Recently, during the research on the "Guide to Elite Intellectual Property Legal Service Brands (2023)", the Research Center of Law and Social Security had a dialogue and exchange with Zhou Xueteng, a senior partner of Beijing Gaopeng Law Firm, and Yu Ling, a team member who participated in the first intellectual property ABS product issuance in the western region and a lecturer at Dagongxin (Beijing) Asset Appraisal Co., Ltd., to explore the current status and future development trends of intellectual property securitization. This article extracts the essence of the interview with lawyer Zhou Xueteng by Law News Agency for forwarding and interpretation, for the readers.

The intellectual property finance business is thriving.

The data shows that in 2022, Shanghai and Shenzhen exchanges successfully issued 86 intellectual property securitization products, with the issuance scale reaching 21.6 billion yuan, patent and trademark pledge financing amount of 486.88 billion yuan, and the proportion of intellectual property securitization in intellectual property financial business is about 4.4%. According to the Development Report of Securitization in 2022 released by China Central Depository&Clearing Co., Ltd., China issued 1977.27 billion yuan of Securitization products in 2022. According to this calculation, the proportion of intellectual property securitization in the total Securitization is about 1.1%.

Although the current proportion of intellectual property securitization in intellectual property financial business and Securitization business is not high, the market is gradually accepting this new type of financing. More and more enterprises and capital are realizing that intellectual property, as a core asset of enterprises, its financial attributes are worth further exploration and utilization.

Zhou Xueteng, Senior Partner of Beijing Gaopeng Law Firm, stated in a survey conducted by Law&Law News that from the perspective of market demand entities, if corporate financing, especially the financing model of technology-based small and medium-sized enterprises, can be established, their own market demand is relatively strong. By the end of 2022, Shanghai and Shenzhen Stock Exchanges had issued 91 intellectual property securitization products, accounting for 0.3% of the issuance scale of China's enterprise Securitization market, which is still a small proportion. If we can solve the difficulties of intellectual property evaluation, valuation methods, and risk sharing methods, the financing models of intellectual property securitization will be more diverse, and the business volume will be significantly increased.

Although the future is bright, it is undeniable that the current intellectual property securitization still faces significant challenges. From the perspective of existing issuers, over 90% of intellectual property securitization products are currently initiated by the government; This is also different from the traditional Securitization. Zhou Xueteng believes that the reason for this phenomenon is that the underlying assets of intellectual property securitization are relatively single, mainly relying on external credit enhancement, while state-owned enterprises or local governments precisely have higher credit ratings.

Regarding the challenges faced by intellectual property securitization, Zhou Xueteng believes that the relatively single underlying assets and the participation of local governments or state-owned enterprises is itself a challenge. In a sufficient market, trading entities should be diversified, especially the financing needs of private entities are more urgent. In such a process, how to use more reasonable evaluation methods to guide the operation and make the field more objective and standardized is an urgent problem that needs to be solved.

During the research process, the attitude of the surveyed lawyers towards intellectual property securitization, a financial product of intellectual property, was divided into two factions. 70% of the surveyed lawyers believe that it is still too early to discuss intellectual property securitization business, and the current intellectual property securitization is more of a virtual than a real; Another 30% of lawyers believe that although intellectual property securitization is still in its infancy in China, it will have a positive impact on the development of the entire industry in the long run. In response to the above two viewpoints, the Research Center of Law and Law Society and Zhou Xueteng had in-depth exchanges.

Zhou Xueteng agrees with the positive significance of intellectual property securitization, stating that any field must be tested first before it can promote its development. She believes that intellectual property securitization has already met certain conditions at both the national and market levels. Currently, the pilot projects in the industry are also doing well, but comprehensive promotion still needs some time. If we can further improve the business operation guidelines in the entire intellectual property securitization business, such as due diligence guidance methods, institutional arrangements, business operation standards, rationality of transaction structure, intervention of external rating agencies, etc., so that market entities can find suitable solutions when encountering problems, it will help further leverage the value of intellectual property legal service providers or legal service providers.

As more and more enterprises and capital realize the importance of intellectual property, the potential and market space for intellectual property securitization are enormous, but its essence still belongs to financial derivatives, which are restricted in all aspects. According to statistics from the Securities Industry and Financial Markets Association (SIFMA), in 2019, the stock size of licensed securitization products (including but not limited to intellectual property assets such as copyrights, patents, trademarks, etc.) in the United States was $22 billion, accounting for only 1.4% of the total stock size of securitization products in the United States. In terms of horizontal comparison, there is still potential to be tapped for the scale of intellectual property securitization in China. However, it must be pointed out that even in developed countries, intellectual property securitization is difficult to become the mainstream financing method.

Zhou Xueteng is optimistic about the future development of intellectual property securitization. She believes that through intellectual property securitization, it can effectively serve social and economic development, especially the positioning and needs of the 14th Five Year National Strategic Plan. At the same time, she also believes that intellectual property securitization is unlikely to become the mainstream financing model, and the mainstream financing model is still the traditional interbank financing model. Intellectual property securitization does not play a substitute role, but plays a positive supplementary role.