Experts attribute rise to intellectual property protection, R&D investment

The readiness of Chinese companies to invest heavily in research and development, and focus on innovation over the past decade has allowed China to dominate patent filing in Europe, industry experts said.

They believe this trend will likely continue and enhance the competitiveness of Chinese companies in the global market.

The number of patent applications from China at the European Patent Office has more than quadrupled in the past 10 years, going from 3 percent of its patent applications in 2012 to 9 percent in 2021, according to its data.

"In the last decade, China increased its patent applications at a higher pace than any other of the leading countries. This shows that Chinese companies are investing strongly in innovation, and using and benefiting from intellectual property protection both in China and abroad," said Luis Berenguer, spokesman for the patent office.

"China has clearly put a lot of focus on technological innovation in recent years as a key factor for the growth of its economy," Berenguer said. "This is significant, and the results of this strategy are reflected in top growth in patent applications in a growing number of technologies."

Industry experts believe the rise in Chinese patent filings is the result of a strong increase in research and development activities.

"Since the mid-1980s, China has been steadily increasing its investments in State and privately funded research and development activities," said Stefan Wagner, professor of strategy and innovation at the European School of Management and Technology in Berlin.

Research analysis company Statista said China's research and development expenditures totaled more than $622 billion in 2021, exceeding the $598 billion of the United States in absolute terms and making it the single largest spender on research and development. Compared with 10 years ago, China's research and development expenditures have more than tripled.

Wagner said this development has been accompanied by a strengthening of the higher education sector leading to a larger number of university researchers, which further contributes to increasing the number of patent filings.

Chinese companies have increasingly realized the importance of innovation and shaped their patent strategies with consistent investment in research and development, said He Shaowei, an associate professor of international business at the University of Northampton in the United Kingdom, the current geopolitical environment has possibly increased their sense of urgency behind that investment.

"Take Huawei, for example, despite a significant fall in its revenue in 2021, it has decided to invest further in research and development," said He.

Huawei, a major Chinese technology company, has fallen victim to geopolitics and ideology-based suppression from the United States and some of its allies. Its production and sales, as a result, have been seriously affected.

"Certainly, the trend of Chinese companies increasing research and development spending is becoming clearer and stronger year after year, and there is no doubt that there are a number of very innovative Chinese companies," He said.

Chinese companies were particularly strong in filing patents on digital communications in 2021 at the European Patent Office, marking the strongest growth of their activity in this field.

George Yip, a professor at Imperial College London and Northeastern University in Boston, said: "China is benefiting from a latecomer advantage by leapfrogging over the traditional analog communication stage and accelerating in digital communication. As a result, both Chinese consumers and Chinese companies are among the most digitally oriented in the world."

Yip said he is confident that Chinese companies will continue to gain global market share, as there are already more Chinese than US companies in the Fortune Global 500 list of the world's largest companies.

The last two decades have seen significant improvements not only in the quantity but, more importantly, also in the quality of Chinese research and development, the experts said.

"Over the past 15 years, China has tripled its high-impact scientific efforts as measured by its share of the top 10 percent of most-cited publications, which has reached 14 percent－the second-largest scientific powerhouse after the United States, which has 25 percent," Wagner said.

Jeffrey Towson, a visiting professor at the China Europe International Business School and head of the advisory firm US-Asia Tech Strategy, said: "The 'China copies' trope is really 20 years out of date at this point. Chinese companies have long been leaders in cost innovation and customer-facing innovation."

He said China has the talent, scale, and domestic market to be an innovation leader, and that China's biggest potential challenge is whether its technology can be used and adopted in the international markets.

"Chinese companies need to compete in non-China markets. Otherwise, innovation could slow or there could be a 'Galapagos Island' effect where Chinese technologies develop differently and are not used anywhere else in the world," Towson added.