CCID Consulting: Patent Fees Become a Bargaining Chip in Market Competition

CCID Consulting: Patent Fees Become a Bargaining Chip in Market Competition

BEIJING, May 24 /Xinhua-PRNewswire/ -- CCID Consulting, China's leading research, consulting and IT outsourcing service provider, and the first Chinese consulting firm listed in Hong Kong (Hong Kong Stock Exchange: HK08235), comments on Europe's recent actions towards several Chinese companies on possible patent infringement violations.

News Background:

Currently, Europe is stepping up efforts to establish a Digital Video Broadcasting Television (DVB-T) alliance to pursue acts of infringement against DVB-T technology applications in Set-top Boxes (STBs) worldwide. The main thrust is against Chinese digital TV makers. Digital Video Networks, Changhong, Skyworth, Coship and Konka have successively received lawyers' letters from the European MPEC-2 Alliance, claiming that a fee of $2.5 for the exploitation of the DVB-T patent will be charged on each STB made all the way back to 2000.

CCID Consulting's Viewpoints:

This news brings a clear signal that the European MPEC-2 Alliance is now brandishing the big patent stick, trying to make Chinese STB makers pay a large toll in their product exportation.

With the finalization of China's digital TV ground transmission standard, the relevant industry chains have been developing fast. It is precisely this reason that the European MPEC-2 Alliance, which owns core technology patents in this field, has paid growing attention to China's STB industry. The alliance has done so because it has seen the tremendous business opportunities in China's STB market.

This battle does not only involve the manufacturers concerned; it is also a war between two factions. In this standoff, Chinese enterprises leverage cost and price advantages as their weapon, while the powerful weapon for multinational giants are standards and patents. Statistics show that the average profit rate in the STB industry is now around 10%, namely about $2-3. The profit level of low-end machines is even lower. Even for STBs with multiple functions and high-added values, the level of profit per set is still no more than $4. If most of such profits are taken away in the form of patent fees, China-made STBs will be forced to withdraw from the European market altogether.

Regarding the above situation, CCID Consulting thinks that Chinese STB makers should adopt the following strategies to respond to the charging of patent fees.

1. Domestic enterprises need to band together and collectively engage
in face-to-face negotiations with the European MPEC-2 Alliance. If
Chinese manufacturers have infringed on the patent, they need to
negotiate actively and properly solve the problem. If they have
not infringed, they need to safeguard their rational interests
and resist the abuse of intellectual property rights.
2. Step up efforts on core technology development. In the fiercely
contested market environment, whoever creates core technologies will
hold the rights for the product market and attain a monopolistic
position. Therefore, stepping up core technology development and
seizing market opportunities in a new round of competition has
become an urgent need for manufacturers.
3. STB makers should pool together and jointly contribute funds to
establish a third party company to conduct research on intellectual
property as well as form collective negotiation and coordination
mechanisms to deal with intellectual property. While pursuing
synergy between industries and associations, STB makers need to
implement intellectual property strategies and fully enter the
fields of standards and patents.

About CCID Consulting

CCID Consulting Co., Ltd. (also known as CCID Consulting), the first Chinese consulting firm listed in the Growth Enterprise Market of the Stock Exchange (GEM) of Hong Kong (stock code: HK08235), is a direct affiliate of the China Center for Information Industry Development (hereinafter known as CCID Group). Headquartered in Beijing, CCID Consulting has so far set up branch offices in Shanghai, Guangzhou, Shenzhen and Harbin, with over 300 professional consultants and industry experts. The Company's business scope has covered over 200 large- and medium-sized cities in China. Apart from home market development, CCID Consulting is establishing international cooperation links across the United States, the Asia-Pacific region and Europe, by setting up agents in the U.S., Japan, South Korea, Australia, Singapore, Italy and Russia, with the aim of going global.

Based on four major competitive areas of powerful data channels, industrial resources, intense knowledge and deep understanding of information technology, CCID Consulting provides customers with consulting, research and IT outsourcing services covering strategy planning, IT application, marketing strategy, human resources and information technology outsourcing. Our customers range from industrial users in IT, telecommunications, energy, finance, automobile, to government departments at all levels and diversified industrial parks.

CCID Consulting is committed to becoming the No. 1 brand for strategy consulting, the No. 1 consultant for enterprise management and the No. 1 expert in market research. For more information, please visit our website at http://en.ccidconsulting.com/.

For more information, please contact:

Cynthia Liu
Coordinating Manager
CCID Consulting Co., Ltd
Tel: +86-10-8855-9080
Email: liuyan@ccidconsulting.com

Source: CCID Consulting Co., Ltd

CONTACT: Cynthia Liu, Coordinating Manager of CCID Consulting Co., Ltd,
+86-10-8855-9080, or liuyan@ccidconsulting.com

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