CTEX one-stop service and support system for national technical exchange

By Kevin Nie, China IP,[Comprehensive Reports]

August 13th marks the second anniversary of the incorporation of China Technical Exchange (CTEX). Without flowers or celebrations, keeping a low profile and with a practical attitude, it lets the day pass pacifically, and goes on to travel light.

“3 business lines, 3 service levels, and 3 support systems”

CTEX was created in 2009 as a national technical exchange service provider with the approval of the State Council, jointly by the municipal government of Beijing, the Ministry of Science and Technology, the Chinese Academy of Sciences and the State Intellectual Property Office. In the past 2 years, it has been persistent with the innovative philosophy of “Technology + Capital + Service,” to build an internet technical exchange platform, an innovative technology finance platform, and a market platform for operation of science and technology policies.

Guo Shugui, President of CTEX, believes that CTEX has been created to take full advantage of the fundamental role of the technical exchange market in allocating scientific and technological resources. It will improve the technical exchange efficiency and promote the transformation of scientific and technological achievements, by integrating and concentrating technical resources, innovating technical exchange mechanisms, and perfecting the technical exchange system.

On August 11th, during his visit and study at CTEX, Wan Gang, Vice Chairman of Chinese People’s Political Consultative Conference (CPPCC) and Minister of the Ministry of Science and Technology, affirmed the successful approaches and experiences of Beijing municipal government in promoting the technical exchange market, Zhongguancun, in promoting experimental points of equity incentive reform, and CTEX in improving its technical exchange functions, innovating the technology finance model, and perfecting the support system. He said that since its incorporation in 2009, CTEX has clarified its strategy to develop “3 Business Lines, 3 Service Levels, and 3 Support Systems.” It has been focused on technology exchange, technology finance and supporting services, which are the three business lines, and launched patent auction, scientific and technological achievement transformation trust, and equity and dividend option incentive, and other service products. It has set up the objective to “base in Beijing, serve the entire nation, and build an international technical exchange center and market.” It has made progress in the construction of the broker membership system, the IT service system, and the talent support system.

Moreover, Wan Gang warned of the huge opportunities and challenges in the technical exchange market of China. The National Scientific and Technological Development Program in the 12th Five Year Plan Period is targeted on the transformation of scientific and technological achievements into real productive forces. It will enhance the connection between the advancement and innovation of science and technology and industrial upgrades, the transfer of advanced scientific and technological achievements to traditional industries, and the commercialization of scientific and technological achievements in the market. This will require technical exchange work to coordinate between technology and economy, and to balance and connect between demand and supply.

Wan Gang emphasized that the technical exchange organization should seek for innovations and breakthroughs with respects to valuation mechanism, project development, talent building and international cooperation. As regards the evaluation mechanism, it should work to increase the value of the soft capital. It should help enterprises evaluate the prospect of a technical project by acting as if it were the baton in a relay race. It should try to spread one technology to more than one product, and cause one product to apply more than one technology. It should tap the potential of a project, by strengthening the connection and communication of information. It should motivate the research staff in enterprises and in particular, colleges and universities, widen the application area of scientific and technological achievements, and accelerate their transformation into real productive forces. It should build its talent pool, by educating, training and introducing persons who are familiar with technology and economy, and understand the demand of colleges and universities and enterprises.

He pointed out that CTEX should explore its intangible assets pricing, equity incentive and one-stop IP services, summarize its successful experiences, and innovate its technical exchange service model. It should set itself up as an example for the other technical exchange markets in China.

Deepen and solidify the main business lines

During the last two years, following strategy to develop “3 Business Lines, 3 Service Levels, and 3 Support Systems,” focused on the three business lines of technical exchange, technology finance and support services, CTEX has made outstanding achievements in innovating the technology incubation model, developing the capability exchange, innovating technology valuation, introducing the competitive pricing model and financial instruments, and promoting the industrialization of scientific and technological achievements.

As regards the innovation of the technical exchange service model, with the one-stop services of CTEX, Beijing Yibuke Science and Technology Co., Ltd. contracted with the Fourth Military Medical University for the incubation of the latter’s EIT patent projects, and contacted with a number of partners to industrialize the project. The new triple-relay incubation model has been praised by the industry. On November 12th, 2009, CTEX, the Fourth Military Medical University and Beijing Yibuke Science and Technology Co., Ltd. signed a tripartite agreement, whereby CTEX provides one-stop services regarding the valuation of intangible assets and their admission into the shareholding structure and the third-party settlement, so that the Fourth Military Medical University will license its EIT technology to Beijing Yibuke Science and Technology Co., Ltd., and provides the phased financing service to Beijing Yibuke Science and Technology Co., Ltd. to industrialize the EIT technology. This innovative model of technical transfer service for the industrialization of scientific and technological achievements of colleges and universities can be brought into the equity incentive reform at Zhongguancun National Self Innovation Demonstration Area.

For the increasing demand from enterprises for customized R&D services, considering the situation of Beijing where the R&D service industry is strongly promoted, and the R&D organizations are concentrated with idle R&D capabilities, CTEX has launched the capability exchange service, to organize R&D organizations in providing customizable R&D services.

On December 28th, 2009, CTEX successfully completed its first capability exchange project. On the platform of CTEX, Sichuan Dongsheng Spirits Co., Ltd. commissioned Beijing ODK Pharmaceutical Technology Co., Ltd. to research and develop a healthy spirit, with the transaction amount being 360,000 yuan, and CTEX acting as the third-party supervisor and settler. The project marked the official launching of the capability exchange service, which helps R&D service providers to show and exchange their R&D capabilities, and provides more options to those who demand such capabilities.

“Since its inception, CTEX has begun to develop a service product for research institutions, universities and colleges, and R&D enterprises to show their capabilities. It provides them with a market development platform that is low-cost, but with a wide coverage. Along with the capability exchange service, it has launched the third-party supervision service and the settlement service, to effectively reduce the credit risk involved in the capability exchange, and protect the technical cooperation between the parties,” Guo Shugui told our journalist.

As regards the innovation of technology valuation, CTEX has made successful explorations. On November 8th, 2010, on the opening ceremony of the Fourth China (Beijing) Patent Week sponsored by CTEX, Tianjin Institute of Pharmaceutical Research and Tianjin Century Dragon Pharmaceutical Co., Ltd. signed a contract on the transfer and related patent licensing regarding the Longjia Tongluo Capsules, with the transaction amount exceeding 50 million yuan—the highest in history for projects involving Chinese medicines. The successful conclusion of the contract was affirmed and highly praised by the parties to the transaction. Tang Lida, President of Tianjin Institute of Pharmaceutical Research, commented that during the transfer of the project of Longjia Tongluo Capsules, CTEX provided high quality services in every link of the transaction, including the transaction structure design and the technology valuation, which led to the conclusion of the transaction. Ren Weizhi, Chairman of Tianjin Century Dragon Pharmaceutical Co., Ltd., said that this was a perfect example of the working of the market-based price mechanism for technology transfer projects. He believed that the Longjia Tongluo Capsules, when launched in the market, would lead to good social and economic benefits.

As the traditional technical exchange model is limited in that the negotiation is simply between two parties, the seller and the buyer have limited options, and the successful transaction ratio is low, CTEX has introduced the competitive pricing model. On December 16th, 2010, the first patent auction of CTEX was successfully completed, where 28 patents of the Institute of Computing Technology of the Chinese Academy of Sciences were sold, with the successful transaction ratio being 40% and the total transaction amount being 30 million yuan. It provides a new way of technical exchange, and signposts how a national R&D institute can sell its patents in batches at a public auction. It attracts wide attention and wins applause from society, and enlarges the influence of CTEX.

Also, reportedly, to serve more patentees, in response to the market demand and promote the fast circulation and realization of intangible assets, the second auction of CTEX will be held in October (site) and November (Internet) 2011. It has received more than 400 patents for auction, in which 307 patents in the electronic and IT field, which are from large to medium domestic enterprises, public companies, research institutions, and small to medium R&D firms, have entered the listing phase. In particular, as the biggest highlight, 7 foreign patents will be sold at the auction. These applied patents in the consumer electronic field will enjoy a good prospect. The auction will be the debut of foreign patents in the Beijing market, which is also the first international step of CTEX.

For many years, technological enterprises of small and medium size have been nagged by financing difficulties. To effectively address their pledge finance issues, CTEX has introduced financial instruments to promote the commercialization of intellectual property and launch the technology trust service. In April 2011, CTEX, together with COFCO Trust Co., Ltd., Beijing Vestone Capital Co., Ltd. and Beijing Fuhai Jiaxin Investment Consultation Co., Ltd., established and launched the Zhongguancun Self Innovation, IP Finance and Collective Funds Trust Plan. The Plan, which is centered on intellectual property and in the form of a trust loan, intends to address the financing problem of technical companies that usually pay more attention to intelligence than to assets. It guides social funds to the industrialization of scientific and technological achievements, strengthens the support to technological projects, promotes the advancement of science and technology, and causes enterprise to innovate.

Guo Shugui said that focused on self innovation building, centered on the central issue in the commercialization of intellectual property—the intellectual property pledge finance, CTEX, together with COFCO Trust Co., Ltd., Beijing Vestone Capital Co., Ltd. and Beijing Fuhai Jiaxin Investment Consultation Co., Ltd., through structured arrangement of trust products and innovative designs, will gradually explore ways to combine venture capitals and private equity funds into the trust plan, to lead more social capitals to support the industrialization of scientific and technological achievements, diversify and sustain the longer term development of intellectual property finance, break the financial bottleneck to high-tech enterprises, accelerate the scientific and technological development of Beijing, and achieve a prosperous and innovative future.

Build support systems, and add service levels

In addition to the work on the three service lines, CTEX has established the target to “base in Beijing, serve the entire nation, and build an international technical exchange center and market.” Moreover, it has made progress in building its membership system, information service system, and talent support system.

By cooperating with professional organizations, CTEX has built up technical transfer and transformation platforms in many areas, including the international pharmaceutical technology transfer platform, the modern agricultural technology transfer platform, and the Internet-of-Things technology transfer platform. It has also been preparing for platforms of chemistry, new materials, software and information services. In addition, CTEX has developed its broker service system through its membership. Members provide professional and integrated services for technical exchange, and even bring their own customers to CTEX, in order to extend their customer services.

On August 17th, 2010, the Intellectual Property One-Stop Service (IPOS), which was built by CTEX and others, was put into operation. On the starting ceremony, Delta Electronics Inc., Thomson Reuters Corporation, Shanghai Electric Group, totally 12 companies, entered into a strategic cooperative agreement with CTEX. The purpose of IPOS is to carry out the intellectual property strategy of the state; collect first-rate brokerage resources in China and other countries with respects to related consultation, search, law, appraisal and training; accelerate the transfer and transformation of scientific and technological achievements in China; promote industrial upgrade and leap-forward development; and provide government and society with professional, high-quality and all-around services in the search, consultation, exchange and commercialization of intellectual property.

Through over 20 years of development, Zhongguancun has become a concentration place and exchange center of top technologies in China. According to statistics, the technical exchange market of Beijing maintained its good trend of development in 2010, which produced 50,847 technical contracts. The transaction amount was 157.954 billion yuan, which accounted for 40.4% of the national total and ranked Beijing No. 1 among Chinese cities. This has set up a good example for other technical exchange markets. In particular, the transaction amount of the Zhongguancun National Self Innovation Demonstration Area was 123.280 billion yuan, which accounted for 78.05% of the total of Beijing and 31.6% of the national total. Topping the list of national self innovation demonstration areas, it has been a leading example of technological innovation and transfer. It highlights the high-end, efficient, and high-radiating features of Beijing, and helps deepen the technological cooperation between the capital city and the surrounding areas.

CTEX, which locates at the Zhongguancun National Self Innovation Demonstration Area, has and will continue to work as a catalyst for the integration of technology with capital and enterprises in wider areas. Along with other enterprises at the Zhongguancun National Self Innovation Demonstration Area, it will act to concentrate high-end technologies, guide similar works, and radiate to and drive surrounding areas. It will pioneer the self innovation and systematic reform, to turn Zhongguancun into a source of strategic emerging industries. Moreover, by relying on CTEX, the Zhonguancun National Self Innovation Demonstration Area will consolidate intellectual property-related brokerage resources in the area, and provide its enterprises with one-stop services.

On June 19th, 2011, CTEX Fuzhou Workstation was officially unveiled. It was established jointly by CTEX and Fuzhou Science and Technology Bureau, on the basis of Fuzhou Technical Exchange Market. Fuzhou Technical Exchange Market is a professional technical exchange service provider in Fuzhou. It has been certified by the Ministry of Science and Technology as a National Technical Transfer Demonstration Organization, and selected by the State Intellectual Property Office as one of the National Centers for Display and Exchange of Patented Technologies. CTEX Fuzhou Workstation will base itself in Fuzhou, and radiate to the entire Fujian Province and surrounding provinces. With the comprehensive advantageous resources of CTEX, it will provide local enterprises with services and support with respects to technical transfer, technology finance, intellectual property, and trademarks. Also, it will cause more technological achievements and projects to land in Fujian, and the technological resources in all regions to circulate more effectively.

Moreover, by cooperating with professional investors, CTEX has started various funds to invest in start-ups and attract foreign technologies. On December 8th, 2009, CTEX, along with Infinity Group of Israel and Zhongguancun VC Development Co., Ltd., established Zhongguancun International Technology Import and Investment Fund, with the current scale being 100 million yuan. The Fund will import to Zhongguancun advanced technologies from Israel and the United States by means of technical transfer, talent import and industrialization promotion. The related projects will be invested by the investors of the Fund on pro rata basis according to their committed contributions to the Fund.

“Next, following the requirements of Minister Wan Gang, we will carry out the National Scientific and Technological Development Program in 12th Five Year Plan Period to further depths. We will innovate the models of technical exchange, technology finance and integrated services, effectively concentrate resources, tap the potentials, improve the dynamic valuation system, strengthen talent building, and promote international cooperation. We will help effectively connect technology with capital, improve the industrialization of scientific and technological achievements, accelerate the building of the Zhongguancun National Self Innovation Demonstration Area, and contribute to the construction of a technological Beijing and an innovative country,” Guo Shugui said.

(Translated by Ren Qingtao)


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