Asia’s Invention Boom

by Edward Jung

Edward Jung, former Chief Architect at Microsoft, is Chief Technology Officer at Intellectual Ventures.

BELLEVUE, WASHINGTON – For more than a century, the United States has been the dominant global force for innovation. But China and other Asian countries are now 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 government established a set of ambitious targets for the production of patents. Almost immediately, China became the world’s top patent filer.

China soon surpassed the US in other important measures. Each year, Chinese universities award more PhD’s in science and engineering than US institutions do – and more than twice as many undergraduate degrees in these fields.

Moreover, China is set to outpace the US in investment in research and development. Since 2001, China’s R&D expenditure has been growing by 18% 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. But 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. And 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, Singapore and Taiwan meet often to define and coordinate their intellectual-property (IP) policies. China’s leaders know that they can learn from countries like Japan and South Korea, which implemented policies to encourage innovation and protect IP rights long before China did.

The precise impact of Asia’s IP expansion is impossible to predict. But 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 health care 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 will be the natural order.

In this context, the West would be foolish to resist Asia’s IP 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. And Chinese and Western companies should be encouraged to invest in one another’s IP.

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 over 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 IP 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 IP laws.

Instead of shaking its fist, the West could provide incentives that encourage China to become a responsible actor in the existing IP 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 enterprises to manufacture their prototypes at scale, creating a kind of cross-border Kickstarter culture.

Eventually, many Shan Zhai companies will evolve into legitimate businesses with their own IP. Given that Asian countries naturally will uphold and defend IP 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% stake in the proceeds of any ideas the company commercializes. That is probably not an approach that many American companies have considered. But maybe they should.

Asia is also experimenting with creative ways to finance innovation, such as China’s IP exchanges and Malaysia’s IP 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 inputs to Chinese businesses selling innovative products. This recommendation may 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 whiz-kid entrepreneurs and high-tech start-ups. 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, former Chief Architect at Microsoft, is Chief Technology Officer at Intellectual Ventures.

Copyright: Project Syndicate, 2014.
www.project-syndicate.org

 


This article is brought to you by Project Syndicate that is a not for profit organization.

Project Syndicate brings original, engaging, and thought-provoking commentaries by esteemed leaders and thinkers from around the world to readers everywhere. By offering incisive perspectives on our changing world from those who are shaping its economics, politics, science, and culture, Project Syndicate has created an unrivalled venue for informed public debate. Please see: www.project-syndicate.org.

Should you want to support Project Syndicate you can do it by using the PayPal icon below. Your donation is paid to Project Syndicate in full after PayPal has deducted its transaction fee. Facts & Arts neither receives information about your donation nor a commission.

 

 

Browse articles by author

More Current Affairs

Added 18.06.2018
Daniel Wagner: "My prediction Korean War will be formally ended, the peninsula will be denuclearised, and a lasting peace will be the result."
Added 14.06.2018
Extract: PiS [ the ruling Law and Justice party] has established the most significant addition to the Polish social safety net since 1989: the Family 500+ program. Launched in 2016, Family 500+ embodies the nationalism, traditional family values, and social consciousness that the PiS seeks to promote. The program pays families 500 złoty ($144) per month to provide care for a second or subsequent child...........The program has been enormously popular. Some 2.4 million families took advantage of it in the first two years. The benefit, equivalent to 40% of the minimum wage, has almost wiped out extreme poverty for children in Poland, reducing it by an estimated 70-80%........... Liberal pro-European politicians and policymakers are not convinced. They complain that such a generous family benefit will weaken work incentives and blow up the government budget. But initial evidence suggests that Family 500+ has actually increased economic activity. It has also reversed the post-communist decline in fertility, increased wages (particularly for women), and enabled families to buy school materials, take vacations, buy more clothes for their kids, and rely less on high-priced credit for basic household needs. And, thanks to rapid economic growth, the government deficit has steadily fallen, not grown.
Added 12.06.2018
The depths of hypocrisy of the Republican Party in supporting Trump’s meeting with the North Korean dictator in Singapore are hard to plumb. This is a party whose leading members adopted the Ostrich Foreign Policy Principle for decades. If you don’t like a country’s government or political and economic system, pretend it does not exist.
Added 12.06.2018
US Defense Secretary Jim Mattis has spoken out against China’s strategy of “intimidation and coercion” in the South China Sea, including the deployment of anti-ship missiles, surface-to-air missiles, and electronic jammers, and, more recently, the landing of nuclear-capable bomber aircraft at Woody Island. There are, Mattis warned, “consequences to China ignoring the international community.” But what consequences?
Added 12.06.2018
With a general election approaching in September, Swedish voters are being warned that now it’s their turn to be targeted by Russian interference in the democratic process. According to Sweden’s Civil Contingencies Agency (MSB), which is leading the country’s efforts to counter foreign-influence operations, such interference is very likely, and citizens should be on the lookout for disinformation and fake news.
Added 11.06.2018
Extract: "While the presidency has grown stronger over the years, during the Trump administration Congress has been timid and subordinate. That is because the leaders of the Republican Party – which controls both the House of Representatives and the Senate – are frightened of Trump’s base. They cannot afford to alienate the roughly 30-35% of Americans who passionately back him, ignore his personal transgressions, tolerate his degradation of the country’s civil discourse, favor his brutal treatment of immigrant families, and don’t mind that he is leaving the US almost friendless in the world."
Added 08.06.2018
Has North Korea’s ruler, Kim Jong-un, made a strategic decision to trade away his nuclear program, or is he just engaged in another round of deceptive diplomacy, pretending that he will denuclearize in exchange for material benefits for his impoverished country? This is, perhaps, the key question in the run-up to the summit between Kim and US President Donald Trump in Singapore on June 12. Until then, no one will know the answer, perhaps not even Kim himself.
Added 07.06.2018
Some analysts even project that, before long, Facebook will hold more data on its users than any government. Meanwhile, it makes a lot of money from this data. Its advertising revenues came up to around US$40 billion in 2017 (up 50% from 2016). With Google, it holds an 84% market share in online advertising.
Added 05.06.2018
Roseanne Barr is an American comedian whose fictional TV character of the same name is a working-class Trump supporter. For those who remember the show “All in the Family,” she might be usefully compared to Archie Bunker, the crude proletarian patriarch from Queens, New York. Barr’s show was swiftly canceled late last month by the television network ABC, not for anything her “character” said in her show, but for a tweet in which she described Valerie Jarrett, an African-American former adviser to Barack Obama, as the offspring of the Muslim Brotherhood and “Planet of the Apes.”
Added 04.06.2018
 

When Donald Trump was elected, I, like many others feared what his presidency might do to the country. A year and a half into his term in office, our concerns have been justified. 

Added 01.06.2018
Extract from the article: "While the West’s relative decline is almost inevitable, its economic dysfunction is not. Yet pessimism can be self-fulfilling. Why undertake difficult reforms if a dark future seems preordained? As a result, accepting and anxious pessimists tend to elect governments that duck difficult decisions (witness Germany’s grand coalition), while angry pessimists make matters worse (by voting for Donald Trump’s “America First” agenda or for Brexit, for example). It doesn’t have to be this way. As French President Emmanuel Macron has demonstrated, bold leaders can succeed with a message of hope, openness, and inclusion, and by promoting a vision of progress based on credible reforms."
Added 30.05.2018
It has been nearly two years since the United Kingdom narrowly voted in favor of leaving the European Union. As the march toward Brexit – formally set for the end of next March – proceeds, fundamental questions about the nature of the future UK-EU relationship remain unanswered. Instead, every time a tough decision must be made in the negotiations in Brussels, British ministers kick the can down the road, or even into the long grass. This is somewhat surprising. Apparently, none of the politicians and newspaper editors who plotted for years to get the UK out of the EU thought much about what would happen if their machinations succeeded.
Added 30.05.2018
Discussions are now underway to establish a system of joint deposit insurance for eurozone banks. Proponents of the scheme, with the European Commission and the European Central Bank (ECB) taking the lead, point out that deposit insurance would avert the danger of a run on banks in times of crisis. While this argument is true, critics emphasize the disparity in risks, owing to the high share of bad loans on the balance sheets of banks in some countries. To address this risk disparity and move ahead with the plan, balance sheets will need to be cleaned up before considering the next step. While the share of bad loans for banks in the stable eurozone countries is just 2%, the most recently published International Monetary Fund statistics, from last April, show a share of 11% for Ireland, 16% for Italy, 40% for Cyprus, and 46% for Greece.
Added 29.05.2018
Trump’s decision cannot be justified by any breach of the agreement on Iran’s part. It is, rather, a return to the old, largely unsuccessful US policy of confrontation with Iran. The only difference this time is that the Trump administration seems determined to go to the brink of war – or even beyond – to get its way. If the administration has any plans for keeping Iran’s nuclear program in check in the absence of the nuclear deal, then it is keeping them a secret. Judging by some of the administration’s rhetoric, it would appear that airstrikes against Iran’s nuclear facilities are on the table. But bombing would only delay Iran’s nuclear program, not stop it. Would Trump then consider a massive ground war to occupy the country and topple the regime? We know all too well how that strategy worked the last time it was tried.
Added 28.05.2018
US President Donald Trump’s abrupt decision to cancel his planned June 12 summit with Kim Jong-un represents a diplomatic coup for the North Korean leader, and an even bigger victory for China. In the space of just a few months, Kim’s image has gone from that of international pariah to that of thwarted peacemaker.
Added 23.05.2018
The good news is that the United States and China appear to have backed away from the precipice of a trade war. While vague in detail, a May 19 agreement defuses tension and commits to further negotiation. The bad news is that the framework of negotiations is flawed: A deal with any one country will do little to resolve America’s fundamental economic imbalances that have arisen in an interconnected world.
Added 21.05.2018
The cryptocurrency revolution, which started with bitcoin in 2009, claims to be inventing new kinds of money. There are now nearly 2,000 cryptocurrencies, and millions of people worldwide are excited by them. What accounts for this enthusiasm, which so far remains undampened by warnings that the revolution is a sham? One must bear in mind that attempts to reinvent money have a long history. As the sociologist Viviana Zelizer points out in her book The Social Meaning of Money: “Despite the commonsense idea that ‘a dollar is a dollar is a dollar,’ everywhere we look people are constantly creating different kinds of money.” Many of these innovations generate real excitement, at least for a while. As the medium of exchange throughout the world, money, in its various embodiments, is rich in mystique. We tend to measure people’s value by it. It sums things up like nothing else. And yet it may consist of nothing more than pieces of paper that just go round and round in circles of spending. So its value depends on belief and trust in those pieces of paper. One might call it faith.
Added 19.05.2018
The protests that rippled across Russia ahead of Vladimir Putin’s fourth inauguration as president followed a familiar script. Police declared the gatherings illegal, and the media downplayed their size. Alexey Navalny, the main organizer and Russia’s de facto opposition leader, was arrested in dramatic fashion, dragged out of a rally in Moscow by police. On May 15, he was sentenced to 30 days in prison. More than 1,600 protesters across the country were beaten and detained.
Added 16.05.2018
Many knowledgeable people dismiss the prospect of advanced AGI [=Artificial General Intelligence]. Some, ..........,argue that it is impossible for AI to outsmart humanity........Yet other distinguished scholars........do worry that AGI could pose a serious or even existential threat to humanity. With experts lining up on both sides of the debate, the rest of us should keep an open mind.
Added 15.05.2018
The world’s most important bilateral relationship – between the United States and China – is also one of its most inscrutable. Bedeviled by paradoxes, misperceptions, and mistrust, it is a relationship that has become a source of considerable uncertainty and, potentially, severe instability. Nowhere is this more apparent than in the brewing bilateral trade war.