Altium
Next generation electronics design solutions
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| Illustration by Claudio Munoz |
Media and blogs are alive with commentary and debate on innovation, protecting intellectual property, and what the current economic turmoil means for both.
Much of the commentary focuses on who’s eating whose breakfast. And before long, China enters most discussions.
But China is changing: it’s emerging as a great economic power, and as a consequence is now most interested in commercial opportunities. These opportunities influence the thinking of both the government and businesses in China, and this in turn affects China’s attitudes towards intellectual property.
Chinese businesses, supported by the government, are seeking out, and are willing to pay for, the best tools to help create not just economic growth, but economic leadership. They are, in our experience, less interested in pirating software.
Altium is growing in China more quickly that the rest of the world. We have about 230 people working for Altium in China, split between direct employees and in resellers. Our support centre for Asia is based in Shanghai. And we manufacture in China.
And all of this is relevant because it represents a commitment to China that is so important to making business relationships work, and which provides a strong lever when seeking to protect intellectual property.
There are also some circumstances that are unique to Altium that do make a difference, and these are factors that might not be shared by everyone.
The first is that we have market leadership in China. The second is that we estimate that we have perhaps 300,000 users of our older software in China. We are fortunate to have brand leadership, and an entrenched user base.
The irony is that about 99% of this is based on buying pirated copies of our software.
So it’s this combination, of a large number of users and the hunger for legitimate commercial success and leadership, which makes our intellectual property protection programs there work.
But there are bigger market forces and a broader context at play as well. On the back of the Internet, everything is becoming connected and intelligent. And users of everything demand more in the services they receive.
And this means huge opportunity for China. Over 80% of all consumer electronic products are already manufactured in China. And the government has recently announced an initiative to take Chinese-produced consumer white goods and consumer electronic products into the rural community by subsidizing these products, many from domestic companies. That’s 320,000 villages, 720 million people.
Yet China is seeking to move from being the manufacturing powerhouse to the world’s design powerhouse, to move from “made in China” to “designed in China”. And this shift is well under way. Data from the OECD, the Economist Intelligence Unit, and the Information Technology and Innovation Foundation in America, all show that patents, exports, engineering graduate numbers, and other indicators, are all increasing rapidly.
And how is the recession affecting all this? We all know it’s complicating everything, even for China. But China’s government announced a US$88 billion, three-year stimulus package solely for the electronics sector in February, so its commitment to supporting the sector through the recession is clear.
All these factors combine to push China towards compliance with intellectual property. They demand the tools, products and expertise to continue this growth. They are not in business to chug along on the back of previously pirated solutions that might now be 10 years old.
So, last July, we announced a number of initiatives that represent a different approach to IP protection.
The first was the Altium Invest in Innovation Program, or I3 Program. Its aim is to convert illegal users of our software, mostly software that is 10 years old, to paying users of our latest solution.
It works by adding value to the user. The program has a number of components. It provides an amnesty to users of illegally copied software; and it has special pricing that includes the software licence, training, certification, and localized language support.
We provide dedicated Chinese language forums and phone support. And we are creating training centres to extend the teams engaging with the users on this conversion program.
The value in this program to the users is the removal of the barriers to our modern software, which in the Chinese market was viewed as being desirable but expensive.
Chinese engineers now have access to the same solution as the west. In levelling the field, Altium has made the concept of piracy much less attractive by providing increased value.
The second program was the Altium China Academic Program. This builds on our leadership in the teaching of electronics in universities. Eighty per cent of students use Altium, and 50% of China’s engineering universities and schools do.
This program’s intent is to equip and train the top-five engineering schools in China with Altium’s software and support, over three years. And these five would then train, in turn, a further 25.
We are also planning five centres of excellence in each of the five tier-one universities.
And we announced a new Altium China Academic Forum, a peer network with Chinese engineering academics, to address curricula, training, research and publishing in electronics engineering.
We have appointed three universities so far, supporting them with special pricing, training and support. These are Qing Hua University in Beijing, South China University of Technology in Guangzhou, and the University of Electronic Science and Technology of China, in Chengdu.
What is becoming clear is that the desire from Chinese engineers for modern solutions is getting stronger than the instinct to use pirated software. This is the context set by the Chinese government, and the opportunity as they see it is there to be taken now.
Clearly, Altium’s situation may be unique, and is certainly unusual, in having such a large user base to convert, in a market context that is advantageous.
The recession has played its part in slowing things down, and the government has made it clear to us that, for now, continuity of individuals’ employment is more important than driving compliance programs. That’s something we have to live with.
But those national initiatives overlay everything. China does understand the importance of intellectual property rights, not least for the protection it provides its own patents and inventors. And, as with many other things in China, history sets the context. Until about 30 years ago, there was no such concept as intellectual property in China, certainly not in the western sense.
One example of this is that China has 33 provinces each with its own court system. There are, in effect, 33 courts of appeal for any given dispute or claim, and while a program to bring all these courts together under one system is now under way, it won’t be completed overnight.
But, consider this: it could be argued that all we've done is invested in an overseas market on terms that fit the cultural norms of that market, emphasizing added value, and providing support in-country.
Taking a long term view suggests that working with China's world and economic aspirations, rather than seeking to impose your own, works, and on your terms.
The protection of intellectual property should be taken seriously, but it can be addressed in the context of working with your market in China, not cutting across it.