the price is flexible. If they pull out a calculator and type in the price to display it for you (this allows them to show you a price privately without revealing it to other customers within earshot), that’s a sure sign that the price is flexible, and a sign that what they are asking is way too high.

If they say, “No, I can’t lower the price,” say “OK” and walk away. It’s when you walk away that you see if they are serious or not. If you walk away and they say, “OK, OK, 10% off!” then you know the price can be lowered. If they say nothing, the price probably is firm.

Many electronics, appliances, bedware (blankets, linens, quilts, mattresses, etc.), and relatively high-margin items have prices that can be negotiated when shopping in China.

The next challenge is knowing what the real price is. Sometimes you can only hope to shave off 20% or 30% from the price. Other times the asking price might be 10 times the real price (this is especially true of gifts like pearls or jade items). This is where knowledge is power. Chinese people ask each other what they pay for things all the time in order to learn real prices. Do your homework before you buy. But if you don’t have time, you can try several different shops and start very low, and seeing if they call you back after you walk out. Again, it’s only when you walk that you see if your offered price might actually be acceptable. You may have to walk away several times, raising your asking price each time, until you find a taker and realize that you’re close to the real price.

On the other hand, if you are not in a bind financially, don’t be too tight-fisted in China. Spending a little extra money for what you buy can mean a lot to the merchants. For a small extra amount that is still a fair price, you can bring a lot of cheer, and if you feel that a merchant is kind, helpful, and honest, giving him a “healthy price” can keep him or her happy to serve you and help you in the future. That’s my view, anyway.

By |June 14th, 2014|Categories: Business, China, Consumers, Shopping|Comments Off on Shopping in China: Are the Prices in Department Stores Fixed or Negotiable?

Customer Service in China: China Telecom Busts Another Western Myth

I commonly hear Western businessmen stating that China doesn’t get innovation and customer service. I’ve discussed the myth of China’s lack of innovation on the Innovation Fatigue blog. Today I’ll share my experiences with China Telecom that convince me that the West has a few things to learn about the new world of customer service in China.

Some of the worst customer service I’ve ever experienced involved internet and cable TV service — in the United States. When we had technical problems, the hassles we faced when working with Time Warner in particular put real strains on my endurance. It took forever to reach someone, and then getting help to come fix a problem when that was needed was a real pain. Required advanced scheduling with no knowledge of when the people would show up. Coming to China, I expected things to be even worse. What a surprise that has been!

Two days ago I bought a new router for our home, worried that the signal strength of our old Apple Airport router was too low. But the new router, with instructions only in Chinese, wasn’t working right even after I thought I had done everything properly. I called China Telecom after 9 PM, reached an English speaking agent in about 2 minutes, and they said they would send someone out the next morning. I asked if they could make it around 6 PM when I would be back from work. They said OK, 6 PM or later. The next day at 6:05 PM, a friendly tech support man showed up. Big smile, very polite and kind. He understood exactly what I needed, went to the router, looked at the router page on my computer, clicked one area and immediately spotted an error in my set up. Within 2 minutes the problem was fixed. He then tested the connection, gave me his number in case I had any other trouble, smiled again, shook my hand, and was off. Then 5 minutes later, I got a call from China Telecom to ask how things went, if the problem was fixed, and if the service man had a good attitude and had given me his phone number, etc. Wow.

Rapid access to support, rapid scheduling of service, prompt arrival, quick resolution of trouble, and follow up. What a great lesson for American businesses. China Telecom is a large state-owned enterprise that represents mainstream Chinese business in this new era. China gets customer service. Sure, there are plenty of cases of bureaucracy in the way and lazy employees who don’t care, problems that abound in the West as well. But China Telecom’s fantastic customer service should be the gold standard that the West tries to copy and imitate, before it’s too late. Likewise, the burgeoning spirit of innovation and intellectual property support in China is something the West should learn from, though China has much to do in this area still. But don’t discount the competitiveness of China because you think they don’t get customer service or innovation. Time to start relearning what you think you knew about China, and relearning what you know and do about customer service.

By |April 22nd, 2014|Categories: Business, China, Industry, Internet|Tags: |Comments Off on Customer Service in China: China Telecom Busts Another Western Myth

Brave Dragons: About Chinese Basketball, But Maybe Also About Your Job in China

I just finished reading Brave Dragons: A Chinese Basketball Team, an American Coach, and Two Cultures Clashing (New York: Alfred Knopf, 2012) by Jim Yardley, an entertaining Pulitzer Prize winner. While the topic might seem very narrow to some readers, it may be one of the best books on the market to prepare for life and work in China, if that’s of interest to you. Even if you aren’t coming to China, it can help you understand some of the cultural barriers between China and the U.S. in spite of its very specific focus. It’s about one Chinese basketball team and an American coach’s experience in coming from the NBA in the U.S. to a lesser known Chinese city, Taiyuan. But so much of what he experiences and the setbacks and surprises he faces remind me of what many foreigners face when they come here to work or live. Definitely a good read and an entertaining one.

NBA coach Bob Weiss does a remarkable job of adapting to changes that would make many people give up in exasperation. For example, he was hired to be the coach of the Taiyuan team, but that changed when the owner suddenly made a Chinese man the acting coach to ensure that the team would run through constant fruitless drills to work the team to death rather than working on the skills and play development they really needed. He rolled with the punches and didn’t let pride get in the way. It helped that he really loved China and wanted to stay here, as it has helped for many foreigners here in related circumstances.

People coming to China for jobs often find out that the glorious position they were offered wasn’t quite as described, or that the benefits promised were withdrawn without notice, or that the work environment is almost the opposite of what they expected. In some cases, even the very job they accepted isn’t actually there. You need to come here expecting disappointment and setbacks, but determined to find a path through the craziness to make something precious and fulfilling out of your experience. Contracts here don’t carry the same meaning as they do in some parts of the world. There is much more emphasis on flexibility and renegotiating things when they prove to be difficult for one side (i.e., the other side). Important issues that you negotiated during your interviews might be eventually forgotten. Understand that and always ask yourself what you will do if an understanding doesn’t turn out the way you thought it was supposed to. Over-communicate,get anything important in writing or be prepared to abandon it, and be prepared to abandon it in any case.

While management in China can be quite good, in many businesses there are some huge differences in style that will surprise Westerners. The unfortunate management style of Boss Wang, the team owner, is  important to observe, but will probably  never encounter the extremes portrayed in the book. He tended to yell at his players for everything, sometimes an hour or more of yelling at them, constantly demeaning and harassing them for mistakes, and emphasizing excessive work rather than smart preparation. But the sudden last minute changes in plans and strategy that he would call from the top can be something you’ll see more often here than you might have seen before. Sometimes it works, but see for yourself in the book.

I recommend reading this book and contemplating how you might deal with related situations in your own journey in Asia or anywhere with new culture and rapidly changing rules.

For sensitive ears, there is some profanity as some of the players are quoted.

By |April 4th, 2014|Categories: Books, Business, China|Tags: , , |Comments Off on Brave Dragons: About Chinese Basketball, But Maybe Also About Your Job in China

Great Chinglish in a Dramatic Video from a Machinery Company That Teaches Much About Chinese Culture

Great Chinglish in an impressive video from Peixin Machinery Corporation in China

Great Chinglish in an impressive video from Peixin Machinery Corporation in China

“It inherits the wisdom of Minnan Merchants. It assembles numerous elites.” Spoken in perfect English with a dramatic deep voice, these words begin an impressive and instructive video prepared as an advertisement for Peixin Machinery Company and their advanced systems for the paper industry. There is so much that may be puzzling to native English speakers when they watch this video, and so much that teaches unintended lessons about Chinese business culture. I feel that the video and its Chinese equivalent could be a valuable addition to any course studying Chinese and especially business Chinese or business culture in China.

Some of the scenes selected for the video also teach a lot about culture in China. You can see the intense deference to authority in several sections, for example. Quite interesting. But it’s the English that I enjoy most.

“Big waves wash the sand, but we still go ahead bravely with the pulse of the times.” That’s one of many intriguing statements that are important in Chinese speeches and ads, but seem really strange to Western ears. The Chinese version of the video has been translated well, I think, as far as direct translations go, but it’s the whole mindset and nature of the content that needs to be retranslated and reworked for this to be an effective video for native English speakers. For example, starting off with a boastful link to Minnan merchants is just crazy–even Americans who have been living in China for years are not likely to appreciate the old lore of Fujian Province merchants known as the Minnan merchants. One of many moments that makes this fun video a great example of the very large cultural gaps that sometimes look like language gaps between the East and the West.

No offense intended to Peixin. Their video is better than most and has been done much better than most. The equipment also looks pretty good, but I don’t know one way or the other.

By |April 3rd, 2014|Categories: Business, China, Chinglish, Industry, Paper, Products|Tags: |Comments Off on Great Chinglish in a Dramatic Video from a Machinery Company That Teaches Much About Chinese Culture

A Sign of China’s Growth in Intellectual Property: Chinese Company Relies on IP to Gain Giant Loan

Notice & update: IAM Magazine, one of my favorite sources for information on intellectual property, just issued a blog post on the use of IP in lending in China: “Chinese companies have secured over $10 billion in patent-backed loans since 2008” by Jeff Wild, March 4, 2014. The news I share below (cross-posted at InnovationFatigue.com) definitely supports their article. Great timing! Further, responding to the news that I first broke to English speakers on the Innovation Fatigue Blog, IAM Magazine has written a blog post about this story (kindly citing my announcement), wherein they observe just how big of a deal this is. I agree, though I also think it’s fair to wonder how much of the transaction actually depended on IP and how much was due to guanxi and other factors. I have not yet evaluated the IP and if I do look at it in more detail, do not plan on sharing my analysis publicly, but may still offer further updates on this story here. IAM’s post includes a translation of the Chinese article behind this story. My independent translation (prepared before I saw the IAM translation) is at the end of this post. If there are significant differences in meaning, I’ll defer to them since my Chinese is still rough.

March 6, 2014: I just learned of breaking news from the Province of Shandong in northern China. A Chinese paper company, Quanlin Paper (also called “Tralin Paper”) has successfully used its portfolio of patents and trademarks to secure a huge loan of 7.9 billion RMB (about $1.3 billion). Potentially significant story for those tracking IP and innovation in China. The story was just reported on March 3, 2014 at China Paper (the story is in Mandarin). This is quite a big deal and may be a record for China in terms of how much value IP brought in seeking a corporate loan. To emphasize the significance of this development, the normally dry China Paper publication begins with a somewhat flowery statement based on an interview with the Chairman, who expresses surprise and delight at how much money they were able to obtain with their IP. Here’s my loose translation, followed by the actual Chinese:

“I never thought that intellectual property could have such a big effect in obtaining this loan. IP was a big part of it,” according to Quanlin Paper Company’s Chairman of the Board, President Li Hongfa, speaking today to a reporter about the 7.9 billion yuan from bank lenders that began this week. He said that this money will help them rapidly expand and seize market opportunities. Money has been tight for business, and this new addition is welcomed just as the mist-covered earth rejoices in the spring rains from the night before.


OK, a bit flowery, but again, this is big news for China and things get flowery when the big news is good. This development shows that IP in China can be valuable (though the portfolio includes some international patents, it is mostly Chinese IP). It also shows that Chinese companies, even in seemingly dull industries like the paper industry, can be innovative and create valuable IP. I haven’t reviewed their IP to assess its value, but I understand they have over 100 Chinese patents in areas such as technology for using straw and other renewable or recycled materials for making paper, with alleged benefits of enhanced environmental friendliness and cost effectiveness. Shandong Province’s IP Office has also created some publicity about Quanlin’s IP estate (see the Chinese article here), though this was before the news of the massive loan secured with the help of IP. Expect more publicity from them shortly.

Further background comes from Baidu’s wiki-like entry on Quanlin Paper.

When nations develop strong IP systems, companies can use their IP to protect their innovations. This also motivates them to take the risk and spend the money need to drive further innovation, and gives investors courage to fund growth and innovation. In this case, it helped give a lending partner (a Chinese financial organization) the courage to loan a giant sum of money to help Tralin grow. Tralin has been pursuing IP not just for tax breaks it seems but also for strategic purposes, and information coming out about this story shows that they have been developing expertise in their staff to develop their IP estate. Sure looks like that has paid off for them.

This is one of many signs that China is becoming serious about IP and innovation, and not just low quality IP, but IP that can provide significant value. For IP to apparently be a crucial part of such a large loan in this challenging economic times is a remarkably positive sign for China, in my opinion.

On the other hand, the loan may be due to politics and guanxi with officials, and the IP is just window dressing. That’s possible. But to even choose IP as the window dressing for publicity and hype is a remarkable thing in it’s own right, and still a sign of China’s rapid transformation in valuing and pursuing intellectual property.

Here is my loose translation of the China Paper article:


Quanlin Paper Crafts the Nation’s Largest IP-Backed Financing


On Feb. 21, 2014, Quanlin Paper secured a loan using a pledge of intellectual property. The pledge, recorded with the State Intellectual Property Office (SIPO), includes 110 patents and 34 registered trademarks. The Shandong Province Intellectual Property Office has verified that this is the largest amount ever financed in China using intellectual property.


“With this funding obtained, we will be able to accelerate our large projects. Market opportunities wait for nobody!” said Chairman Li Hongfa. The primary project Li refers to is a straw-based pulp manufacturing complex for papermaking that will process 1.5 million tons per year of straw. Quanlin company is headquartered in Liaocheng City, Gaotang County (Shandong Province). Quanlin’s core business among their large-scale enterprises is pulp and paper manufacturing using straw to create “natural color” paper. Quanlin turns waste into treasure and promotes a healthy environment, transforming both the impression that people have (of the industry) and their habits of consumption.

After the enterprise brought this large project forward, it rapidly gained approval from the Environmental Bureau and the National Development and Reform Commission. The project is an important program for the nationwide comprehensive utilization of resources and a model project for China’s recycling economy. It was also considered a provincial key construction project in 2013. Currently, capital construction is fully underway and should be complete by year-end. Once production begins, the expected annual sales revenue will be 8.165 billion RMB, with anticipated sales taxes of 489 million RMB and annual profit of 1.24 billion RMB.


For intellectual property to receive this high level of approval from the market is without doubt a giant benefit for technological enterprises in general. Although Quanlin company’s own development has now benefited from their intellectual property, they continue to invest steadily in their core technology—continuing even during the times when investment is most difficult. This is an area where the company has never gone “short.” The result has made a deep impression on Li Hongfa: in the process of obtaining these loans, the appraised value of Quanlin’s patents reached 6 billion RMB and played a key role in successfully obtaining the financing. This means that patents and other IP rights are not just about obtaining a monopoly in the market, but can be used to creating long-term profit for the enterprise. They can be used as collateral for significant financing to resolve one the biggest headaches for high-tech businesses, the hunger for funds to grow, to capture hidden potential, grasp favorable market opportunities, and to let the company “grow up.”


This financing will stir the interest of banks other technology enterprises. Not only did the China Development Bank and their affiliates issue Quanlin a loan of 7.9 billion RMB, but the Bank of Communications also signed a strategic cooperation document with the Provincial Science and Technology Department, and launched a specialized intellectual property financing product. Jiang Lurong, General Manager of the Retail Credit Department of Shandong Branch Bank, said that while intellectual property seems invisible, it reflects value creation and the ability to continue operations without increasing banking risk, and can help obtain more high-quality customers, improve the system for customers of the bank such as companies like Quanlin.

Kudos, by the way, to Dr. Ian Feng of Goldeast Paper in Zhenjiang, China for alerting me to the story in China Paper.

By |March 7th, 2014|Categories: Business, China, Patent law|Tags: , , , |1 Comment