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China’s Race to Innovation

China’s Race to Innovation

While many think of Asian innovation as imitation rather than the building of new technologies, China is attempting to base its national strategy on innovations.  While China has recognized its reputation as being the world’s lowest cost workshop for innovations created in other countries, it has recently began to make adjustments to the way it does businesses, signaling that the government is serious about innovation.

 

The first indication of China’s commitment to fostering innovation came in 2011 with the publication of broad strategies the government would undertake, including national goals for innovation.  Shortly thereafter, China began its race to top patent filer in the world: a goal in its published National Patent Development Strategy document.  China’s goal for number of patents issued by this year was two million, a goal that by all accounts has not only been met but will be far surpassed:  in the first half of 2015, China issued 1,124,000 patents in three different areas including invention, utility model, and design.  This number represents a year on year growth of 20.5 percent.  Utility model patents represent such innovations like engineering features and while they’re less ambitious than invention patents, utility model patents represent just 471,000 of the total number of patents.  424,000 invention patents and 229,000 design patents have been issued so far in 2015.

 

The surge in Chinese patents isn’t much of a surprise.  What may be a surprise for industry experts is the large number of patents that Chinese residents and companies have filed in other companies.  Chinese companies have filed patents in the United States for industrial strategy including wind and solar energy, information technology, telecommunications, and battery and manufacturing innovations for vehicles.  How has China accomplished such outstanding goals?  Well, for one the country has offered lofty incentives including monetary bonuses, better housing for individual patent filers, and tax breaks for companies who file such patents.

 

While many deftly observe that China is more concerned with the sheer number of patents issues rather than that quality of the innovations, it’s a mistake to assume that China will follow on the heels of Japan’s failed industrial policy.  China and Japan vary in many ways, the least of which being that China is a much bigger country and one whose entrepreneurial society is focused on individuals rather than companies.

 

Many predict that China will one day house the ranks of such innovative individuals as Steve Jobs and Bill Gates.  However, the challenge for China falls to its unwillingness to tolerate risk – something that much be overcome for China to win its massive race to innovation.

 

 

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