For more than a century, the US has been the dominant global force for innovation. However, China and other Asian countries are testing that dominance, and the West should welcome the challenge.
China’s move from imitation to innovation has been a matter of national policy in recent years. In 2011, for example, the Chinese government established a set of ambitious targets for the production of patents.
Almost immediately, China became the world’s top filer of patents.
China soon surpassed the US in other important measures. Each year, Chinese universities award more doctorates, and more than twice as many undergraduate degrees in science and engineering, than US institutions.
Moreover, China is set to outpace the US in investment in research and development (R&D). Since 2001, China’s R&D expenditure has been growing by 18 percent annually and has more than doubled as a share of GDP. In the US, that ratio has remained relatively constant.
To be sure, such metrics can easily be manipulated — a fact that critics are quick to point out. However, statistics from the US National Science Foundation reveal a genuine drive to innovate across much of Asia, with East, South and Southeast Asian countries together spending more on R&D than the US.
Technology-intensive activity in the region is fast approaching that of North America and Western Europe.
In fact, Asian countries are helping to fuel one another’s innovative success. China’s invention initiative has produced such rapid results in part because the government actively cooperates with its Asian competitors.
Indeed, despite territorial disputes and other divisive issues, the commissioners of the patent offices of Japan, South Korea, China and to a lesser extent, Taiwan and Singapore meet often to define and coordinate their intellectual property policies. China’s leaders know that they can learn from countries like Japan and South Korea, which implemented policies to encourage innovation and protect intellectual property rights long before China did.
The precise impact of Asia’s intellectual property expansion is impossible to predict. However, its transformative potential is obvious.
Asian countries are essentially giving tens of thousands of top minds the opportunities and incentives to tackle today’s most pressing challenges, such as developing cost-effective sustainable energy solutions, ensuring affordable healthcare for aging populations and improving the quality of life in overcrowded cities.
These complex problems demand a plurality of innovative talent and long-term international collaboration — not just to find solutions, but also to deploy them. In an increasingly knowledge-based global economy, partnerships and cooperation are set to be the natural order.
In this context, the West would be foolish to resist Asia’s intellectual property emergence. Instead, Western governments should support, learn from and reap the rewards of the invention boom in the East.
For example, the US, which leads the world in bringing innovative products to the market, should offer commercialization channels to innovative Chinese universities and small companies.
Chinese and Western companies should also be encouraged to invest in one another’s intellectual property.
Such cooperation has already begun. For example, in 2008, Intellectual Ventures (which I helped found) established a presence in China and other countries with emerging innovation cultures in order to focus their inventors’ talent and energy.
The resulting global network of more than 400 institutions and more than 4,000 active inventors has produced more patent applications than many R&D-intensive companies do.
In this ecosystem, everyone wins. The inventors gain access to the company’s expertise in intellectual property development and to an international community of experienced problem-solvers.
Intellectual Ventures gets a stake in valuable solutions and the world benefits from those solutions. Imagine if more such initiatives were launched, not only by companies, but also by governments. A cooperative approach could help to improve the troubled trade dynamics between Asia and the West, characterized by disagreement over China’s lax enforcement of its intellectual property laws.
Instead of shaking its fist, the West could provide incentives that encourage China to become a responsible actor in the existing intellectual property regime.
These could include, for example, efforts to organize viable alternatives to piracy for the tens of thousands of Chinese companies that currently earn a living from it. Some Western entrepreneurs already turn to these so-called Shan Zhai (山寨) enterprises to manufacture their prototypes at scale.
Eventually, many Shan Zhai companies will evolve into legitimate businesses with their own intellectual property. Given that Asian countries naturally would uphold and defend intellectual property rights more vigorously when they have more at stake, the West should look for ways to hasten this transition.
The West can also take some lessons from the various models Asian countries are experimenting with as they ramp up domestic innovation.
In South Korea, LG recently launched a program to solicit invention ideas from the public, promising inventors a hefty 8 percent stake in the proceeds of any ideas the company commercializes. That is probably not an approach that many US companies have considered. However, maybe they should.
Asia is also experimenting with creative ways to finance innovation, such as China’s intellectual property exchanges and Malaysia’s intellectual property loan programs.
The West should pay attention to these efforts, because they could offer alternatives to traditional avenues for sourcing and financing invention, such as venture capital, that are producing lackluster results.
Finally, Western companies should be willing to supply input to Chinese businesses selling innovative products.
This recommendation might seem radical, but only because the view of a one-way flow of innovation from West to East has become so entrenched. In fact, there is no good reason for Western businesses to stand on the sidelines as Asia produces whizz-kid entrepreneurs and high-tech startups. These pioneers are building ecosystems with points of entry at every level, and the West should enter at all of them.
As Asian innovation comes into its own, the US and other developed countries must find ways to participate — or risk missing the opportunity of the century in a vain bid to recapture bygone supremacy.
Edward Jung is Intellectual Ventures head technology officer and former Microsoft chief architect.
Copyright: Project Syndicate
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