Fujian encourages IP-collateralized financing to boost industry growth
With support from the central government, East China’s Fujian province is forging ahead in expanding intellectual property mortgage financing.
In 2018, the amount of patent-collaterized loans was 4.7 billion yuan ($664.87 million) in Fujian, up 46.9 percent from a year earlier.
Xiamen, a popular tourist destination in Fujian, has always been at the forefront of the country in terms of IP cultivation and commercialization, local officials said.
One of the first batch of 10 cities to build a strong IP city, Xiamen began to establish China’s first IP bank in 2017.
In order to boost the development of IP-collaterized financing, the Xiamen intellectual property administration offers subsidies on interest payment to small and mediumsized enterprises involved in such loans. The maximum subsidy is 60 percent of the bank loan interest, and the combined amount of subsidies each borrower can obtain is up to 600,000 yuan.
Additionally, companies can acquire a local government grant for services charged during the financing process including fees for insurance, guarantee and evaluation.
“These policies have broadened funding channels and reduced financing cost for enterprises,” said Lu Linbing, head of the Xiamen intellectual property administration.
Among beneficiaries of the policies is Gachn Technology, a local private manufacturer of intelligent packing equipment.
The company has used 13 patents as collateral and secured a loan of 8 million yuan from the Xiamen branch of Bank of China.
“Thanks to such favorable policies, the cost of patent-collateralized loans has halved and the annual interest rate is only 3.76 percent,” said Lin Jinbo, deputy general manager of Gachn.
The loan has given strong support to the company’s progress, especially for plant expansion and product upgrades, Lin said.
The city government also cooperated with banks, insurance companies and other organizations to share the lending risks. If a bad loan occurs, 40 percent of the capital loss will be incurred by the government.
Lu said, “Lending risks is effectively managed and mitigated in this way, which encourages more financial institutions to engage in IP-collateralized loans.”
Official statistics show that Xiamen’s IP-collateralized loans had amounted to 450 million yuan by the first half of 2019, benefiting 67 businesses.
Endeavor in IP-collateralized financing can also be seen in Fuzhou, capital of Fujian province.
To date, 156 enterprises in the city have been approved to secure patent-collateralized loans, with a total credit line of 3.5 billion yuan.
Meanwhile, the financing method has advanced enterprises’ innovation and technological research.
Zheng Demou is the director of the IP department of Ospring Technology, which has received loans worth 14 million yuan with nearly 40 patents used as collateral.
“Banks prefer useful patents with broad market prospects, which promotes us to increase investment in research and apply for high-quality patents,” Zheng said.
In 2018, the Fujian IP Public Services
Platform was established in Fuzhou’s Gulou district. Gathering officials, professionals and 33 IP services organizations, the platform can provide one-stop IP-collateralized financing services for enterprises, said Li Wenmiao, general manager of the platform’s operating department.
Other achievements in IP commercialization in Fujian include the Belt and Road Initiative-themed Xiamen IP investment sub-fund, which was set up in August.
According to Lu, the fund is estimated to reach 300 million yuan in its first phase and mainly invested in high-tech industries such as information technology and biomedicine.
As for IP trade, the National Patent Technology (Fujian) Exhibition and Trade Center has seen IP deals signed worth 97 million yuan over the past three years.
The center also organizes regular activities in communities, universities and enterprises to enhance IP awareness among the general public, local officials said.