How Beijing Is Stifling Chinese Innovation

Discussion in 'China' started by Daredevil, Jan 11, 2012.

  1. Daredevil

    Daredevil On Vacation! Administrator

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    How Beijing Is Stifling Chinese Innovation

    By ANIL K. GUPTA
    AND HAIYAN WANG

    China's indigenous innovation program, launched in 2006, has alarmed the world's technology giants. A recent report from the U.S. Chamber of Commerce even went so far as to call this program "a blueprint for technology theft on a scale the world has not seen before."

    The goal of the indigenous innovation program is to accelerate China's move up the technology ladder. Using a variety of mechanisms (such as making access to China's market dependent on transfers of leading-edge technologies and R&D labs to China), the program supposedly helps Chinese companies assimilate, absorb and re-innovate upon the proprietary technology developed by foreign companies.

    Virtually every assessment of the indigenous innovation program has framed it as a win-lose proposition—a win for China and a loss for foreign multinationals. Our analysis, however, suggests that indigenous innovation measures have been counterproductive for China itself. Instead of inducing technology giants to shift leading-edge R&D work to China at a faster pace, its effect has been exactly the opposite.

    China today hosts about 1,000 foreign-owned R&D labs. Yet, with rare exceptions, these labs focus primarily on local adaptations of innovations developed elsewhere, rather than the development of leading-edge technologies and products for global markets.


    Tech company executives are eager to leverage the quality and scale of China's talent pool. However, given the indigenous innovation measures, they do not trust China as a secure location for leading-edge R&D.

    A comparison with India is illustrative. India has no equivalent to indigenous innovation rules. The government also is content to allow companies to set up R&D facilities without any rules about sharing technology with local partners or the like.

    These policy differences appear to have a significant influence on corporate behavior. Consider the top 10 U.S.-based technology giants that received the most patents from the U.S. Patent and Trademark Office between 2006 and 2010: IBM, Microsoft, Intel, Hewlett-Packard, Micron, GE, Cisco, Texas Instruments, Broadcom and Honeywell.

    Half of these companies appear not to be doing any significant R&D work in China. Between 2006 and 2010, the U.S. Patent Office did not award a single patent to any China-based units of five out of the 10 companies. In contrast, only one of the 10 did not receive a patent for an innovation developed in India.

    India has proven more fertile territory for these companies. For the 10 tech giants taken together, India-based labs received more patents (1,119) than did China-based labs (886) during this period.

    At a company level, the difference can be even more striking. For the seven out of 10 companies where Indian units received more patents than Chinese labs, the aggregate numbers were 978 vs. 164. Only a strong showing for China from two outliers, Microsoft and Intel, pulled up its aggregate filings—Chinese labs at those two companies secured 722 patents compared to 141 from Indian labs.


    The R&D disparity is all the more striking given China's three seemingly major advantages over India. With a GDP more than three times larger, China offers a much bigger market than India. China also spends four times as much as India on R&D. And China produces a much larger number of Ph.D.s.

    Yet Beijing is standing in the way, because it's looking at the problem from the wrong angle. Instead of trying to extract technology from foreign firms today, it should be creating a hospitable environment for these firms to create and train world-class innovators.

    When a tech giant sets up an R&D lab in a new location such as Beijing or Bangalore, more than 95% of the researchers are hired locally. Over time, many of them leave and use the expertise they've acquired to start new ventures or join other, often local, companies. This kind of personnel "spillover," far more than sharing individual technologies, has been key to thriving innovation ecosystems like Silicon Valley.

    If it wants to become a global technology leader, China needs open doors, strong intellectual property protection, and no stacking of the deck in favor of Chinese companies—a policy mix exactly opposite to some of its current indigenous innovation measures.

    Mr. Gupta is a professor at the University of Maryland's Smith School of Business and a visiting professor at INSEAD. Ms. Wang is managing partner of the China India Institute. They are the co-authors of "Getting China and India Right" (Wiley, 2009).
     
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  3. Daredevil

    Daredevil On Vacation! Administrator

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    China as an Innovation Center? Not So Fast

    By ANIL K. GUPTA AND HAIYAN WANG

    Hardly a week goes by without a headline pronouncing that China is about to overtake the U.S. and other advanced economies in the innovation game. Patent filings are up, China is exporting high-tech goods, the West is doomed. Or so goes the story line.

    The reality is very different. China is indeed mounting considerable efforts on the innovation front. However, many of the pundits seem to confuse inputs with outputs.

    The "inputs" for innovation are impressive. China's R&D expenditure increased to 1.5% of GDP in 2010 from 1.1% in 2002, and should reach 2.5% by 2020. Its share of the world's total R&D expenditure grew to 12.3% in 2010 from 5.0% in 2002, placing it second only to the U.S., whose share remained steady at 34-35%. According to UNESCO, China now employs more people in science and technology research than any other country.

    At first blush, data on "outputs" also look impressive. According to the World Intellectual Property Organization, Chinese inventors filed 203,481 patent applications in 2008. That would make China the third most innovative country after Japan (502,054 filings) and the U.S. (400,769).

    Yet there's less here than meets the eye. Over 95% of the Chinese applications were filed domestically with the State Intellectual Property Office. The vast majority cover Chinese "innovations" that make only tiny changes on existing designs. In many other cases, a Chinese filer "patents" a foreign invention in China with the goal of suing the foreign inventor for "infringement" in a Chinese legal system that doesn't recognize foreign patents.

    A better measure is to look at those innovations that are recognized outside China—at patent filings or grants to China-origin inventions by the world's leading patent offices, the U.S., the EU and Japan. On this score, China is way behind the others.


    The most compelling evidence is the count of "triadic" patent filings or grants, where an application is filed with or patent granted by all three offices for the same innovation. According to the OECD, in 2008, the most recent year for which data are available, there were only 473 triadic patent filings from China versus 14,399 from the U.S., 14,525 from Europe, and 13,446 from Japan. Data for patent grants in 2010 by individual offices paint a virtually identical picture.

    Starkly put, in 2010, China accounted for 20% of the world's population, 9% of the world's GDP, 12% of the world's R&D expenditure, but only 1% of the patent filings with or patents granted by any of the leading patent offices outside China. Further, half of the China-origin patents were granted to subsidiaries of foreign multinationals.:rofl: :rofl:

    Why is there such a big gap between innovation inputs and outputs? Partly it may simply be a matter of time. Innovation requires not just new efforts but also a rich stock of prior knowledge. As new players on the technology frontier, Chinese organizations will need several years to build the requisite stock of knowledge.

    But other factors are also at work. For instance, processes for allocating government funds for R&D projects remain highly politicized and inefficient. Policy makers have a strong penchant for megaprojects backed by individual ministries and give R&D grants based largely on political clout and connections rather than scientific peer review.

    As Yigong Shi and Yi Rao, deans of Life Sciences at Tsinghua and Peking Universities respectively, observed in a recent editorial in Science magazine, for grants ranging from tens to hundreds of millions of yuan, "it is an open secret that doing good research is not as important as schmoozing with powerful bureaucrats and their favorite experts.. . . . China's current research culture . . . wastes resources, corrupts the spirit, and stymies innovation."

    China's research culture also suffers heavily from a focus on quantity over quality and the use of local rather than international standards to assess and reward research productivity. The result is a pandemic of not just incrementalism but also academic dishonesty. A 2009 survey by the China Association for Science and Technology reported that half of the 30,078 respondents knew at least one colleague who had committed academic fraud. Such a culture inhibits serious inquiry and wastes resources.

    China's educational system is another serious challenge because it emphasizes rote learning rather than creative problem solving. When Microsoft opened its second-largest research lab (after Redmond, Wash.) in Beijing, it realized that while the graduates it hired were brilliant, they were too passive when it came to research inquiry. The research directors attacked this problem by effectively requiring each new hire to come up with a project he or she wanted to work on. Microsoft's approach is more the exception than the rule among R&D labs in China, which tend to be more top-down.

    Yes, China is making rapid strides in some areas such as telecommunications technology. However, on an across-the-board basis, it still has quite some distance to cover before becoming a global innovation power.

    Mr. Gupta is the Michael D. Dingman Chair in Strategy and Entrepreneurship at the Smith School of Business, The University of Maryland and a Visiting Professor in Strategy at INSEAD. Ms. Wang is managing partner of the China India Institute. They are the co-authors of "Getting China and India Right"(Wiley, 2009).
     
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  4. Daredevil

    Daredevil On Vacation! Administrator

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    All the bluster of 50-centers about the might of Chinese scientific advances are busted by above two articles. :rofl: :pound:

    Most of the research and scientific papers published out of China are shallow as evident from their patents.
     
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  5. Daredevil

    Daredevil On Vacation! Administrator

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    12% of World's R&D investment done in China but yet it produces only 1% worthwhile patents. That's a massive inefficiency of Science and Technology field in China. The useless domestic patents of China will take it no where.
     
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  6. trackwhack

    trackwhack Tihar Jail Banned

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    How can you innovate when the driving force for technology adaptation is reverse engineering? Its impossible - an approach of incremental improvement will never lead to breakthrough innovation. The Chinese will forever play catch-up with the West if they don't change.
     
  7. JAISWAL

    JAISWAL Senior Member Senior Member

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    ^^^exactly my thought. When your 90-95% telent pool is invested in reves- engineering and stilling of foreign technology, how can you invest in innovation.
     
  8. LETHALFORCE

    LETHALFORCE Moderator Moderator

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    Chinese like to brag about being the second biggest economy and being first soon. But can anyone name one Chinese innovation or one Chinese Brand??
     
  9. Ray

    Ray The Chairman Defence Professionals Moderator

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    Why should China waste time on innovation right now.

    She has much to catch up with the US.

    Let the US waste money to innovate, China has its own means to get the same and use it to their advantage and to the US disadvantage.

    Killing two birds with one stone.
     
  10. Armand2REP

    Armand2REP CHINI EXPERT Veteran Member

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    And half of that 1% belongs to foreign companies. :laugh:
     
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  11. mylegend

    mylegend Regular Member

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    At the very least, we realized the importance of innovation. The days will come when investment turn into outcome. Investment mark a step forward. A problem so obvious, I do believe the administration realized that, change will follow, but it takes time.

    Another problem is the government's hatred toward private company, private company have hard time to grow and not become a target of government. The fall of 日照钢铁, is a great example. Under such a system, more productive private company will not be willing to invest in technology.
     
    Last edited: Jan 12, 2012
  12. tiranga

    tiranga Tihar Jail Banned

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    Chinese mistook the word research for "re" search (and recycle :lol:) of already innovated innovation
     
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  13. cir

    cir Senior Member Senior Member

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    Our Indian friends talk as if India were the centre of innovation.

    China never boasts. It simply strives for the best. That's why it places increasing emphasis on innovation these days, with a set of national policies to boot.

    In contrast, India prefers to talk empty, live in the fairyland and dream about being a “shining India” or a “rising India”, and claims such no matter what the reality is。

    The bottom line is that our Indian friends are not qualified to look down at China。 People of a problematic mentality should go and see a psychologist or at least take time to look themsleves in the mirror。

    What do they see?Nothing。 Nothingness。:rofl:

    Welcome to the phantasmagoria of dim that is popularly known as India。
     
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  14. cir

    cir Senior Member Senior Member

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  15. Dovah

    Dovah Untermensch Senior Member

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    Troll attack........
     
  16. LTE-TDD

    LTE-TDD Regular Member

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    answer your question,lease read this:

    China tops U.S, Japan to become top patent filer | Reuters
    China tops U.S, Japan to become top patent filer

    (Reuters) - China became the world's top patent filer in 2011, surpassing the United States and Japan as it steps up innovation to improve its intellectual property rights track record, a Thomson Reuters research report showed on Wednesday.The report said the world's second-largest economy aimed to transform from a "made in China" to a "designed in China" market, with the government pushing for innovation in sectors such as automobiles, pharmaceuticals and technology.
    However, legal experts said China would need to do more before it can lead the world in innovation as the quality of patents needed to improve.
    The government provided attractive incentives for companies in China to file patent applications, regardless of whether a patent was eventually granted, they said.
    "The idea of subsidizing patents is not bad in itself, however it is a blunt instrument because you get high figures for filings, but it does not tell you anything about the quality of the patents filed," said Elliot Papageorgiou, a Partner and Executive at law firm Rouse Legal (China).
    "One thing is volume, quality is quite another. The return, or the percentage of grants, of the patents is still not as high in China as, say, in the U.S., Japan or some places in Europe," he said.
    The Thomson Reuters report said published patent applications from China were expected to total nearly 500,000 in 2015, following by the United States with close to 400,000 and Japan with almost 300,000.
    Published applications from China's patent office have risen by an average of 16.7 percent annually from 171,000 in 2006 to nearly 314,000 in 2010, data from Thomson Reuters Derwent World Patents Index showed.
    During the period, Japan had the highest volume, followed by the United States, China, Korea and Europe, the report said. It did not give figures for 2011.
    "The striking difference among these regions is China -- it is experiencing the most rapid growth and is poised to lead the pack in the very near future," it said.
    Of total patents filed in China, the percentage of domestic applications rose to nearly 73 percent in 2010 from less than 52 percent in 2006, indicating that Chinese companies have outpaced foreign entities in the patent boom.
    In terms of patents overseas, Chinese companies have also been climbing in the rankings, according to data from the World Intellectual Property Office (WIPO).
    In 2010, China's No.2 telecommunications equipment maker ZTE Corp was second on the list of applicants, ranking just behind Japan's Panasonic Corp.
    U.S. chip maker Qualcomm Inc came in third, while China's Huawei Technologies Co Ltd, the world's second-largest telecom gear maker, was fourth, according to WIPO.
    Chinese companies have been trying to be more innovative as they transform from contract manufacturers to regional and global brand names producing higher end products to improve margins.
    Patent filings have also increased among Chinese companies due to legal battles that they have had to fight, especially in the telecommunications sector. For instance, Huawei and ZTE have been embroiled in patent disputes over fourth-generation wireless technology
     
  17. LTE-TDD

    LTE-TDD Regular Member

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    In 2010, China was at 4th place, but where was India?


    For India, it not the time to challeng China in innovtion area, you are far far behind. In fact, in almost all area, India still far behind, keep low tone, do not be such childish!

    China ranks 4th in patent application, India lags - Economic Times

    China ranks 4th in patent application, India lags

    PTI Feb 9, 2011, 11.15pm IST
    Tags:
    GENEVA: India remains a laggard in research and technological innovation as compared to China which has become the world's fourth largest filer of patent applications in 2010, according to the data released by World Intellectual Property Organization today.
    While India figured nowhere in the top 15 countries that have dominated filing of patent applications under the WIPO's Patent Cooperation Treaty, China overtook South Korea and other industrialised countries like France, Britain and the Netherlands to emerge as "the fourth ranked PCT filing country."
     
    Last edited: Jan 12, 2012
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  18. tiranga

    tiranga Tihar Jail Banned

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    your idiocity is seen by your posts still need an anwer??
     
  19. Daredevil

    Daredevil On Vacation! Administrator

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    This patent filing might of China is already busted. All the domestic filings of patents of China are good for nothing as mostly they are copy of existing patents which are approved by CCP patent office as a patent. Real mettle of a patent is proved when they are accepted by US, UK, European patent offices. And that is where China has failed miserably...it spends 12.5% of world's R&D but still produces 1% of world's patents.

    You need specialists who can go through data to see through the bluster of Chinese patents and might of Chinese publications. And that is what those two articles has done and they found that Chinese R&D is all shallow, shallow. :D
     
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  20. LTE-TDD

    LTE-TDD Regular Member

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    You are the smartest guy in the world. God will bless you, have a good luck, bye!
     
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  21. Daredevil

    Daredevil On Vacation! Administrator

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    Even their publications in the journals is a bluster, not according to me, but according to Chinese Academy of Sciences.

    The articles says that quality of publications from China is below that of emerging countries like India and Brazil. China is the second highest spender on R&D in world but is no where in Top 20 countries when it comes to quality of their publications. Read the full article...

     
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