The IP International Exchange of Hainan was set up in Hainan Province on 28th December 2019, vowing to make its trade volume surpass 1 trillion yuan ($142.94 billion) in the next five years. 

At the establishment ceremony, Chen Yang, Head of Hainan's Financial Supervision and Administration Bureau, said that by combining the IP exchange system with pilot zone's reform of the foreign exchange control system, the exchange should explore cross-border IP trading and facilitate the RMB's broader use in investing and financing.

Background

The Guiding Opinions of the Central Committee of the CPC and the State Council on Supporting Hainan for Comprehensively Deepening Reform and Opening-up, issued on 14th April 2018, states explicitly that we should encourage exploration of Intellectual Property securitization and improve the intellectual property credit guarantee mechanism.

The General Plan for the Hainan Pilot Free Trade Zone which was rolled out on 16th October 2018, supported establishment of the intellectual property exchange center, to construct an intellectual property operation service system, encouraging exploration of Intellectual Property securitization and improving the intellectual property trading system and mechanism.

The Overall Plan for the Construction of Hainan Free Trade Port, published on 1st June 2020 by the Central Committee of the CPC and the State Council, emphasized further that one of the key undertakings of Hainan by 2025 is to construct the Hainan International Intellectual Property Exchange, to carry out institutional innovation in transfer, usage and taxation policy of intellectual property, and to standardize intellectual property securitization.

As requested by the above decisions of the Chinese central government, the IP International Exchange of Hainan was established to implement the above policy.

Current Development

The Exchange officially open for business on June 2020. It, as a trial site, is developing four systems: IP transfers, IP licenses, IP ecosystem (including evaluation, credit guarantee, data services and legal protection), and evidence preservation by blockchain.

Regarding IP transfer and license, the Exchange is exploring a mechanism where the participants can sell their IP ownership or license it, and also customize financial derivatives to make full use of IP rights. The Exchange is also exploring a mechanism to list prices in the IP trading market to better utilize the value of IP and move the Chinese market.

The Exchange is also expected to adopt innovations such as providing targeted tax breaks and RMB's free exchange services when assigning or utilizing IP exchange, as a measure to motivate the liberalization and facilitation of Hainan's service and trade sectors. 

The Exchange cooperates with Hainan International Arbitration Court, financial companies, technology companies, intellectual property agents, law firms, banks etc., for constructing the IP ecosystem.

Moreover, the Exchange introduces blockchain technology to IP-related work, such as evidence preservation, IP registration, trade or liquidation. 

Conclusion

Supported by the agriculture sector, bio-pharmaceutical industry etc., and the Chinese government, Hainan province will continue to explore ways to maximize the value of intellectual property. The Exchange has signed a number of contracts with other entities to cooperate its development. However, it seems to be at a very early stage.

(photo credit: unsplash.com)