Fraud expert urges businesses to defend themselves on the far eastern front


26-07-2007

With over £3.3bn of UK exports shipped to China in 2006, and healthy quarterly export figures for 2007*, it is apparent that China’s vast domestic market is an attractive destination for a growing number of UK businesses, including entrepreneurial companies.

However a significant number of companies exporting to China, which has been renowned for high levels of counterfeit goods and piracy, are leaving themselves vulnerable to fraudsters by operating without adequate protection for their intellectual property.

This is the view of Ernst & Young’s fraud and risk services specialist in Cambridge, Jonathan Middup, who is urging the region’s entrepreneurs to look carefully at the controls and measures that protect their intellectual property, before capitalising on China’s domestic market.

He said: “Entrepreneurs are the lifeblood of the Cambridge economy and it is their ideas and intellectual property that sets them apart from their competition.

“As many of the region’s business gurus recognise the huge potential of this land of opportunity, I urge them to think carefully about protecting their ideas, designs and products through implementing the appropriate safeguards and measures.”

Mr Middup’s warning comes on the eve of Ernst & Young’s Entrepreneur of the Year Award’s final at the Birmingham Metropole hotel, in which three finalists from Cambridge are vying for a coveted award.

Speaking about the risks facing entrepreneurial companies and large corporates exporting to China, and the dangers of leaving intellectual property unprotected, Mr Middup said: “Although most companies take out patents on their intellectual property, it is concerning that a large number fail to implement compliance agreements with their overseas distribution channels.

“Well drafted Compliance agreements will enable a company to conduct regular audits of their distributors to ensure that patents are being upheld and that a distributor is declaring all of their sales.

“Implementing preventative measures, like the compliance agreements, are vital to protecting a company’s intellectual property and I would strongly recommend any UK exporter to seek specialist advice about integrating these systems into their business practices, particularly those exporting to China.”

He added: “A patent supplies the legal protection for intellectual property and some 3,106 patents were filed from companies in the South East in 2006,** but without implementing appropriate measures and controls, patent breaches are virtually impossible to monitor.”

Concluding Mr Middup said: “China is experiencing unprecedented levels of growth and with that comes enormous opportunity. In these exciting times it is more important than ever before to go into these markets with protection in place.”

The Entrepreneur Of The Year finalists from Cambridge are: Richard Longdon, the CEO of AVEVA Group Plc; Peter Harris and Angus Thirlwell, the Co – Founders of Hotel Chocolat; and Tim Haynes, the CEO of Nujira Limited.

* Statistics provided by the Office for National Statistics (ONS)

** Statistics provided by the Office for National Statistics (ONS)

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