Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
465643 | Computer Law & Security Review | 2007 | 4 Pages |
China's Ministry of Commerce issued guidelines in March on attracting foreign investment in 2007. According to the guidelines, China intends to continue to encourage foreign investment in research and development (“R&D”) centers. This paper examines intellectual property (“IP”) strategy and best business practices for research and development services in China. Such services are provided in China either by a wholly owned subsidiary (a wholly foreign owned enterprise (“WFOE”) operating as an R&D center) or by a third party such as for outsourced software development services, integrated circuit design services or contract research in the drug discovery process. Many companies have established a WFOE to be an R&D center in China in order to reduce the costs of and speed up R&D. Advantages of using a WFOE (as opposed to a third party) include that there is more practical control over the results of the R&D and IP can be better protected. A disadvantage is that the parent company also must pay for the infrastructure costs of the WFOE.