“More than five billion yuan have been distributed to over 200 small and medium sized enterprises (SMEs) in Beijing via intellectual property (IP) pledge financing and non-performing loan has never been seen so far,” said Liu Wutang, general manager of Beijing Liancheng Assets Appraisal Co., Ltd.
Differing from the traditional credit pledge where only real estate can be accepted as collateral, IP-collateralized loans, widely adopted in European countries and the U.S. yet still at the initial stage in China, allow individuals and businesses to put legally-owned patents, trademarks and copyright in pledge when applying for credits.
Banks in China have dispelled misgivings after years of successful practices on IP pledge, said Liu. Since the Beijing Branch of Bank of Communications first offered IP-collateralized loans to small enterprises in October 2006, many financial institutes have followed suit, whose new services have benefited a group of local enterprises. For example, after financing 1.5 million yuan for one year with a pledge of patents in October, 2006, Beijing Kerui Bio-pharmaceutical Co., Ltd has refinanced its credit for the fourth time, with the loans reaching 10 million yuan cumulatively.
The development of IP pledge financing should be attributed to the “Beijing mode”, namely, an IP pledge financing mode featured with the involvement of banks, intermediaries and the government. According to Beijing Zhongguancun Intellectual Property Promotion Office, the agency has distributed 4.1 million yuan funds for interest subsidizing to 29 high-tech enterprises.
Nowadays, IP pledge financing is promoted in many places in China. Since December, 2008, the
State Intellectual Property Office (SIPO) has approved 16 pilot cities in three batches to provide IP pledge financing services, said a director from the department. By July, 2010, there have been 24 commercial banks and 16 guarantee institutions registered in SIPO to conduct patent pledge for about 1.4 thousand projects, with the value in pledge amounting to around 21 billion yuan.
Source:IPR in China
