Measures give firms more finance options

The administrative committee of Guangzhou Development District, an emerging industrial center in South China's Guangdong province, has launched new measures to encourage local high-tech companies to widen their financing channels with intellectual property rights.

The measures, which took effect on May 17, will strengthen the use and protection of IP, allowing any high-tech company in the district to pledge their IP as collateral for funds from banks, small-loan companies or financial leasing companies. The companies that do so will have their assessment fees, guarantee fees and insurance fees refunded via government subsidies valued at up to 100,000 yuan ($14,070) for each item.

The government will also subsidize capital repayments and interest annually to the tune of 3 percent, capped at 1 million yuan, for no longer than a year.

"The fiscal support is much bigger than before," said Lan Weifeng, director of the district's IP administration, in a news briefing last week. "We also set up new awards to promote IP securitization."

In September 2019, 11 small and medium-sized high-tech companies in the district received financing of 3 million to 45 million yuan by leveraging expected patent licensing fees of 103 invention patents and 37 utility model patents from a securitization product at Shenzhen Stock Exchange.

"It's significant for a company like us on a fast-growth track that needs consistent financial input. IP can be used as a major channel for funds," said Xiang Xianqing, deputy general manager of Huayin Health.

According to the new measures, the issuer of invention IP securitization products is eligible to an award of no more than 6 million yuan, of which 10 percent can be used to reward its executives and staff.

Companies that successfully raise capital from IP securitization can also receive a 3 percent subsidy on interest payments for no more than three years, or up to 2 million yuan annually.

"The new arrangement can solve the financing problems of small and medium-sized high-tech enterprises and encourage them to develop more patents," Xiang said.

The new measures also encourage IP service agencies to develop in the district. If annual revenues of new agencies reach the targets of 10 million yuan, 50 million yuan and 100 million yuan, they can receive corresponding one-off rewards of 1 million yuan, 5 million yuan and 10 million yuan.