Adaptive IP strategies in China: a tactical analysis

Purpose – The Chinese market presents numerous challenges to companies from industrialized nations, none of which is as daunting as protecting intellectual property (IP). It is necessary to develop a fresh approach for the US, EU and Japanese governments and companies to take advantage of China's growing domestic market while not exposing their IP to continued losses. This paper seeks to discuss this issue. Design/methodology/approach – The research is based on review of existing literature on IP rights infringements in China, application of theory of sustainable competitive advantage as a prescription to discourage imitation and promote early‐mover advantages, and SWOT analysis of the contrasting US and Japanese IP strategies. Findings – Both US and Japanese IP strategies have advantages and disadvantages, but the question remains who can be the most creative and adaptive in their ultimate goal of preserving their IP rights while prospering in the world's largest marketplace. Practical implications – Apart from internal use, IP may also be commercialized through a joint venture, outright sales, franchising, or licensing. Using creative but proven methods to protect IP is another way to equalize the playing field. Companies can operate in regions where IP laws are strictly enforced and they should work with, and not against, their counterparts in China. Originality/value – IP strategies of US and Japan in China provide a number of valuable insights on distinctive approaches used. A prescriptive approach is outlined for companies from the industrialized world to manage their efforts in protecting IP in an emerging market with a vastly different social and economic structure.