What is a Trademark?
A trademark is any word, slogan, logo or other device that helps consumers identify and distinguish the source of a product or service. Even smells, sounds, colors, product shapes and packaging designs can be trademarks – e.g. the color brown applied to vehicles used for delivery services (owned by UPS), the musical notes G, E and C played on chimes when used in connection with television broadcast services (owned by NBC Universal) and the well-known shape of the curved COCA-COLA bottle. When consumers see or hear these unique trademarks, they know what company is offering the product or service without the need for words.

As a source indicator, a trademark helps consumers decide whether they want to buy or avoid a product or service based on their prior experiences with something else bearing that trademark. For example, a consumer who had a positive experience with a FORD vehicle may decide to buy another FORD vehicle in the future. Thus, a trademark that builds a positive reputation in the marketplace is an invaluable business asset.

Selecting Strong Trademarks
When developing a new brand name it’s tempting to pick a term that describes the product or service. For instance, if you are launching a new detergent, the name ULTRA CLEAN may be appealing because you want consumers to immediately understand that it is a superior cleaning product. However, as a general rule, terms that describe a characteristic of the product or service, or attribute quality or excellence to it (e.g. ULTRA), are very weak source identifiers that do little to set your product apart from those of your competitors.  Descriptive and laudatory terms are also subject to little, if any, trademark protection, meaning it will be difficult to prevent competitors from using an identical or nearly identical product or service name.

More distinctive brand names generate more consumer recognition and are entitled to more protection. The strongest trademarks are fanciful or coined terms, which have no dictionary definition (e.g. KODAK film or EXXON petroleum). Arbitrary trademarks, which are comprised of terms with common meanings but not in relation to the product or service for which they are used (e.g. APPLE computers) are also very strong. Suggestive terms, which hint at a characteristic of the product or service without immediately describing it (e.g. COPPERTONE sunscreen), are also capable of trademark protection.

Clearing Trademarks for Use
Before adopting and investing money into a new trademark, you should first determine whether someone else is already using the same trademark, or a very similar trademark, in connection with a related product or service. If you use a trademark similar to one already used by a competitor, it may erode the source-indicating function of your competitor’s trademark and cause consumer confusion, subjecting you to a trademark infringement claim. If you infringe another’s trademark rights, you will have to rebrand your product or service and you may also be liable for monetary damages.

For this reason you should have a qualified attorney conduct a clearance search before adopting a new trademark. A clearance search typically involves a review of federal and state trademark databases, as well as other sources of information such as company name databases and the Internet. After completing a survey of current trademarks in the marketplace, your attorney will provide an opinion as to whether your new trademark poses an infringement risk. It is recommended that you conduct a clearance search in each country in which you intend to use your trademark.

Trademark Protection: Should I Register My Trademark?
In the U.S., rights in a trademark belong to the first person or business to use it. You need not have a federal registration to own trademark rights; however, without a registration, your rights will typically be limited to the geographic area in which your products or services are offered.  For example, if you operate ABC BAKERY in Portland, Maine and sell your baked goods only in that area, and you do not own a federal registration for your ABC BAKERY trademark, then you may not be able to prevent someone else from operating an ABC BAKERY in San Diego, California. If you are granted a federal registration for ABC BAKERY, it will constitute a legal presumption of your ownership of that trademark and your exclusive right to use it nationwide as of the filing date of your federal trademark application.  Other benefits of federal registration include public notice of your claim of trademark ownership, the ability to record your trademark with U.S. Customs and Boarder Protection Service to prevent importation of infringing or counterfeit products and the right to use the ® registration symbol.

There are many countries that, unlike the U.S., do not recognize unregistered trademark rights. In those countries, the first person or business to register a trademark acquires exclusive rights in it and can prevent others from using the same or similar trademark, even if that other party has already used the same mark in that country for many years.  For this reason it is important to consult with a trademark attorney to determine where trademark applications should be filed in order to protect your valuable trademark rights.

Proper Trademark Use
Trademarks are adjectives. A trademark should never be used as a noun or a verb.  It should always be used as an adjective that describes the common, generic name for the product or service.

Correct:

We use XEROX copy machines in our office.

I own ROLLERBLADE in-line skates.

My kids love OREO cookies.

Incorrect:

I made a XEROX.

Please XEROX these documents.

I’m going ROLLERBLADING.

My kids love OREOS.

If a trademark is used improperly as a noun or a verb it may become the generic description for, or synonymous with, a general class of products or services and lose its source-indicating function. Then, everybody will be free to use it.  Examples of well-known terms that were once trademarks include “aspirin” and “escalator.” These terms lost their trademark significance through improper use.

Be consistent. Always use a trademark in the same manner, and if you registered it, use it exactly as shown in the registration certificate. Do not change punctuation or make a two-word mark into one word (e.g. X-Y-Z WisconsinDGET vs. XYZWisconsinDGET). 

Use the appropriate trademark symbol. The ^TM symbol can be used to identify any trademark, registered or unregistered.  It has no legal significance but indicates to others that you claim rights in the marked term. In contrast, the ® symbol can be used only to identify a federally registered trademark.

It is not necessary to mark every occurrence of a trademark with the ^TM or ® symbol, but it certainly doesn’t hurt. At a minimum, the first and/or most prominent use of a trademark on a product, on a package or in an advertising piece should be marked appropriately.

Distinguish trademarks from surrounding text. In addition to using the ^TM or ® symbol, you can also emphasize trademarks by printing them in all capital letters or in a bold, italic or other unique font. This helps make it clear to others that you are claiming trademark rights in a particular term.

Maintaining Trademark Rights
You must use a trademark to maintain rights in it. If you stop using a trademark for a period of time with no intention to use it again in the future, then you will abandon your rights in the trademark and it will become available for others to use.

Misuse of your trademark by others can also result in a loss of rights. If you don’t enforce your rights against infringers, your trademark will lose its source-indicating function, just as “aspirin” and “escalator” lost their trademark status (discussed above). If you discover that someone is infringing your trademark it is important to take action, or risk losing your rights.

When should an inventor consider seeking patent protection?
With marketing a product incorporating the invention of primary concern to most inventors, it is not uncommon for inventors to first consider patent protection during the final phases of the design process. However, an inventor should consider patent protection early in the design process to improve the likelihood that patent protection could be obtained on the inventor’s technology. Ideally, an inventor should consider patent protection immediately after having conceived of their invention to a sufficient detail so as to be able to explain to “one of ordinary skill in the art” how to make and use the invention. Every day that subsequently passes, additional “prior art” may become available for a patent examiner to cite against a later-filed application covering the inventor’s technology.

At the very least, an inventor should consider seeking patent protection prior to any public disclosure of the invention. Although under current U.S. law, an inventor is provided a one-year grace period from a public use, sale, or offer for sale of the invention within which to file an application in the U.S., most foreign countries require “absolute novelty” of the invention as a prerequisite to obtaining patent protection. In other words, to preserve a right to pursue patent protection in foreign countries requiring absolute novelty, an inventor must file a patent application covering the invention before any public disclosure of the invention occurs. Such an application, for example, may be a U.S. or an international patent application, discussed in more detail below.  

What if foreign patent protection is desired?
Presuming an inventor first files an application in the United States, any foreign patent applications claiming priority to the U.S. application must be filed within one year from the filing date of the U.S. application. This right is based on the Paris Convention for the Protection of Industrial Property, of which the United States is a signatory.

An inventor may prolong the decision in which foreign countries an application should be filed by an additional period of time by filing an “international” patent application within one year from the filing date of their U.S. application. This right is based on the Patent Cooperation Treaty, of which the United States is also a signatory, and provides a period of 30 months from the priority date upon which the international application is based (i.e. the filing date of the U.S. application, in the above example) to file national applications in each of the PCT member countries in which patent protection is sought.

The international or “PCT” patent application itself cannot mature into an enforceable patent, but rather preserves the inventor’s right to later pursue patent protection in the individual PCT member countries. Currently, there is no “global” patent application that could ultimately mature into an issued patent that is enforceable in any country in the world. 

What do I do with all of this information?
As a businessperson and entrepreneur, after reading this article, you should know enough about U.S. patent law and the patent system to understand how the patent system might be used to the advantage of your business. For example, you should have a better understanding of the role that the patent system could play in your business strategy, particularly if your business is innovation-focused. You should also now be aware that patent protection covering your technology should be considered early in the development process, rather than later or at the very end. At the very least, you should be equipped with enough information about U.S. patent law and the patent system to ask more informed questions when working with your patent attorney or initially engaging the services of a patent attorney.

What is involved in the process of preparing a patent application?
It is important to know that an issued patent begins life as an application that is filed with the U.S. Patent and Trademark Office (USPTO), which examines the application to determine whether it is entitled to be granted as a patent under U.S. patent law. It is not guaranteed that an application will eventually be granted as a patent. It is also not guaranteed that the scope of patent protection desired at the time of filing the application will be available to the applicant at the conclusion of prosecution of the application.

By rule, a patent application must include a specification in which the invention is described, at least one drawing of the invention if it lends itself to illustration, and at least one claim defining what the inventor considers to be the invention. If analogized to a real property setting, a “claim” is like a legal description of the invention, and can be visualized as a fence demarcating the invention from the known art in the public domain. The greater the area surrounded by the fence, the broader the scope of the inventor’s claim, making the patent more valuable.

An application filed with the three above-mentioned elements is considered complete and is entitled to a filing date. The filing date of a patent application can be analogized to the inventor’s “stake” in the ground at which time the inventor was in possession of the invention.

Although an applicant is not required to perform a patentability search prior to filing a patent application in the United States, it is almost always a good idea for the applicant to do so. A patentability search, in essence, is a preliminary assessment of the likelihood of obtaining patent protection on an invention. More specifically, a patentability search involves studying a sampling of prior-art patent or non-patent documents in the same technical field within which an invention might be classified. After understanding the relevant prior art, an inventor may make a more informed decision whether it’s worthwhile to proceed with a patent application, the cost of which is typically many times that of a patentability search.

What happens after a patent application is filed?
It is also important to know that the U.S. patent system is not based on registration. In other words, submission of a patent application to the USPTO is not the end of the process. Rather, it is only the beginning of a process, known as “prosecution,” in which the applicant (or, their patent attorney) is actively involved in advocating for the patentability of the invention described in the application.

After an application is filed, it sits in an examiner’s queue awaiting examination. To commence examination, the examiner conducts a search in the USPTO database for prior art that could be used to “reject” one or more of the inventor’s claims in the application. A “rejected” claim is a definition of the invention that, as alleged by the examiner, is wholly included in the prior art. These allegations are communicated to an inventor in an “office action,” initiating prosecution of the application.

Of course, the examiner’s claim rejections may be rebutted by submitting arguments based on fact and legal precedent. Alternatively, the inventor may decide to amend the claims in the application to address the examiner’s claim rejections. This process of negotiation continues until the examiner either agrees that the claims in the application are allowable in view of the prior art of record or closes prosecution of the application if agreement cannot be reached. Continued prosecution may be requested by the inventor with payment of additional fees. 

What happens after a patent is issued?
Only after a patent is issued can it be enforced against a potential infringer in the marketplace. However, for a patent to eventually be enforced, the patent owner must actively monitor the marketplace to identify potential infringers. The USPTO is not responsible for identifying potential infringers of patents that are issued by the office.

It is also important to know that the fee paid to the USPTO to obtain issuance of a utility patent will only maintain the patent in force for up to four years after issuance. Additional fees, known as “maintenance fees,” are due at the 3-1/2 year, 7-1/2 year, and 11-1/2 year intervals after issuance to ensure that a utility patent remains in force for its entire 20-year natural term. The maintenance fee for each interval progressively increases to encourage patent owners to let their patents lapse, thereby dedicating the technology covered by the patent to the public.

Design patents do not require the payment of maintenance fees to remain in force throughout their natural 14 year term.

To first-time inventors, effectively navigating the patent system in the United States might seem like a daunting task. It is the author’s experience dealing with first-time inventors that, oftentimes, the difficulty lies in knowing where to begin and what questions to ask. This article is intended to assist inventors and entrepreneurs, who are in the midst of their first experience with the patent system or who are otherwise unfamiliar with the patent system, in gaining a working knowledge of the patent system in the United States.

What is a patent?
A patent is a legal document that grants its owner(s) the right to exclude others from making, using, selling, or offering for sale a patented invention within the United States for the term of the patent. A U.S. patent also grants its owner(s) the right to exclude others from importing the patented invention into the United States.

A U.S. patent does not grant a right to use the patented invention. It is within the realm of possibility that a patent owner may be precluded from making, using, selling, or offering their patented invention for sale because the technology upon which it is based is covered by an earlier patent owned by another party. Such a situation may arise when a first party is issued a patent covering an improvement on a base technology, while the patent covering the base technology (issued to a second party) remains in force. So, under U.S. patent law, the first party is entitled to exclude the second party from making, using, selling, or offering for sale any products incorporating the improvement to the base technology, while the second party is entitled to exclude the first party from making, using, selling, or offering for sale any products incorporating the base technology.

A patent owner, however, may convey to another an exclusive or non-exclusive right to make, use, sell, offer for sale, or import the patented invention by granting a “license” covering the patent. Otherwise, unauthorized manufacture, use, sales, offers for sale, or importation of a patented invention is known as “infringement.”

Furthermore, pending patent applications and issued patents have the attributes of personal property and can be bought or sold (i.e. “assigned”). The assignment, however, must be memorialized in a written document. 

What subject matter can be patented?
Any new and useful process, machine, article of manufacture, or composition of matter, or any new and useful improvement thereof may qualify as patentable subject matter.

Most individuals associate patents with a consumer product, which traditionally would be considered a “machine” or an “article of manufacture” for purposes of patentability. However, the process used to create a consumer product, or a material used in creating a consumer product, may also qualify for patent protection.

What types of patents are available?
The two most common forms of patents include a “utility” patent and a “design” patent. A utility patent defines an invention in terms of its structure and function. In contrast, a design patent defines an invention in terms of its ornamental appearance, rather than its function.

Therefore, the scopes of protection afforded by a utility patent and a design patent, respectively, are largely independent of each other and do not overlap. 

What is the term for each type of patent?
Generally, the term of a utility patent begins on its date of issuance and ends 20 years after the filing date of the application on which the patent is based. The term of a utility patent is generally non-extendable, though some exceptions apply. 

The term of a design patent is 14 years, beginning on its date of issuance. The term of a design patent is non-extendable.

For many businesses, a well-known, highly respected brand is often the most valuable piece of intellectual property that can be had. Building a powerful brand is, at the end of the day, a function of two things: offering products and/or services that distinguish (in a positive way, of course) the business in the marketplace, and tying those products and services to one or more trademarks widely recognized by the target customers in the market as the source of those products and services.

This upcoming blog series is aimed at removing some of the mystery of intellectual property, and also acting as a primer informing entrepreneurs on branding and trademarks. The next several blogs are designed to help entrepreneurs develop a better understanding of the basics of IP including discussions on the United States patent system, trademarks, copyright law, trade dress and trade secrets.

Stay tuned for day one about the U.S. patent system…

On Monday, the Delegation attended the 5^th International Outsourcing Business Development Summit. The overall theme of the summit was helping China transition from “Made in China” to “Created in China.”

There was a very interesting Keynote Panel entitled “Service Outsourcing – Promotion of the Innovation and Cooperation of Global Service Resources.” The panel was moderated by Raymond Groth of Duke University– Fuqua School of Business. The panelists were:  (1) Mr. Georges Moukhbat, Managing Partner of MACOM SARL, Mr. Jean-Claude Lebois, CIO of EGEYS, Mr. Martin Bloom, CEO of EMBLEM Ventures, Mr. Lionel Novo, CIO of Fonds de Garantie des Assurances Obligatories de Dommages, Ms. Julia McClug, President of InContext, Inc., Mr. Frank Fond, CEO of Sinotech and Mr. Thomas Gephart, Ventana.

Mr. Groth asked the panelists to consider two questions: (1) What would make you think about or recommend China for outsourcing? and (2) What more does China, your own company and country need to do in order for China to be seen as a more viable source for outsourcing?

During the discussion, several panelists noted that one of the most significant problems in conducting business with China is the language barrier. Panelists commented that while Chinese companies are recognized as being excellent in IT, significant language barriers still exist that cause confusion and misinformation while wasting time and money. Since English is the common language used for documentation purposes, it was stressed that it is imperative that outsourcing companies in China be fluent in English in order to provide this accurate documentation. One panelist urged Chinese companies to find partners in the U.S. and Europe to help China bridge this language barrier. Another panelist specifically asked whether China had a plan to expand English as a common language. 

A follow-up question was whether the West should or could do more to encourage the learning of the Chinese language, culture and history in their schools. One panelist admitted that the U.S. is notoriously bad at encouraging its people to learn a foreign language and that it did not appear that this mindset would change any time soon. The panelist noted that Chinese was considered to be a much more specialized language for which programs were not always readily accessible, unlike those for Spanish, French and German. 

Another panelist emphasized the fact that outsourcing should be considered more than just simply a provider or customer service arrangement. Rather, the panelist urged that  these arrangements be considered to be “partnerships.” The panelist further stated that these “partnerships” be should be transparent and based on mutual trust between the parties. The panelist emphasized the need for each party to spend the requisite time and resources to improve and cultivate the partnership.

Today was the final day of 13^th Great-Idea China Sourcing & New Industrial Delegation to China. I want to take this opportunity to thank Rachel Kuklinski of Michael Best who was tremendous in helping me get these entries posted every day from China.  Also, I really want to thank my colleagues in the Delegation. I enjoyed meeting each and every one of you.  This trip was a truly wonderful experience.

On Sunday morning, the Delegation met with local government officials at a local hotel to discuss and share information regarding the Hangzhou Hi-Tech Industry Development Zone. During this meeting, the Delegation learned that
Hangzhou ranks 8^th among the 88 National Hi-Tech zones in China. Hangzhou is considered a National Software Industry Base, a National Intellectual Property Rights Protection Zone and a National Animation Zone. In 2011, the total value of software and outsourcing in Hangzhou was about 65 billion RMB.  Hangzhou has 1,200 software companies with about 70,000 people involved in research and development and ranks 3^rd among the 35 national Software Parks in China, second only to Beijing and Shanghai.  Much like Suzhou and Wuhan, Hangzhou has invested in creating a world-class higher educational system. Specifically, Hangzhou has 37 universities with a current campus population of about 400,000 students. Over 20,000 students graduate per year with information technology (IT) degrees. 

On Sunday afternoon, the Delegation traveled back to West Lake, which was declared a UNESCO World Heritage Site in 2011, for a boat ride. The lake is surrounded by mountains on three sides and is quite beautiful. The natural beauty of the lake has influenced poets and painters for ages and in fact, the lake has been among the most important sources of inspiration for Chinese garden designers. One of the sights from the boat was that of the Leifeng Pagoda. Leifeng Pagoda is a five-story tall tower with eight sides.  It was originally constructed in the year A.D. 975, collapsed in 1924, and then rebuilt in 2002.

On Sunday evening, we had a Welcome Banquet with the government officials of Hangzhou. The Welcome dinners are very elaborate and formal affairs. The tables are beautifully decorated with colorful table linens and gorgeous floral arrangements. The dinners include numerous dishes which tend to reflect the specialties of the region.

On Saturday, the Delegation was up early and traveled to Hangzhou, China, a city with around 8,000 years of history. Hangzhou is one of the original 7 Ancient cities in China and has been a city for about 2,200 years. Presently, Hangzhou is the capital of Zhejiang province and is its political, economic and cultural center. The current population is approximately 7.5 million people. 

Hangzhou is known for its textiles, particularly silk and green tea. For those of you who may not be familiar with green tea, it is the only tea that is not made by fermentation and it is high in antioxidants, particularly vitamins A and C. West Lake Dragon Well tea, grown in the Longjing mountain area surrounding the city, is Hangzhou’s specialty. High-grade Dragon Well is often very expensive and it is frequently displayed in luxury shops like jewelry. Its leaves, brilliant emerald-green and about three-quarters of an inch long, are renowned throughout China for their beauty.

Hangzhou possesses an enchanting natural beauty and a plethora of cultural heritages.  It’s no wonder it is known as “Heaven on Earth.”  In fact, the city is so beautiful that there is a popular Chinese saying, “Heaven Above, Suzhou and Hangzhou below,” which really does capture the charm of this city. One thing I noticed right away in Hangzhou is that there is less pollution than in other parts of China. Unlike the pollution in Shanghai, Suzhou and Wuhan where the sky seemed to turn gray in the afternoon, here the afternoon sky is a pretty shade of light blue with just a slight film of haze. 

The beauty of the city is reflected in the fact that many people who live in Shanghai travel to spend weekends in Hangzhou since the two cities are only 230 kilometers apart, about a 3-4 hour drive. There is also a bullet train that runs between the two cities which cuts the trip to just 45 minutes. The price is very reasonable as well.  A first class seat is about $23.00 US dollars, and a second-class seat is about $14.70 US dollars. I can tell you having spent a weekend in Hangzhou that the traffic is horrible and that the city is extremely congested. Getting anywhere in the city by bus is painstakingly slow.

While in Hangzhou, the Delegation is staying at “The Dragon” hotel. The hotel describes itself as a “Smart Hotel” in that it creates an “unprecedented” high-tech experience for its guests. Some of the “high-tech” features include: (1) remote check-in and check-out using an electronic hand-held device; (2) when you use your room key to activate the elevator there is a sign which flashes the direction to go to find your room; (3) the doors of each room have no peep holes; instead the back of each door features a small screen about the size of an iPod or iPhone that allows you to see who is standing outside your door; and (4) an interactive set of TV programs, one of which allows you to access the latest information regarding flight departures and arrivals at the local airport and another which places the image of who is outside your door on the TV screen.

On Saturday evening, the Delegation went to see the performance of Impression on the Lake. The performance is staged entirely on West Lake and is an open-air show using light, music, dance and theatrics. The performance was created by Zhang Yimou, the Chinese movie director who created the opening ceremony of the Beijing 2008 Olympic Games.    

The performance tells the story of “The Legend of the White Snake,” also known as Madame White Snake. According to the story, Bai Suzhen, or Lady White, a 1,000 year old female white snake demon, dreams of becoming a goddess. In order to do this, she takes on mortal form and steps into the human world. On the broken bridge of the West Lake, she meets a handsome scholar Xu Xian, who, in a previous life, saved her. The two fall in love and get married. A monk intervenes in order to maintain a law that forbids humans and spirits from falling in love by casting Lady White into a deep well at a Leifeng Pagoda. Over centuries, this story has evolved from a tale of horror to a story of romance. 

I have been very fortunate to see about 10 different performances of Cirque du Soleil and Le Reve at the Wynn at Las Vegas. While Impression on the Lake does not have a circus component like Cirque du Soleil and Le Reve, the artistic component is at least equal and probably even exceeds them. There was just something about the charm of the lake and being outside while watching the brilliant combination of lights, music and dancers performing on top of the water that was just beautiful. Taking in a performance should be on anyone’s to do list when visiting Hangzhou.

When the Delegation arrived for the start of the 6^th Wuhan Service Outsourcing Industry Development and Cooperation International Forum this morning, each of us found a beautiful purple orchid boutonniere at our seat.  In addition to this, we received a bottle of “mineralized” drinking water, Ice Dew. Ice Dew is one of the leading brands of bottled water in China and is a Coca-Cola product. In fact, in 2010, Coca-Cola China launched an eco-friendly, light weight bottle for Ice Dew. The design and texture of this bottle is very different from the DASANI® bottle in the US, as the Ice Dew bottle is more decorative than the DASANI® bottle.

A number of local government officials and business leaders from Wuhan participated in today’s program. Similar to Suzhou, the stage set for the presentations contained a large multimedia screen and was surrounded with a variety of green plants with a few marigold plants. In Wednesday’s blog, I described how the podium in Suzhou was ornamented with a dozen red roses. The podium used in today’s meeting featured a beautiful spray of mixed flowers.

For several hours, the meeting focused on the service outsourcing industry in Wuhan. According to government officials, Wuhan’s 2011 service outsourcing industry achieved an operating income of 40.7 billion RMB, an increase of 44.8% over 2010. Wuhan’s Off-Shore Outsourcing industry achieved an operating income of 254 million RMB in 2011, an increase over 2010 of 97.7%. Wuhan hopes to increase its outsourcing revenue to 120 billion RMB annually by 2015. The city’s plan to achieve this lofty goal involves (1) developing software outsourcing service enterprises; (2) developing financial service outsourcing enterprises; (3) developing digital entertainment enterprises; and (4) building fully functional state-of-the-art facilities in the service outsourcing bearing area. 

Similar to Suzhou, Wuhan has invested in creating a world-class higher educational system. Specifically, Wuhan has built 84 colleges and universities with a current enrollment of 1.2 million students. Each year, these colleges and universities graduate 300,000 students, thereby providing a large pool of talent available for employment in the above enterprises. 

A very interesting presentation was given by Siegmar Haasis, President & CIO IT of Daimler North East Asia Pte Ltd. (Daimler) regarding business cooperation opportunities between world-class companies and new emerging service providers in China. Mr. Haasis was appointed President & CIO IT in October 2012 and is headquartered in Beijing. If the name “Daimler” does not ring a bell, think of Mercedes-Benz cars, Daimler Trucks, Mercedes-Benz vans, Daimler Buses and Daimler Financial Services (financing and leasing). Mercedes-Benz cars are by far Daimler’s biggest product, resulting in annual sales of 57.4 billion Euros while employing 99,091 people worldwide. Next closest is Daimler Trucks which has annual sales of 28.8 billion Euros and employs 77,295 people worldwide. This is followed by Mercedes-Benz vans which has annual sales of 9.2 billion Euros and employs 14,889 people worldwide, Daimler Financial Services which has annual revenues of about 12.1 billion Euros and employs about 7,065 people and Daimler buses which has annual sales of 4.4 billion Euros and employs 17,495 people worldwide.

In total, Daimler currently employs 271,370 people worldwide, of which, the largest number, 201,354, are in Europe and 18,153 in Asia. Mr. Haasis expects Asia to ultimately contain the highest number of Daimler employees in the world. In fact, he stated that due to the rapid growth in China, he intends to double his work force every year for the next few years. 

Moreover, according to Mr. Haasis, by the end of 2012 or early 2013, China will be the #1 market for Daimler in car, truck, and van sales. He indicated that an announcement will be made shortly that in January 2013, a new Daimler car will be made available in China that will be produced entirely in China for the Chinese market. 

During his presentation, Mr. Haasis stated that “China will not only be a source of significant business growth for the big companies but it will also be a key source of talent, innovation and ground-breaking approaches to business. World-class companies are looking forward to this opportunity to leverage this benefit.” In his opinion, he believes that world-class companies look for the following when determining whether to enter into a business cooperation opportunity in China: (1) non-core business operations; (2) access to world-class technology; (3) reduction in operating cost; (4) access to exceptional skills and capabilities; and (5) effective business management. Daimler is looking for “…a long term reliable, ethical and knowledgeable service provider who can provide comparable services with comparable quality at comparable price.”

Another very interesting presentation was given by Mr. Chen Yulong, a member of the Advisory Committee for State Informationization and Researcher for SIC. Mr. Yulong noted that service outsourcing has been around for centuries.  In his view, the key question is whether service outsourcing can transform and evolve, particularly in the current economic climate. In his opinion, the key to transforming service outsourcing is new technology. Mr. Yulong believes that service outsourcing companies should focus on newly emerging technologies, such as the Internet of Things, which refers to uniquely identifiable objects and their virtual representations in an Internet-like structure as an example, to achieve such transformation and evolution.

Mr. Yulong also discussed the industrial revolutions that have occurred throughout history. He noted that it is well accepted that human civilization has been through two major industrial revolutions: (1) the agricultural revolution, which was driven by the upgrading and advancement of agricultural tools; and (2) the industrial revolution, which occurred during the period from 1750 to 1850. Mr. Yulong argues that a third industrial revolution occurred in the 1950’s. According to Mr. Yulong, the 1950’s was a time during which information technology gained rapid development. He believes that currently, we are in another industrial revolution, namely the “modern economy” revolution. Mr. Yulong believes that service outsourcing will play a crucial role in the development of this modern economic revolution. Going forward, he believes that service outsourcing should develop as a combination of informationization and industrialization. 

As a quick side note, several times this week I have written about the impressive colleges and universities that the Delegation has visited. Given the high cost of tuition at U.S.colleges and universities, I spent some time today inquiring about the cost of higher education here in China. I was able to learn that it depends on the course of study selected by the student. Tuition ranges from about $1,600 – $3,200 per year, per student. Additionally, there are a variety of scholarship programs available for students who may not be able to afford the tuition. 

Delegate Spotlight:  Martin Bloom, Emblem Ventures, London, UK.  

Martin has had one of the most unique, colorful and diverse careers of any person I have met. He is a very unique businessman in that he builds businesses, directly and indirectly, using a combination of business acumen and artistic vision, and is able to express himself through artistic pursuits. Martin has used his unique talents to build scalable high growth businesses internationally in the U.S., Europe, and China. In fact, he now spends a quarter of his time in China and sees the region as critical to the high growth prospects of Western companies.

Martin is the CEO of Emblem Ventures. He was with Unilever for almost a decade in his early career and also worked at Chatham House. While at Chatham House, he wrote a book on the industrialization of South Korea, which was published by the Organisation for Economic Co-operation and Development (OECD), and was actively involved with high-tech forums between the British government and Japan. The purpose of these programs was to bring together the top R&D directors in Japan with their British counterparts once a year. He then ran a technology transfer program for the British government assisting British companies to develop strategic relationships with Japanese companies. 

Since 1997, Martin has been actively building businesses through a combination of mentoring entrepreneurs in the UK, U.S. and China, investing in international high growth companies, and joining company boards to design and drive forward unique business models and raise financing for these companies. Martin’s skill is in deconstructing business models to make them scalable. 

In 2001, he started his first venture collaboration with China and in 2005 was appointed UK Chairman of the China-UK Venture Capital Joint Working Group. This working group had such high support that the first meeting was launched by then Finance Minister Gordon Brown, in Beijing. Martin went on as Chairman to assist Chinese solar wafer manufacturer Renesola list first on the London Stock Exchange (AIM) and then on the New York Stock Exchange (NYSE: SOL). Annual revenues grew from $5 million to $1.2 billion in five years. He has just joined the Board of a British fuel cell company which has high growth potential.

Business creation and building is just one outlet for Martin’s creativity. He is an excellent photographer and has created stunning works of art. In fact, in 2007, his work was displayed at Factory 798, an art gallery in Beijing. The exhibition was entitled “Images of China in Transition.” In addition, he had an exhibition in the gallery of the Lee Miller Archive. The photographs were taken in the garden of Lee Miller in Sussex, England and were exhibited alongside his selection of some of her unseen images. Additionally, Martin produced the catalogue for the Tunnel 228 Underground Installation produced by Kevin Spacey and The Old Vic, where Kevin Spacey works as Director. According to Mr. Spacey, “Martin has the rare ability for a photographer to capture the essence of a subject and turn them into works of art which speak to us directly.” 

Furthermore, Martin is currently working on the first of a three-volume novel entitled “The Gift”. The first volume ends with the day before 9/11 and our hero is a young woman trying to get back home to Ithaca, NY to her ill mother. It is an Odyssey and as such, she offends the Gods and is blown off course. Martin is writing the book to express the feelings he had during the first internet era; he spent a third of his time in the US between 1998-2002, investing in e-commerce and telecom companies in California, New York, Boston and Northern Virginia. Martin has embedded some of his photographs and poetry into the book and these will also be published as a separate volume.

During yesterday’s summit, local government officials described their vision and expectation that Suzhou would lead the way in transforming China’s economy from low-end services to high-end service outsourcing. This morning, the Delegation had the opportunity to see just how Suzhou plans to achieve this lofty goal.

After checking out of the beautiful Dushu Lake Hotel, the Delegation boarded buses to travel to several of Suzhou’s industrial parks. The one we visited was the Suzhou Industrial Park Institute of Services Outsourcing (SISO), which is a full-time public higher education institute. SISO’s first classes began in 2008 with only 180 students. Now, about 4 years later, the school has over 3,000 students. 

SISO has 5 departments (1) Information Technology; (2) Business & Management; (3) Finance; (4) Digital Media; and (5) General Education. A Nanotechnology Department is being added and classes are scheduled to begin this fall. The educational programs within each department are designed for the Outsourcing industry. Additionally, the facility of SISO is composed of a mix of national and non-national engineers with industry background. Approximately 90% of the faculty has their Masters or Doctorate degrees. SISO’s education ideology is “Borderless Mindset” and the teaching values are “Commitment, Creativeness, Cooperativeness and Conduct”. The school motto is “Diligence, Applicability, Practice and Innovation”. The first group of SISO students just recently graduated and amazingly, achieved 100% employment.

The Delegation was given a tour through an animation class that was in session. Upon entering the classroom, the first thing I immediately noticed was how each student was wearing an identical blue blazer. SISO requires each student to wear the blue blazer when attending class. They are free to wear whatever else they desire, but must wear the jacket. 

The next thing I noticed was that the students were sitting at long glass tables, in front of their own computer screen. They did not have any books, paper or pens. They simply had their computer, a mouse and a stylus pen. The students sat in their chairs, deeply focused on their computer screens, engrossed in their animation projects. Some of the animation that the students were working on was simply amazing and extremely sophisticated (i.e. designing and rotating 3D graphics). Even more impressive was the fact that this animation class was a freshman level course.

The second stop was the Suzhou International Science-Park, specifically, to the Suzhou International Science-Park Data Center (SISDC). Interestingly, not only is SISDC founded by the Suzhou government but has also received substantial funding from IBM.  SISDC aims to provide: (1) integrated data service platforms for medium and small high-tech enterprises in Suzhou; (2) support platforms for e-governments and digital cities; and (3) data outsourcing platforms for Information Technology Outsourcing (ITO)/Business Process Outsourcing (BPO) and financial back offices.

SISDC is very proud of the fact that it has a computer room constructed in accordance with Tier IV International standards and that its design was certified by Uptime USA. Data center tier standards exist to evaluate the quality and reliability of a data center’s server hosting ability. There are four tiers with four being the highest rating. The goal of SISDC is to be the first green data center in China

During the visit, I learned that SISDC has a very unique way of describing their corporate culture. Specifically, it is described as being like: (1) the “wind” – meaning as speedy as the wind; (2) the “forest” – meaning to be as compact as the forest; (3) “fire” – meaning as aggressive as fire; and (4) the “mountain” – meaning as firm as a mountain.

The next stops on the tour were the Suzhou Science & Technology Town (SSTT), the biomedical engineering park (also known as MedPark) and Suzhou New & Hi-Tech Industrial Development Zone (SND). 

A very nice buffet lunch was served to the Delegation at a local hotel after the tour of the SND.  The buffet contained some very unique items from across several different cultures (Chinese, Japanese and Muslim). I experienced some firsts, namely, Kettle Cooked Bullfrog, chicken feet and pig ears. 

After lunch, the Delegation made their way via bus to Pudong Airport to catch a flight to Wuhan. On the way, several in the Delegation noticed that the sky was getting darker. I turned to my colleague Justin Alden, from Wanno Capital LLC., and said, “Justin, I think it’s gonna rain”. Justin looked out the window and turned to me and smiled and said, “Nope, that’s just the pollution.” And yes, Justin was right. It was the pollution.  Several of us in the Delegation have been commenting on how each and every day the morning seems to start out bright and sunny but by mid-day the pollution rolls in and the sky gets very gray. I have never experienced pollution like I have thus far in China.

For those of you wondering about Wuhan, it is the capital of Hubei province, and is one of the largest and most important cities in China. Specifically, it is recognized as the political, economic, financial, cultural, educational, and transportation center of Central China.  In China, Wuhan ranks fourth in population and third in science and technology.

Tomorrow begins the 6^th Wuhan Service Outsourcing Industry Development and Cooperation International Forum. 

Delegate Spotlight: Sandy Forbes from Vancouver, British Columbia.

Sandy is the Director of Information Technology & Sustainability for Vancity. Sandy’s responsibilities involve ensuring that the IT infrastructure for Vancity is stable, secure and sustainable. Sandy has placed particular emphasis on sustainability in his role as Director for Vancity. He has introduced a number of new innovative programs to facilitate and improve Vancity’s sustainability. First, Sandy replaced the traditional trash cans in the office with significantly smaller sized trash cans. Although unpopular at first, this measure has contributed significantly to the reduction of waste in the company. Second, he instituted an active composting program. As a result, Vancity now composts all of their organic matter – everything from banana peels, to tea bags, to coffee cups, etc. The composting program includes the use of compost bins on each floor that the cleaning staff removes while cleaning at night. Third, Sandy is establishing a sky or roof top garden on the company premises. The sky garden is being implemented in two phases. The first phase involves providing enough green space for the staff. The second phase involves developing a sustainable garden that Vancity will use to attract local farmers to come and grow crops to then sell to the local community. Fourth, in connection with their servers, Vancity partnered with BC Hydroelectric to identify opportunities to reduce their energy consumption and carbon footprint. As a result of this program, the company went from 250 servers to just 5 servers. Sandy’s efforts have helped Vancity to be able to realize a cost savings of 35% per year and have reduced its carbon footprint by 7%.