17th National Congress of the Communist Party of China

Chinese Farmers Cash in on Intellectual Property Rights

China has a huge -- but not necessarily robust -- agricultural economy. Arable land in China represents 7 percent of the world total, yet its agricultural workers represent just one third of the global farming population. The per capita farmland in China, at less than one-tenth of a hectare, therefore, remains one-fifth of the world average. China’s fruit trade is another example. While China produces more fruit than any other nation, its international share in the fruit trade is a mere two percent. China's small-scale, peasant mode of agricultural production is at the root of these discrepancies.

A new development in rural areas -- that of Chinese farmers exercising their intellectual property rights -- has brought them fresh hope of increasing the productivity of their small plots and of boosting their income. Philippe Petit, deputy director general of the World Intellectual Property Organization (WIPO), has commended China for its success in promoting economic development in rural areas through trademarks and geographical indications. Geoffrey Yu, also a WIPO deputy director general, suggests that China export its innovations in this field to other developing countries.

Geographical Indications Expand Profit Margin

The quality of agricultural products frequently derives from the specific local factors associated with their area of production. Geographical indication (GI) is an international intellectual property right whereby certain goods indicate a specific geographical origin, its attributes and reputation.

China has safeguarded its GIs since joining the Paris Convention for the Protection of Industrial Property in 1985. The State Administration for Industry and Commerce (SAIC) first intervened in 1987 to protect the “Danish Butter Cookies,” trademark and again in 1989 when it banned the appellation Champagne in both English and Chinese. The SAIC began to handle collective and certification marks registered with the Madrid system that had been transferred from the WIPO International Bureau after China signed the Madrid Agreement for International Registration of Trademarks in 1989. Protection of geographical indications commenced in China in 1994, in the form of collective and certification marks. These marks were incorporated into the Trademark Law in 2001 and in the Regulations for the Implementation of the Trademark Law in 2002.

An increasing number of trademark applications have been received from the farming sector in recent years -- 130,000 applications between 1997 and 2001. In the subsequent five years this number rose to 320, 000. To date, China has registered 370,000 marks for agricultural products, which account for 13 percent of the national registered total. This is not an enormous share, given the overall size of the agricultural sector in China, but nevertheless indicates that Chinese farmers are actively taking advantage of their intellectual property rights in order to gain the upper hand in the market.

“The registration and use of trademarks and geographical indications of feature produces have become a key tool in increasing farmers’ incomes and accelerating agricultural industrialization,” so stated Li Yuquan, chairman of the Association of Scientific Research on Zhangqiu Scallion. Li maintains that “farmers across the nation are seeing solid benefits.”

The Pinggu peach was the first agricultural product to have its geographical indication registered in Beijing in 2002. The price of a Pinggu peach then rose to a level 30 percent higher than others, while premium Pinggu peaches sell for double the price of those less distinguished. Pinggu District exports 40 percent of China’s fresh peaches. In 2005, its peach sales income hit RMB 420 million, earning each of the region’s 150,000 peach growers RMB 2,800 -- 18 percent more than in 2004.

Production of the Korla pear of Xinjiang Uygur Autonomous Region has grown steadily since its own geographical indication was approved in 2004. It is currently planted by 80,000 families on over 44,000 hectares, and annual revenues from sales exceed RMB 1 billion. Korla pear exports stand at 30,000 tons, generating a sales income of US $47.43 million.

The famous Oolong tea Tieguanyin of Anxi, Fujian Province, has its geographical indication registered both in China and internationally. It commands prices 80 percent higher than other teas, and 12,000 tons, worth US $40 million, of Tieguanyin is sold in more than 100 countries around the world. Local farmers can make RMB 5,000 on each mu (15 mu = one hectare) of land by growing Tieguanyin, which quintuples the average income of any other crop. Booming tea trade has fueled the growth of other economic sectors in the area. Today, half of the county’s population makes its living either growing tea or in a tea-related field, while tea farmers’ incomes have been growing at an annual rate of eight percent.

China has so far received 680 applications for geographical indications, 647 of them domestic. It has totally sanctioned 219, including 198 domestic applications.

A Springboard to Agricultural Industrialization

Most Chinese farmers today are small, disparate producers that lack the capital and know-how to create brand names or undertake mass production or operations. Geographical indications give them a chance to share the added value of brand names without necessarily establishing their own. Chinese laws stipulate that the collective mark of a registered proprietor of a geographical indication is confined to a group, association or other organization, rather thanan individual producer or trader. Such organizations must comprise members who are native to the region that is specified by the geographical indication. For instance, the registrant of Pinggu peach is the Pinggu County Production and Distribution Service Center of Agricultural Products, while that of the Korla pear is the Korla Pear Assocation of Xinjiang Bayingolin Mongolian Autonomous Prefecture.

The Fuling pickled mustard tuber of Chongqing is loved for its inimitable piquant flavor that derives from the soil and weather conditions in the district, as well as the traditional techniques used in its preservation. Before it was conferred the geographical indication status, however, Fuling's reputation made it a sitting duck for counterfeiters. For a period, more than 90 percent of pickled mustard tubers on the market were branded Fuling. Some producers from outside the region went so far as to take the preemptive action of attemptingto file registration of the trademark, putting the authentic producers at risk of infringement charges. This all changed in 2000, when Fuling pickled mustard tuber was granted a geographical indication. From 2000 to 2004, mustard tuber growers in Fuling District saw a steep, 194 percent rise in income.

Geographical Indications also work as a form of quality control. Agricultural producers are required to abide by restrictions on growing areas and producing standards, otherwise their geographical indication may be revoked by the State Administration of Industry and Commerce. Following implementation of this regulation, the Fuling Pickled Mustard Tuber Management Office worked out detailed specifications on manufacturing procedures and technical norms. Producers who fail to comply are banned from using the geographical indication symbol on their product packaging. This process ensures that shoddy products from small workshops with poor sanitary and technical conditions are kept out of the market.

An Qinghu, director general of China’s Trademark Office, believes that registered trademarks give farmers access to industrialized production and modern marketing resources. Particular trademarks ally agrarian households under specific corporations. Primary products concentrated under these corporations are marketed as a whole; corporations have thus unified the manufacturing process, quality control, packaging design and distribution channels. This accelerates marketization and mass operation in China’s agricultural sector.

GI - A Nonrenewable Resource

Currently, China has 70,000 produce processing enterprises that yield an annual output value of approximately RMB 4 trillion and employ more than 20 million people. Of these enterprises, between 20 to 30 percent are involved in high quality processing, compared with the 70 percent in developed nations. This gap signifies substantive space for further development of the agricultural product processing industry in China. Geographical indications, however, are incapable of growth.

GI are a rare, nonrenewable natural and cultural resource shaped by the process of history and consequently fixed. As the number of geographical indications yet to be registered can only decline, the focus of GI protection should be on maintaining product character and quality, rather than on upping the volume of GI registrations.

A group of scholars, headed by Li Hua, vice president of Northwest Agriculture and Forestry University and National People’s Congress deputy, have called for a Law of Protection on Geographical Indications. This past June, WIPO and SAIC jointly hosted the biennial International Symposium on Geographical Indications in Beijing, the first GI conference to be held in an Asian country. At the meeting, Dr. Kamil Idris, director general of WIPO, confirmed China’s efforts to build and extend its intellectual property rights system, and to protect geographical indications.

There are still many challenges ahead in the effort to protect intellectual property rights. Since 2004, the SAIC has investigated and penalized 300 cases of GI infringements. The effort to fight these crimes requires an extended campaign, whose outcome will have crucial impact on the future of China’s fragile rural economy.

(By Xin Xin and Ai Jie)



Address:24 Baiwanzhuang Street, Beijing 100037, China
Tel: 86-10-68326037
Fax: 86-010-68328338
Website: http://www.chinatoday.com.cn
E-mail: chinatoday@chinatoday.com.cn
Copyright (C) China Today, All Rights Reserved.