How can companies manage the risk of lost intellectual property, when sourcing in China? Single case study - GEA Process Engineering

Abstract

This master thesis is the final assignment before obtaining a master degree within supply chain management, at Copenhagen Business School. The main subject of the thesis is how companies can manage the risk of lost intellectual property, when sourcing China. The main purpose of this thesis was to investigate what problems there are in terms of risk of lost intellectual property when companies do global sourcing, with main focus on China, and how these risks could be reduced and could be approached. The thesis therefore starts by defining the background of global sourcing, and then turns its direction into sourcing in China, and the risks and issues involved with that. The main problem of sourcing in China is defined as the country’s poor governmental and legal protection against IP infringement. The different types of risks regarding sourcing in China was found as being risk of reverse engineering, disloyal employees and R&D leakage. The thesis then describes different aspects of general and strategic risk management strategies, which is then used for analysis of the case company of the thesis. The thesis is based on a single case study, at the engineering company GEA Process Engineering that have had a lot of experience within global sourcing, and especially sourcing in China, and issues with intellectual property counterfeiting. The different risks defined from the literature review, is then compared in the case organizations situation to find out what actions that they have done in different situations and how their organization do protection against IP infringement. There were some similarities between the literature and the case organization in terms of the different risks, and some authors also agreed with the case organization on a future that look brighter, in terms of IP protection in China. This factor was therefore considered for the thesis risk management strategy towards reduction of lost IP, for companies sourcing in China. The strategic risk management framework was therefore split into different management scenarios, depending on how the Chinese environment will develop. The risk management strategy is further based on an overall strategy towards IP protection, with different types of measures and actions needed to manage and reduce the risk of lost IP.