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A Nation of Copycats is Becoming an Innovation Powerhouse

China has transformed its economy since the 1970s, from a centrally planned closed economy to one which is now the second largest in the world, known for being an international hub for manufacturing and trade. The Chinese economy has long been known for its consistent growth, growing as much as 14% in some years.[1] Despite its successes in rebuilding its economy to one of the best in the world, China is still often referred to as a nation that relies on imitating Western trends rather than an innovation powerhouse.

There could be many different ways to measure innovation and to identify the most or least innovative countries. One way of doing that could be based on the number of patents[2] registered by inventors from each country.

The latest data published by the World Intellectual Property Organization (WIPO), which is a specialised agency of the United Nations, shows that over a million patents that are in force are registered by China-based inventors.[3] This makes China arguably the third most innovative country on the planet.[4] 

The number of patent applications recently made should also be examined. Remarkably, almost 40% of all recent patent applications are made by China-based inventors alone. A staggering 1.25 million patent applications are made in 2016, exceeding the number of patent applications submitted by the USA, Japan and South Korea based inventors combined.[5]


Figure 1 — Number of Patents (Thousand, 2016)

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It is certain that China has shown consistent growth for over a decade in inventing new products and processes. However, many people still do not consider China as an innovative nation, despite the fact that they register a record number of patents. In fact, even the World Intellectual Property Organization itself ranks China only at 25th in the Global Innovation Index 2016 ranking overall.

The Global Innovation Index (GII) is created by the WIPO, along with several partnering organisations, and provides detailed metrics about the innovation performance of more than 100 countries. Its 80 indicators explore a broad vision of innovation, including political environment, education, infrastructure and business sophistication. The GII report is based on a framework, which entails multiple pillars to explore whether or not a country is taking steps to produce innovative products or services:

1. Creative outputs
2. Human capital and research
3. Infrastructure
4. Market sophistication
5. Business sophistication
6. Knowledge and technology outputs
7. Institutions

A closer look at the report reveals that some of the indicators used for the GII may not be suitable for non-Western countries, such as China. As noted above, the index evaluates creative outputs originated from countries to judge how innovative they are. A section under this pillar refers to online creativity and countries are ranked based on several indicators, such as Wikipedia edits or video uploads on YouTube. Yet it is known that Chinese people do not commonly use Western social media platforms or websites.

Another fundamental issue can also be located when the index is closely analysed. It appears that accurate and reliable data related to several areas has not been accessible in the case of China. Each of these areas – such as the level of employment in knowledge-intensive sectors, the amount of investment in education or the percentage of employed females with an advanced degree – is linked to at least one indicator used in the GII. Hence it is essential that China starts to produce accurate data in such areas.

For example, the GII report fails to use any data on the percentage of Chinese graduates in science and engineering. Yet China is one of the countries with the largest number of graduates in science and engineering in the whole world. The US-based National Science Board reports that the annual number of Chinese graduates in science and engineering was over 1.5 million already in 2014, which can illustrate China’s strength in this area.[6]

Lack of data clearly has a detrimental effect on China’s ranking in the GII in such cases. A closer cooperation between Chinese authorities and the WIPO could potentially tackle most of these issues, giving China an opportunity to move up in the rankings.

Nonetheless, there are many problems that must be addressed within China if they are determined to become an innovation superpower. The GII alone presents numerous fundamental issues that should be carefully examined. It can safely be argued that (i) the pupil-teacher ratio in the country must be optimised, (ii) more support should be given to Chinese creative professionals, (iii) ease of doing business must be improved,[7] and (iv) China’s regulatory environment must continue to become more transparent.

Although China is still dealing with many internal problems and not considered as a hub for innovation, the data presented by the WIPO itself highlights how rapidly China is progressing. As a matter of fact, this year China has achieved its highest position in the GII (see Figure 2) and become the first developing country that ranked as one of the world's top 20 most innovative countries.[8] Similarly, the number of patents registered by China-based inventors was only around 100,000 just a decade ago. Today, this number has skyrocketed to over 1.25 million as discussed above. These developments support the argument that China is indeed becoming a more innovative nation.

China may not be the most innovative country at this moment in time, but it is evident that it is not long before the stigma of China being a copycat nation is long forgotten.


Figure 2 — China's Place in the Global Innovation Index Ranking

figure-2


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[1] World Bank Data (1990-2017) GDP Growth (Annual %)
[2] According to the World Intellectual Property Organization (WIPO), a patent is an exclusive right granted for an invention, which is a product or a process that provides, in general, a new way of doing something, or offers a new technical solution to a problem.
[3] WIPO IP Statistics Data Center (2016) Patents in Force – Total Count by Applicant's Origin. Access: www3.wipo.int/ipstats 
[4] The data is based on each inventor’s origin, regardless of where those patent applications are filed. In the case of multiple applicants, WIPO considered the residence of only the first person listed on the application form.
[5] WIPO IP Statistics Data Center (2016) Total Patent Applications – Total Count by Applicant's Origin. Access: www3.wipo.int/ipstats 
[6] National Science Board (2018) Science & Engineering Indicators 2018
[7] China ranks low at the World Bank’s Ease of Doing Business Index as well.
[8] World Intellectual Property Organization (2018) Global Innovation Index 2018

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Arron Mardikar is currently studying Business Analytics and Managment at Nottingham Trent University. 

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About the author

Arron Mardikar is currently studying Business Analytics and Managment at Nottingham Trent University. 

The views and opinions expressed in this article are those of the author(s).

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Inquisitive university students and recent graduates are welcome to collaborate with our team to produce insightful articles.