Transfer Pricing Associates

China’s Road to Innovation.

post Tuesday June 24, 2014

Tags: china, innovation, intellectual property, ipo, patent

china development

China has been boosting the innovation of their own businesses and economy for years. However, the Asian country is also known for their copycat companies and the Chinese leaders understand that this stereotype does not fit the description of a global superpower. The current and former Chinese presidents have continuously emphasized the importance of China’s own local innovation. Xi Jinping wants to push forward the fusion of science and economy, so that science and technology strength can be transformed into industrial and economic power.

China still has a long way to go before they have satisfied the Communist Party, which has very high expectations. Even though the number of patents is increasing, their quality is poor, because China owns few patents which feature core technology. Furthermore, less than 1,000 patents are getting recognition from western countries. China is making progress though, they have applied for over 6,600 patents in the U.S. last year. That is more than France and twice as much as India.

If China does not succeed in creating the innovation they want, the Chinese could also just buy foreign innovation. Purchasing other companies is no obstacle for the rich Chinese government. Besides, the largest e-commerce company in China, Alibaba is preparing for their IPO in the U.S. and could maybe even become the biggest IPO ever. The Hangzhou-based company is buying up patents and it currently has 120 U.S. patents, according to Bloomberg News. Another Chinese company, called Wanxiang Group, is also buying intellectual property. It is the biggest maker of car parts and accessories in China.

However, the innovation and intellectual property rights in China are still in its infancy. The little investment in technological research and development is not helping either. Even though buying intellectual property in Europe and the U.S. is a good short-term solution, China still needs to improve a lot of areas concerning their innovation. 

Source: businessweek

Image courtesy of David Castillo  /

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