According to latest statistics from the State Intellectual Property Office (hereinafter referred to as SIPO), the amount of funds included in new patent right pledges (hereinafter referred to as patent pledges) reached 31.8 billion Yuan in the first half of 2017, representing a 92% increase over the previous year. Furthermore, the number of individual pledges during the first half of 2017 was 1,493, representing a 41% increase over the previous year. The aforementioned statistics confirms the breakneck growth seen in the number and size of patent pledges in China today.
During the China Intellectual Property Rights (IPR) Hengqin Forum held on August 29, 2017, SIPO stated that ten provinces had already established managing funds geared towards the of intellectual property of key industries. More than four billion Yuan has been raised during the first phase, which is being used to support the establishment of IPR pledge financing for risk compensation funds in four provinces. The amount of funds allocated for patent pledges in China has reached 205.7 billion in the past five years, representing an annual growth rate of 33% in average. This pledge financing program has effectively alleviated the financial problems faced by a number of SMEs.
On August 30, 2017, it was decided at an executive meeting of the State Council that a "one-stop investment and financing information service system” would be created with the aim of supporting innovation in SMEs. The financial support in question would come in the form of pledges taken from the accounts receivable of industry giants and large enterprises. The new patent pledge financing model provides financing as a bundle of loans, insurance and financial risk compensation for affiliated enterprises. The new measures will improve the flexibility and convenience of financial support geared towards the promotion of innovation. This in turn allows knowledge to become capital, which entails that intellectual property rights become what can be described as a new channel for obtaining financing for SMEs.
In the 13th Five-Year Plan for the Protection and Application of Chinese Intellectual Property recently published by SIPO, the section addressing the division of work responsibilities makes clear that the amount of funds for patent pledges must reach 180 billion Yuan. Conservative estimates put out in CIPRUN Intellectual Property Research Institute's (hereinafter referred to as CIPRUN) 2017-2020 Intellectual Property Market Forecast have the number of trademark pledge registrations reaching as high as 1,692 for a total amount of 78 billion Yuan by the end of 2017; their predictions for the end of 2020 show that the numbers will reach 2,924 cases and 134.8 billion Yuan respectively. With respect to patent pledges in the nationwide program, the report estimates that by the end of 2017, the amount of funds included in patent pledges will reach 55.9 billion Yuan, with a total of 2,333 businesses benefitting from these pledges; by the end of 2020, it is predicted that the amount of funds will reach 70.6 billion Yuan, with 2,939 businesses benefitting from the pledges.
There are more supportive measures planned by the government to come in addition to the aid in the form of intellectual property pledges. On August 28, 2017, during the third review of the Small and Enterprise Promotion Act (revised draft), which was deliberated on during the at the 29th meeting of the 12th National People's Congress Standing Committee, that added the provision to Article 16 which read, "The central government shall encourage financial institutions of all verities to assist the development of SMEs and to provide them with financial products and services tailored to their features"
The Standing Committee of the National People's Congress proposed during a breakout session that the first chapter of the revised draft include more language pertaining to secured financing by intellectual property rights . In addition, the Standing Committee of the Shaanxi Provincial People's Congress proposed the inclusion of a provision which would allow valuable intangible assets (such as trademarks and patents) to be used as collateral for financial institutions when said financial institutions provide secured financing for SMEs.
Academics from the Commercial Law Research Center at Renmin University of China have stated that secured financing as a generic concept encompasses more than pledge financing does; the former includes forms of financing such as mortgages, pledges, guarantees and deposits. Were IPR financing securities to be included into the law, the scale of IPR financing would be prospect to increase massively. This in turn would be a big step towards alleviating some of the difficulties faced by SMEs in securing financing such as cost and barriers.