Liu Zhengang, Director of the Beijing IP Office

An interview with Liu Zhengang, Director of the Beijing IP Office

At the end of 2008, the State Intellectual Property Office of the People’s Republic of China (SIPO) selected the first batch of pilot units for intellectual property pledge financing. By the end of this September, the second group had also been formally launched. In just a short year, the tide of IP pledge financing has expanded to the entire country. However, the governments are the main promoters behind the fast expansion of the new type of loan financing. They not only formulate policies, but also promote the development of pledge financing through various means. However, the pure market actions loom in the shadows of the governments.

From the outset of this year, China IP Magazine has reported on the developments of IP pledge financing in Beijing. Ever since 2007, the Beijing Intellectual Property Office (BJIPO) had begun to promote the development of IP pledge financing; until now, the total amount of pledge loans has exceeded 600 million Yuan, and pledged properties have begun to go beyond trademarks and patents.

On November 6, 2009, this Magazine, in association with the IP channel of People’s Daily Online, held an exclusive interview with Liu Zhengang, Director of BJIPO.

China IP: What are the bases for a relatively early launch of IP pledge financing business in Beijing, in your view?

Liu Zhengang: As far as the greater background in concerned, IP pledge financing relates to social advancement, because since the entry into the information age, IP has assumed a more important role. To be specific, large foreign corporations have established two balanced and independent management systems in assets management, namely, management systems of tangible assets and intangible assets, both of which are able to bring new profits to the enterprises. With the development of reform and opening up in China, more and more IP have been accumulated to translate into some type of properties, thereby laying a foundation for the formation of IP pledge financing.

Surely, this is a great background. If it is necessary to be particularly concrete, there is a need for supporting institutions, such as assets appraisal institutions and legal appraisal institutions. Certainly, banks shall be able to accept the concept of intangible assets. In Beijing, there was demand and supporting institutions were also relatively adequate. Therefore, Beijing started the business relatively early in China.

China IP: At present we find that the IP pledge financing business has been conducted across the country. However, pledged properties seem to be very simple, they are all patents and trademarks. Are there any difficulties in copyright pledge financing?

Liu Zhengang: Yes, there are difficulties in copyright pledge financing although there are success stories in Beijing. Copyright pledge financing is particularly used in film and entertainment sector. Beijing’s Daye TransMedia Group Ltd. received 80 million Yuan in a bank loan through pledging its film and television products, which is not only a result of exploitation of copyrights, but also one of the largest loans in terms of total amount and hence is a very typical example. In addition to the above, the pledge loan is plentiful in Beijing and so it is more of a mixed pledge. For example, we say a film and entertainment company may pledge its copyright to get a bank loan, in the meantime, its company name may be its trademark, and certainly, it is a combination of trademarks and copyrights.