B.C. firms head to Shanghai show amid concerns over intellectual theft

B.C. companies head to Shanghai trade show amid fresh concerns about intellectual property theft in Chinese market.

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David Tan, CEO of Richmond-based Sunnylife Health Enterprises, which makes and sells vitamins, is gearing up to attend a big trade conference for companies wanting to sell to the Chinese market.

Sunnylife will be joining a group of over 30 small- and medium-sized B.C. firms specializing in food, wine, health and other products at the upcoming China International Import Expo (CIIE) in Shanghai.

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“I’m going to see old customers and hopefully meet some new ones,” says Tan.

But the November trip organized by the Canada China Business Council comes at a time of continuing tension between Canada and China, and new concerns about intellectual property theft.

Last week, officials from the U.S., Britain, Canada, Australia and New Zealand, known as the Five Eyes’ intelligence sharing network, made a rare joint statement that accused China of stealing intellectual property. They described the threat as a massive one.

“The People’s Republic of China represents the defining threat of this generation this era. There is no country that presents a broader, more comprehensive threat to our ideas, our innovation, our economic security and ultimately our national security. We have seen efforts by the Chinese government, directly or indirectly, trying to steal intellectual property, trade secrets, personal data — all across the country. We’re talking everything from Fortune 100 companies, all to smaller startups,” said Christopher Wray, director of the FBI to 60 Minutes.

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China denies the allegations and says they’re part of a disinformation campaign by Western countries.

B.C. exports to China totalled $8.48 billion last year, according to government statistics. That figure is a distant second to B.C. exports to the U.S., which are more than $37 billion. After that, B.C. exports to Japan and South Korea come in at third and fourth with about $6 billion and $4 billion, respectively.

In May, B.C. Premier David Eby went on an Asian trade mission that excluded China and instead focused on Japan, South Korea and Singapore, explaining that his trip was part of an effort to grow trade and reduce the risks that come with international uncertainties, including those surrounding China.

At the time, tensions between China and Canada had been growing amid accusations of foreign interference and election meddling, including allegations of interference in 2021 in a federal riding in B.C. and in the 2022 Vancouver municipal election.

Relations between Canada and China have been tense for years since Canadian authorities detained Huawei executive Meng Wanzhou in 2018 in Vancouver and an extradition hearing was held about sending her to the U.S. where she faced charges. In the end, the U.S. brokered a deal that led to her release and the release of Michael Kovrig and Michael Spavor, two Canadians who had been imprisoned in China in retaliation for Meng’s detention.

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This year, the Canadian government unveiled its Indo-Pacific Strategy that aims to expand and diversify trade in the Indo-Pacific and away from China’s economy.

Hugh Stephens, principal at Trans-Pacific Connections who has written extensively about Canadian business in Asia and blogs about international copyright issues, said that all the caveats about the challenges of protecting intellectual property that have been in place for years for companies wanting to do business in China still hold.

However, the most recent comments by the Five Eyes are, in particular, focused on industrial espionage issues, said Stephens.

“Much of this is focused in the high-tech sector. Companies can assess the level of intellectual property in a product. For many health-care products such as vitamins or supplements, it’s more about the process, the reputation, the physical packaging and the price.”

There is a difference, he says, between taking that kind of product to a trade show in Shanghai compared with taking a product that involves cutting-edge or proprietary technology.

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He says that longer term there are some basic things to understand about selling into the Chinese market when it comes to intellectual property.

“For example, it’s a ‘first-to-file’ market and not a ‘first-to-invent’ one so the market has for years been littered with foreign companies sharing information with a partner or an agent and then having them file the information and then work against them. All companies have to be careful.”

Hong Yan, owner of Burnaby-based CAC Naturals, says he has attended the CIIE for six years and that every market has its pros and cons. But sales for some products CAC is selling in China are growing by 40 per cent a year.

“There is some real strength to the Chinese consumer,” Yan said.

Aisha Yang, co-founder and director of Richmond-based Herbaland Naturals Inc., which makes nutritional gummies and sells its products at Costco stores in Shanghai, says that in the natural health products sector consumers in China prefer to have products manufactured in foreign countries.

She agrees that concerns about intellectual property differ depending on the sector.

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Said Tan: “In the food or health industry, it’s different than IT where it is about your technology. We’re selling dietary supplements. Vitamin C is Vitamin C. It’s about talking about health benefits, representing trust in the product, that it is used internationally.”

— With files from Gordon Hoekstra

[email protected]

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