Are Chinese firms innovative?

The question comes back year after year: how innovative are Chinese firms?

Coming up with a meaningful answer is far from easy. It requires first to define what we mean by innovation – it can take many forms, from disembodied technology to a new product or process – and what we mean by Chinese firms – for instance, do we include joint ventures. It then requires to find a measurement “tool”. Patents filed are often used as a proxy.

Statistics computed by the World Intellectual Property Organization (WIPO) both at the country and firm level tell us that China ranks 5th in 2009 (behind the US, Japan, Germany and South Korea). With 7946 patents filed, China has seen a surge of 29.7% over the past 12 months.

At the firm level, Huawei comes second worldwide with 1847 patents filed. In other words Huawei accounts for more than 20% of all patents filed by Chinese firms abroad. A paltry though in comparison to the 580000 patents delivered by the China State Intellectual Property Office. ZTE, another telecom equipment manufacturer, beats Huawei at the domestic patenting race.

Some firms are more innovative than others, some file more patents domestically than internationally but the trend is there: a limited number of firms have set their goals on becoming leaders in innovation.