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As Chinese companies get more involved in the market economy and world trade, they find themselves facing a major obstacle -- copyright disputes.

Li Gen, general manager of the national leading fridge manufacturer Freshtech Electric Company, complained that copyright problems were a major distraction from running the business. Freshtech prospered in the last decade as their flagship energy-saving fridges sold extraordinarily well at home and abroad.

However, the company was accused of inappropriate application of energy-saving technologies by other manufacturers and several copyright dispute cases in recent years seriously hampered expansion.

"The importance of intellectual property has been long neglected, but we have learned from these cases and figured out workable resolutions to deal with these issues," Li said.

Li introduced a policy last week to encourage staff to protect their innovations. Bonuses will be awarded to those who successfully apply for patent certificates.

"The quality and quantity of patents will be the main criteriato select candidates for bonuses and that will be a regular policy," said Li "Because the company needs inventions and innovations, it also needs to protect the technological fruit as well."

He has also hired an experienced agent to handle copyright issues especially for business cooperation with overseas partners.

More Chinese companies are starting to recognize seriousness of the problem. In central China's Henan Province, enterprises have, so far, filed more than 4,700 patent applications.

A survey conducted last year showed about 70.5 percent of the 350 surveyed companies agreed that "technological innovation has turned out to be the most important factor to affect a company's competitive edge".

"It's big progress for Henan as a populous and inland province," said Guo Minsheng, director of Henan Patent Office. The statistics indicated that Chinese entrepreneurs were starting to shift their focus from visible factors such as capital and equipment to unseen factors including technology, human resource and management, noted Guo.

"Chinese enterprises used to copy things from others and now they understand that only independent and lawful ownership of technology can guarantee long-term development," said Xu Zhanglin,deputy director of Shanghai Patent Office.

In 2002, China spent roughly 60 billion US dollars on technological research and development, ranking third in the world after the United States and Japan. Meanwhile, the number of patent applications has exceeded one million.

However, the number of patent certificates was still too few to bring significant business opportunities, said Zhang Qin, deputy director with the State Intellectual Property Office. In China, only 40 percent of patents are owned by companies while in some developed nations over 90 percent of patent certificates are held by companies.

He said that in some western nations, successful companies withmarket experience and abundant resources, will map out a comprehensive strategy to develop patent technologies, while in China individual patent holders usually have difficulty making commercial use of their inventions or innovations.

"It's currently a big problem for Chinese patent holders, government and companies as well," said Zhang.

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