China’s “Patentless” Economy

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The reason that China, the Chinese, and probably many of the largest companies in the People’s Republic steal intellectual property is that they have so little of their own. Among the top 50 companies ranked by the number of patents awarded them in 2012 only one is China based, according to the IFI CLAIMS Patent Services. China, by some measures, is intellectually bankrupt.

The one Chinese company which does make the IFI list is Hong Fu Jin Precision Industry, a consumer electronics firm. However, the operation depends on U.S. companies for much of its revenue. Apple Inc. (NASDAQ: AAPL) is among its largest customers.

One of the most interesting revelations from the IFI list is that it does not include any of China’s largest corporations. But, on close examination, China has very few large hardware, software, of consumer electronics firms based inside the company. China remains a slave to outside firms which do have patents in these sectors. Chinese companies may act as manufacturers, but not originators of the work that drives their invention.

The list of global companies with the largest numbers of patents does include those which have already identified China as a primary, if the not the primary, market in which they lose money because of theft. First among these is Microsoft Corp. (NASDAQ: MSFT), which says that 90% of its software used in China, based on lost revenue, is stolen. Microsoft is sixth on the 2012 IFI list.

The U.S. reaction to theft of the intellectual property of companies based here is still close to nonexistent. China firms can afford to make little investment in innovation, when they can steal it.

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