I read an article today posted on the “Wall Street Journal” website, “China Times” (
www.wsj.com
) April 9, 2013, that reports a new take on Chinese companies that copy western technology. The article, entitled, “Defending China’s Imitators as “Bandit” Innovators” by Alex Frangos gives the reader some insight into how copying western technology may be viewed by some inside China. Author Frangos writes:
“Here’s a spin on the issue of Chinese companies that copy western technology: They aren’t just imitators. They’re “bandit innovators” who are good for the world — and even for the companies they are copying.
So says Li Daokui, economist at Beijing’s Tsinghua University. A member of two Chinese government consultative bodies, the Harvard-educated former academic advisor to the People’s Bank of China was speaking Thursday at the Institute for New Economic Thinking’s
annual conference
taking place in Hong Kong.
Mr. Li, who has been
outspoken on intellectual property issues
in the past, cited a certain type of high-tech diesel engine, which he says a German company is the leader in, but that a Chinese company he knows is trying to copy.
“I tell my German friends, ‘Don’t worry too much about Chinese companies imitating you, they are creating value for you down the road,’” he said.
“This type of imitation can’t replace fundamental research…they don’t have the accumulation of knowledge, the know-how to continuously grow,” he said. What it does do, he said, is create an ecosystem in which innovations will eventually build off of each other and help industry and the economy overall.
“It creates social value,” he said. “It lowers the monopolized rents…and this innovation is not threatening the leading edge of the leaders.”
We criticize and attach value judgments…we have to understand the mechanism of these kind of innovations,” he added, noting that economists haven’t quantified the benefits of bandit innovation, as he calls it.
The issue strikes at the heart of the whole point of the modern patent system, which is to give innovators a time-limited monopoly to enjoy the fruits of their invention. Some economists, however, say patents take away the incentive by other companies to innovate.
It also touches on the ultimate putdown of China’s economic boom of the past three decades: That very little it had to do with innovation and much of it was thanks to copying Western technology.
There’s a
hot debate
over exactly how much innovation goes on in China. Some say there’s more than the country’s reputation suggests, and that it’s starting to be a
big advantage
to Chinese based manufacturers. Others note there are virtually no global Chinese brands that can rest their names on indigenous Chinese technology.
As to whether China can eventually be the leaders on the frontier of invention, not just the bandits, Mr. Li is sure it will happen.
“I totally disagree with the very popular view that China culturally is not positioned to innovate…There’s no single Chinese culture. There is a large array of subcultures,” he said, pointing to the entrepreneurial engineering culture in southern China. “I have faith that time will enable China to innovate in the Western fashion.”
Another speaker at the forum, economist and Warburg Pincus venture capitalist William Janeway, questioned whether China can move beyond this stage of bandit innovation.
“It’s not yet clear whether economic powerhouses of Asia will succeed in making the change from innovation follower to frontier,” he said.”
And the beat goes on in China!
Hawkeye in China
– Lex Smith