Since early 2026, frequent visits by European leaders to China have highlighted significant shifts in Europe-China industrial cooperation. Despite the European Commission’s focus on de-risking and the imposition of tariffs on Chinese electric vehicles, European companies are increasing technology investments in China, engaging in meaningful technology co-creation rather than simply relocating capacity. This is not abandoning de-risking, but reflects a strategic push for controlled deep engagement amid complex geopolitics. Aria Tian explains how we can better understand this transformation.
I. Paradigm I: R&D localisation– balancing security and efficiency
When research and development (R&D) functions are established by European companies in China, a fundamental question immediately arises: How can Chinese teams properly participate in R&D while protecting core technology assets? This is a core management challenge that all companies adopting Paradigm I must face. Based on industry practices, companies typically need to establish management mechanisms in the following dimensions:
‘Layered authorisation’ for technology access: A typical setup uses a ‘core-periphery’ layered model: core algorithms and technology stay in Europe, while Chinese R&D teams handle application development, localisation and performance tweaks. The teams connect via standardised interfaces; Chinese staff can use core algorithm functions but cannot access internal code. This ‘black boxing’ method protects trade secrets while enabling local innovation.
Dynamic evolution of permission systems: As organisations build trust and enhance team competencies, they can incrementally broaden the scope of technology openness. This progression typically begins with granting access to application program interfaces, advancing to joint parameter tuning in the medium term, and ultimately leading to assigning responsibility for independent module development over the long term. Such a dynamic adjustment mechanism constitutes the foundation of Paradigm I management.
Pre-definition of ownership attribution: Prior to initiating any collaborative efforts, it is essential to clarify ownership matters regardless of the extent of technology openness. Industry-standard approaches include ‘global unified ownership with regional licensing’ or establishing distinct agreements for background and foreground intellectual property (IP). These measures are designed to proactively mitigate potential ownership disputes related to Article 6 of China’s Patent Law concerning service inventions.
Despite the ban introduced by the 2019 Foreign Investment Law on administrative forced technology transfer, the European Union Chamber of Commerce in China has reported limited progress in ending ‘IP transfer for market access’ in sectors such as rail transit.[1] The issue has persisted for four years, and many firms still rely on contractual firewall clauses before introducing new technologies.
II. Paradigm II: Brand licensing and technology systems
In February 2026, Sweden’s Mölnlycke entered into a strategic partnership with China’s Joyme Biotechnology. The Swedish party authorised the Chinese party to use its brands including Yueweike and MONTIVIK, while simultaneously offering related technology system support to jointly promote high-end dental implant materials in China and the Asia-Pacific market.[2]
Core IP management challenge for Paradigm II: Balancing control and growth
The core of brand licensing models lies in achieving market expansion through partners – the Chinese party is responsible for production capacity, channel building and local market insights, while the Swedish party provides brand support and technology resources. However, this also brings the risk of partially transferring brand reputation management to partners. If the Chinese party’s product quality control or service standards deviate, it will directly impact the Swedish party’s global brand image. Therefore, such ‘brand licensing and technology system’ models typically involve the following IP management considerations:
Legal control of brand quality: According to Article 43 of China’s Trademark Law, licensors have the obligation to supervise the quality of goods using their registered trademarks. Companies typically need to embed quality verification mechanisms in agreements to prevent brand devaluation risks.
For example, agreements may stipulate that licensed products must undergo licensor technical validation before market launch, and annual sampling audit failure rates exceeding specific thresholds trigger licence termination clauses. Specific thresholds and procedures require case-by-case negotiation.
Brand asset isolation: To prevent quality issues with a single partner from affecting the global brand, companies may consider establishing brand isolation mechanisms.
For example, establishing independent sub-brands for the China market to differentiate from the main brand; or clarifying in agreements that brand usage rights are limited to China and cannot be used for exports; or linking market performance and quality records to renewal conditions. Specific isolation methods require case-by-case design based on brand strategy and market positioning.
Technology openness boundaries: In industry practice, companies typically need to establish technology grading management thinking, distinguishing between transferable technology modules and retained core assets.
For example, medical device companies may adopt the following grading approach – dividing technology into the drawing level (deliverable documents), training level (requiring on-site guidance) and joint development level (both parties participating), with core formulation source code not included. Specific grading standards and openness ranges vary by project and require case-by-case design based on technology characteristics and cooperation depth.
Paradigm III: Full value chain joint ventures
In January 2026, AstraZeneca announced plans to invest United States dollar 15 billion in China by 2030 to expand R&D and production facilities.[3] This investment covers the full value chain – from early drug discovery and clinical development to large-scale production, focussing on cutting-edge fields such as cell therapy and radio conjugate drugs. AstraZeneca has established R&D partnerships with multiple Chinese biotech companies.
Core IP management challenge for Paradigm III: Balancing sharing and autonomy
The central challenge lies in achieving ecosystem benefits through deep collaboration, all while preserving leadership in technological advancement.
Ownership definition for joint R&D: In cutting-edge fields such as cell therapy and artificial intelligence (AI) drug discovery, where researchers from both parties jointly complete inventions, ownership determination is highly prone to disputes. Standard industry practice is to establish a ‘process documentation’ mechanism.
For instance, a joint R&D achievement register may be established to facilitate transparent collaboration. R&D logs should record the contribution proportions and creation timestamps of each party in real time, while any background IP brought into the partnership by either party should be documented beforehand. Quarterly confirmation of stage achievement ownership should be jointly signed by IP representatives from both sides. The methods of documentation and frequency of confirmations should be tailored to the specific complexity of each project.
To balance the interests of both parties, companies may consider adopting a regional rights division model.
For instance, ‘China rights retention’ means the Chinese party keeps commercialisation rights for China, while the foreign party gets rights elsewhere. After launching the product, both sides share profits through revenue sharing. Rights division is negotiated case-by-case, considering each party’s R&D and market contributions.
Compliance architecture for clinical data: Cross-border flow of clinical data is subject to multi-layered legal regulation in China: the Regulations on the Management of Human Genetic Resources require human genetic resource information to be stored locally, with export subject to approval by the State Council’s science and technology administrative department; the Data Security Law establishes an ‘important data’ catalogue system, with medical and health data typically included; the Personal Information Protection Law stipulates that cross-border transfer of sensitive personal information requires security assessment or standard contract filing; while the European Union General Data Protection Regulation imposes strict restrictions on data export. Companies need to establish a ‘dual compliance’ architecture that complies with the laws of both jurisdictions.
For example, a data pooling approach may be implemented whereby raw biological samples and related clinical information are retained within data centres that comply with Chinese regulations. Anonymised statistical data that cannot be re-identified is then transferred to the international R&D network using standard contractual clauses following the acquisition of secondary patient authorisation. The design of specific compliance pathways must be tailored to each case, taking into account the data type, level of re-identification risk and relevant legal requirements.
The policy landscape in this field is improving. In March 2024, the Provisions on Promoting and Regulating Cross-border Data Flows increased the standard contract filing threshold from 10,000 to 100,000 individuals and removed filing requirements for certain situations. The European Union Chamber of Commerce in China responded positively but suggested a narrower definition for ‘important data’ and recommended that legitimate business needs be factored into necessity tests.[4]
Linking payments to IP development: To align value distribution with technological advancement, companies can establish payment milestones tied to IP achievements within cooperation agreements.
For instance, payments may be structured across three phases: fixed fees for background IP licensing, milestone payments for joint R&D patent filings and revenue sharing from product launches based on dynamic percentages. Where appropriate, option mechanisms can be incorporated to stipulate future rights for increasing equity or repurchasing technology. Specific amounts and proportions should be determined individually, considering project risks and anticipated returns.
Paradigm selection: Analytical framework and dynamic considerations
The three paradigms are not ranked by superiority; rather, they depend on the match between companies’ core asset characteristics and objectives in China. In fact, regardless of which paradigm is chosen, companies face a series of common IP management issues.
These common issues include but are not limited to:
- Background IP definition: How are technology assets from both parties registered and verified prior to cooperation?
- Who retains the rights to any innovations produced through collaboration – will it be jointly owned or belong to a single party?
- Dispute resolution mechanisms: In situations involving ownership disputes, it is important to determine whether litigation or arbitration is the preferred method of resolution, as well as to select the appropriate jurisdiction for such proceedings.
- Data compliance obligations: In what manner do cross-border data transfers ensure adherence to the legal requirements of each respective jurisdiction?
- Personnel mobility risks: What strategies can be implemented to mitigate the risk of proprietary knowledge leakage when key technical staff depart?
These challenges persist across all forms of cooperation and are not eliminated by simply selecting a particular paradigm. The three paradigms differ in how they prioritise, approach complexity and use tools to address these concerns.
Ultimately, choosing a paradigm involves striking a balance between capital investment and control in light of both general issues and a company’s unique asset profile – whether it is opting for full control through greater capital input (Paradigm I), achieving swift expansion with less investment but accepting reduced control (Paradigm II), or engaging deeply with China’s innovation ecosystem by sharing both capital and control (Paradigm III).
Additionally, it should be noted:
First, this is a ‘post-hoc induction’ based on recent cases, not a prescription for future action.
The cases of Mölnlycke and AstraZeneca are business decisions made at specific time points and in specific industry contexts. This article distils them into three paradigms to help readers establish a framework for analysis, not to imply that standard answers exist. A company may fall at the intersection of the three paradigms or may create a fourth paradigm – this is the essence of business innovation.
Second, paradigm selection is dynamic, not once and for all.
Companies often shift paradigms as they develop – starting with brand licensing (Paradigm II) to test markets, moving to wholly owned R&D (Paradigm I) after gaining knowledge, then using value chain joint ventures (Paradigm III) to learn from local innovation and set up independent R&D centres. They may also adjust partnerships in response to technology and market changes.
Beyond de-risking: Winning the technology dividend through IP management
Considering the three paradigms explored—from the internal ownership firewall found in wholly owned R&D operations, to the openness of technology grading seen in brand licensing, and the joint documentation practices typical of comprehensive value chain joint ventures—we can now envision a new approach to how European companies collaborate with their Chinese counterparts. It is no longer just about trading market access for technology, but about genuinely co-creating technology.
This shift is the strongest answer to de-risking policies. While political rhetoric often highlights decoupling and restrictions, European companies have demonstrated through their actions that the real danger lies not in cooperation itself, but in cooperation without control. True security comes not from leaving the market, but from implementing advanced IP governance systems that allow for open collaboration while preserving leadership.
Companies that shift their IP management from reactive rights protection to proactive, integrated processes—and select adapted paradigms and management tools tailored to their core assets—are turning geopolitical challenges into strategic advantages. This approach lets firms benefit from the speed and scale of China’s innovation ecosystem, while protecting their technological sovereignty through robust IP structures. ‘Beyond de-risking’ means not just avoiding risks passively, but actively managing them to secure technology benefits through thoughtful engagement.
Moving from simply entering China to truly co-creating with China depends on whether companies can develop IP management systems suited to collaborative tech development –systems that both protect the security baseline of core technologies and enable shared innovation. This is more than a strategic decision; it is the only way European firms can remain globally competitive in an increasingly fragmented world.
Aria Tian brings almost 20 years of experience as a strategic consultant specialising in law, intellectual property and technology commercialisation. She has worked with top international law firms and a major airline, dedicating her efforts to innovation strategy research and guiding the creation and market launch of sophisticated digital products.
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[1] European Business in China National Position Paper 2024/2025, European Union Chamber of Commerce in China, 11th September 2024, viewed 3rd June 2026, p. 9, <https://www.europeanchamber.com.cn/en/publications-archive/1269/European_Business_in_China_Position_Paper_2024_2025>
[2] Suzhou hosted the signing ceremony for China–Switzerland innovative products’ cooperation agreement, Consumer Daily Network, 12thFebruary 2026, viewed 25th May 2026, <https://www.xfrb.com.cn/article/jk/08153629516138.html>
[3] AstraZeneca will invest over 100 billion RMB in China by 2030 to promote the development of next-generation innovative drugs, AstraZeneca, 29th January 2026, viewed 25th May 2026,<https://www.astrazeneca.com.cn/zh/media/press-releases/2026/01-29-01.html>
[4] European Business in China National Position Paper 2024/2025, European Union Chamber of Commerce in China, 11th September 2024, viewed 3rd June 2026,<https://www.europeanchamber.com.cn/en/publications-archive/1269/European_Business_in_China_Position_Paper_2024_2025>
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