The Secret Driving Force Behind China's Solid IP Growth

BY DR. JILI CHUNG, JOSIE CHEN, JONAS HOU

The world has been awed by China's rapid and robust growth in IP, but few recognize the primary driving force behind this phenomenon.

Recently, the China National Intellectual Property Administration (CNIPA) released yearly statistics on IP in its 2021 Q1 press conference in Beijing.  All major statistics met expectations in 2020, indicating another step forward for China's IP system. *

Summary of the Key Data**

According to the statistics released:

• During the period from 2016-2020, the total estimated value of China's IP pledges reached CN¥709.5 billion (about US$109.8 billion), double the amount of 2011-2015. The added value of patent-intensive industries reached CN¥11.5 trillion (about US$1.78 trillion).
• In 2020, China's patent and trademark pledge financing projects reached 12,039, increasing an average of 43.8% year-by-year; the total amount of pledge financing reached CN¥218 billion (about US$33.7 billion), an increase of 43.9% year-by-year.
• In 2020, the structure of Chinese domestic invention patents' quality had improved, with  281,000 invention patents being maintained for more than ten years, accounting for 12.3% of the total, an increase of 1.0% from the previous year.
• From January to November 2020, China's exports of intellectual property royalties amounted to US$7.47 billion, a year-by-year increase of 24.2%, achieving the most significant growth in 2016-2020.

The value of Chinese IP has increased a lot.  This change can be seen from IP owners' willingness to maintain patents and the possibility of using IP as collateral for a loan, i.e., IP pledge.
China has recently stopped funding applications for intellectual property rights. It now focuses on strengthening support for subsequent commercialization, application, administrative protection, and public services. ***

​Then we wonder, "what has brought China's IP system to this new height?"
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Planned Economy Thinking
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To answer this question, we cannot underestimate the influence of planned economy thinking. The chart below illustrates the targets set by China's 2014-2020 plan of guidance in the field of IP (excerpted from chart 4 in Innovation's Crouching Tiger).
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CNIPA recently released the new action plan in March 2021, but looking retrospectively at this previous action plan from  2014-2020 reveals the secret driving force for China's IP solid growth.

Are you surprised to see such concrete targets?
These indices serve as government officials' key performance indicators (KPIs) to evaluate their performance in each planning cycle.  As pointed out in Innovation's Crouching Tiger, the governments at the provincial and municipal levels plan their corresponding sub-targets and allocate resources to reach these targets according to the national targets established.

This system explains why all significant targets can be met in 2020, bringing the Chinese IP system to new heights.  Such solid growth is also creating numerous investment opportunities by commercializing intellectual property.

Interested in learning more strategies for IP-related investment in China?
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Read more about developments in China's IP ecosystem by visiting our blog at ICTiger2020.com or by following us on Facebook @ICTiger2020 for related news stories.  Contact the author at [email protected]. 

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*: https://english.cnipa.gov.cn/art/2021/1/27/art_2509_156421.html
**: https://www.cnipa.gov.cn/col/col2521/index.html
***: https://www.cnipa.gov.cn/art/2021/1/22/art_53_156324.html

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