The European Chamber of Commerce just came out with a massive report on innovation in China and its conclusion is that there’s not nearly enough of it. The report is entitled, “Dulling the Cutting-Edge: How Patent-Related Policies and Practices Hamper Innovation in China,” and its intent is not to “slam” China, but to prod the Chinese authorities into effecting change to encourage innovation.
The study focuses not on the quantity of China innovation, but on its quality and it is in that arena where it finds China “overhyped” and sorely lacking:
While patents are exploding in China and certain innovation is also on the rise, patent quality has not proportionately kept up and in fact the overall strength of China’s actual innovation appears overhyped. Statistical analysis in this study not only reveals concerning trends in the quality of China’s patents at present, but suggests that while patent filings in China will likely continue to notably grow in the future, patent quality may continue to lag these numbers. In fact, projections in this study indicate there might be over 2.6 million less-than-“highest-quality” patents filed in China in 2015 alone, which is substantially more than estimated “highest-quality” patents filings in that year. With this in mind, and objectively considering its performance on additional innovation metrics, it is clear that China’s innovation ecosystem deserves a new type of scrutiny.
The core of this study is devoted to investigating, through in-depth on-the-ground research and analysis, significant patent-related reasons for China’s patent quality and related innovation shortcomings. In an effort to hone this investigation, the study focuses on key unaddressed institutional and regulatory issues most closely related to patent quality that can be practically remedied in the near future.
This study uncovers how a network of patent-related policies, other measures, and practices in China collectively hamper both patent quality and innovation at large. These dulling devices are categorised in terms of certain government-set patent targets and indicators (Chapter 2); policies and other measures meant to promote patents (Chapter 3); and rules and procedures for reviewing patent applications and those for enforcing patents (Chapter 4). Although given their intertwined nature it is not always possible to clearly separate their impacts on patent quality as distinct from those on innovation at large, these dulling devices collectively create a vicious cycle: they hamper patent quality which then hampers innovation and vice versa, i.e. hamper components of innovation which then hampers patent quality, which then again further hampers innovation).
About a year ago, I became obsessed with whether China has what it takes to become a developed country. I side with those who believe it is relatively easy to go from poverty to mid-level simply by deftly handling/managing cheap labor, but that it is incredibly difficult to go from a mid-level income country to a developed one. This jump is difficult because it takes more than low wages and hard work, it takes innovation because that is what is required to become an innovation economy and becoming an innovation economy is what is typically required these days to become a developed country. The sad truth is that those who live in China and know the country well have serious doubts about its ability to make that big leap. They cite to an educational system that preaches following the pack,not blazing new trails and a business ethos that focuses more on minor incremental change over big breakthroughs. Bill Dodson, who wrote the absolutely excellent book, China Inside Out: 10 Irreversible Trends Reshaping China and its Relationship with the World, in a post entitled, “America to Become the Next Paris: Dumb Innovation Predictions,” sees China’s changes of becoming truly innovative as about the same as America becoming the next Paris.
Does China have what it takes to become a front-line innovator?