In the news: 2013 IP report released, ICBC buys Turkish bank, WH Group pulls HK IPO, new Environmental Law and Qualcomm's China troubles discussed

SPC releases 2013 IP protection paper

The Supreme People's Court released its white paper on IP protection by the courts. Data has shown that growth rates in litigation have slowed down and foreigners continue to play a relatively small role overall while playing an active role in administrative litigation. Trademark, licensing and AML cases increased and provisional measures were still rarely granted. Also, the decline in criminal cases continued, trade secret cases were relatively scarce, transparency in published decisions increased as did the SPCs role in global trade talks.

Sources:
China IPR
China IPR Law

There was an overall decrease in newly received first instance administrative and criminal cases, though the number of first instance civil cases of IP disputes involving foreign parties has risen. There were fewer patent and copyright cases from the previous year, while there were more on trademark, technology agreements and unfair competition. The courts granted 77.8% of its preliminary injunction applications relating to IP disputes (out of only 11 cases that were accepted), 97.3% of its pre-trial evidence preservation applications and 96.07% of applications for pre-trial property preservation. The newly established Beijing No. 3 Intermediate Court, which has jurisdiction over the Beijing HQs of many multinationals and foreign companies, may play an increasingly active role.

More from CLP:
Annual Report on Intellectual Property Cases (2012) (Abstract)
Annual Report on Intellectual Property Cases (2011) (Abstract)
Provisions for the Recognition and Protection of Well-known Trademarks (Draft for Comments on Amendments)
Trademark Review and Adjudication Rules (Draft for Comments)
Implementing Regulations for the PRC Trademark Law (Draft Amendment)
SIPO's reform agenda
Is the new trademark law a missed opportunity?
Opinion: China's judiciary increases IP savvy


ICBC buys Turkey bank

ICBC has announced that it will buy 76% of Turkey's Tekstil Bankasi (Tekstilbank) for US$316 million (Rmb1.98 billion) to counter a credit slowdown that has led to the largest Chinese lender's weakest profit growth in almost five years. It will buy all of GSD Holding's shares in Tekstilbank and bid for the remainder of the company. This purchase extends the Chinese state-owned bank's international reach as the nation seeks to globalise its currency. It also allows ICBC to tap new business amid bilateral trade between China and Turkey, which now exceeds US$28 billion (Rmb175 billion).

Source:
Bloomberg

Turkey is, in fact, attracting interest from many overseas banks. The acquisition is said to be part of China's preparations for renminbi internationalisation, a move that has greater strategic significance than practical significance. The bank has to go abroad to expand globally, and is aiming to triple overseas earnings by 2016 and is targeting more business with Middle Eastern companies. It has proposed US$4.7 billion (Rmb29.4 billion) in acquisitions in the past five years to help the bank expand in global markets such as Argentina and Canada, and even announced in January to buy control of Standard Bank Group's London-based markets unit for US$765 million (Rmb4.79 billion) to boost its trading in commodities, interest rates and currencies. As lending at home is slowing due to government discouragement in overextending credit to default-prone industries and local governments, a priority of China's biggest banks is to dispose of bad loans and find sustainable growth.

More from CLP:
Measures for the Administration of Interbank Negotiable Certificates of Deposit
Measures for the Administration of the Liquidity Risks of Commercial Banks (Trial Implementation) (Draft for Comments)
Work Guidelines for the Protection of the Rights and Interests of Consumers of the Banking Sector
Why shadow banking may never be properly regulated


Chinese pork giant WH Group pulls HK IPO

The world's largest pork producer WH Group has postponed its US$1.9 billion (Rmb11.9 billion) share offering, axing what was to be the biggest IPO in Asia so far this year. The decision followed a move last week to slash the price and deal size from an original US$5 billion (Rmb31.3 billion), which scared off investors. The group stated it will not proceed with the sale due to deteriorating market conditions and recent excessive volatility. It originally planned to use the proceeds from the offer to pay down the US$4 billion (Rmb25 billion) syndicated loan it borrowed to acquire Smithfield Foods, the largest US pork producer, for US$4.7 billion (Rmb29.4 billion) last year.

Source:
South China Morning Post

While WH Group has 29 investment banks working on its IPO, the deal failed due to its demanding valuations and inability to meet investors' expectations on earnings growth following its Smithfield acquisition after paying a 30% premium. A bunch of other deals are heading towards the Hong Kong stock market, such as a US$4 billion (Rmb25 billion) share sale by Bank of Beijing, China's largest city lender, one of many mainland banks lining up to sell equity in order to meet increasingly stringent capital requirements back home. Up to US$50 billion (Rmb313 billion) in mainland securities is expected to be marketed to investors in Hong Kong over the summer. The Shanghai stock exchange's IPO restart and its linkup with Hong Kong will also bolster China's capital markets dynamic.

More from CLP:
IPO reform not going as planned
Rules for the Preparation and Submission of Information Disclosures by Companies That Offer Securities to the Public No. 26: Special Provisions for Information Disclosures by Commercial Banks (2014 Revision)
Measures for Strengthening the Regulation of Offerings of New Shares
Why the IPO reforms don't go far enough
Opinions on Further Promoting the Reform of the System for Offering of New Shares


Powerful environmental laws to tackle pollution

The Standing Committee of China's NPC approved sweeping new environmental protections on April 24 amid mounting concerns over air, water and soil pollution. These amendments are the first revisions to the PRC Environmental Protection Law since it took effect in 1989, and will enter into force on January 1 2015. The new law eliminates China's cap on environmental fines, modifies the evaluation system for government officials (to ensure that environmental protection is considered on par with economic growth) and gives NGOs more ability to take legal action against polluters, a significant change as citizens have repeatedly been blocked from using the courts to address damage caused by factories and power plants.

Source:
The Bellingham Herald

After years of what seemed like empty promises to crack down on pollution, the law that was untouched for 25 years is now able to hand down punishments to violators. Hardly a day passes in China without the revelation of another extreme environmental concern – on April 11 the water supply for over 2.4 million people in Lanzhou city was found to be contaminated with benzene, a cancerous chemical, and the courts quickly dismissed the case when citizens sued the water company. A soil survey conducted from 2005 to 2013 revealed that heavy metals and other pollutants contaminated 16.1% of China's soil and almost 1/5 of its arable land. The authorities are increasingly concerned that the deteriorating environmental conditions will lead to social unrest and threaten the party's rule. But while this is a good sign, problems won't disappear overnight, as Xinhua reported: “China's ecological problems are the result of decades of reckless pollution.”

More from CLP:
Get ready for new environment laws
Measures for Assessment of the Environmental Credit of Enterprises (Trial Implementation)
Guidelines for the Disclosure of Government Information in Connection with the Environmental Impact Assessments of Construction Projects
PRC Law on the Promotion of Clean Production (Revised)


Qualcomm's continuing woes in China

Qualcomm not only suffered a quarterly sales miss but also faces bribery charges and an investigation into pricing monopolies. It said it could face civil action from US authorities over alleged bribery of officials associated with SOEs in China. The civil action follows an internal investigation by the NDRC which found instances of “special hiring consideration, gifts or other benefits” given to SOE-associated individuals in the amount of US$250,000. This was spurred by reports of overcharging and abusing its market dominance. Under the Anti-monopoly law, the NDRC can impose fines of between 1% and 10% of a company's revenues in the previous year. Qualcomm earned US12.3 billion in China in its last fiscal year, nearly half of its global sales.

Source:
Forbes

Qualcomm could face a fine of over US$1 billion. But it still faces other problems from the investigation – the government says it is designed to reduce long-term evolution (LTE) costs and costs for consumers. It made a similar argument when it investigated GlaxoSmithKline in July 2013 for bribery. One big growth problem is that despite the company's optimism for LTE prospects, the LTE rollout may not be as fast as expected. China Mobile is building its own home-grown TD-LTE network which differs from the international standard FDD-LTE network. This is a government-driven initiative as the ministry has approved licences for the former but not the latter – China wants to encourage domestic manufacturers and develop domestic technology that it can export, raising the value of its export economy. The same thing is being done for the high-speed railways, nuclear power equipment and power grid. The other two telecom giants China Unicom and China Telecom however, are investing more in FDD-LTE networks due to incompatibility of the home-grown network with current phones. Qualcomm's integrated circuit sales are also expected to be interrupted by China's initiative to develop the domestic integrated circuit industry. In short, everything Qualcomm has invested in may not even work in China.

More from CLP:
Why it is time for a unified anti-monopoly agency
The NDRC's antitrust ascendance
Huawei uses AML to fight back
Blurring antitrust and anti-corruption
A new era in antitrust enforcement
How to deal with an NDRC investigation
The perils of resale price maintenance