Intellectual Property: "Invisible Wings" of Economic Development

Recently, World Intellectual Property Organization (WIPO) released the "World Intellectual Property Report 2017: Intangible Capital in Global Value Chains". The report shows, intangible capital accounted, on average, for 30.4 percent of the total value of manufactured goods sold throughout 2000-2014, and this amount reached USD 5.9 trillion in 2014. "This underscores the growing role of intellectual property, which is frequently used to protect intangible and related assets in the worldwide economy." WIPO Director General Francis Gurry noted that, intellectual property is the means by which companies secure the competitive advantage flowing from their intangible capital.

The report analyzes case studies on coffee, solar panels and smart phones, which welcomed the better development in recent years, and China performs well in all fields. The report shows, China's position in the global manufacturing value chain has steadily risen in recent years, and Chinese enterprises are gradually becoming the upstream producers of high value-added technologies. The report indicates, in East Asia, Europe and North America, where the industrial chain is the most developed, patterns have emerged in which middle-income economies export primary commodities to developed economies, while the latter export technologically-intensive products to the former. However, with the rapid growth of Chinese enterprises, this pattern is being broken. China is rapidly developing technology-intensive industries and moving up to the middle and high-end industry chain. "China is getting rid of the label of 'World Factory' and climbing to the forefront of the global value chain transformation and upgrading." The report comments.

Taking the report analysis of the smart phone industry as an example, China's Huawei and ZTE have been among the top three applicants in PCT applications among global enterprises for many years, with the market share rising at the same time. The report indicates, in the domain of patents, up to 35 percent of all first filings worldwide may relate to smartphones. Smartphone firms and technology providers rely heavily on patents, trademarks and industrial designs, generating a high return on their intangible capital. Despite the lack of sales capability compared with Apple, smart phone brands such as Huawei, ZTE and Xiaomi in China still achieved remarkable results in the international market with outstanding innovative capabilities. For example, Huawei is rapidly becoming one of the leading high-end smartphone producers in the world through high R&D investment and global brand building. Xiaomi also ranks among the top 10 smart phone sales in the world through a large number of patent acquisitions and research and development.

Although the invisible force of intellectual property has pushed China's economic restructuring and upgrading to a new level, there is still a room for improvement in China's innovation and development. As an important intangible asset, patents are driving profound changes in the global PV industry manufacturing value chain. The number of patent applications in China has risen sharply, and the market share of Chinese manufacturers has been gradually increasing. However, the proportion of PV patent applications submitted by Chinese enterprises in other countries is still very low, less than 2%. In the field of smartphones, most of PCT international patent applications submitted by Huawei and other enterprises are concentrated in the smartphone hardware, but less on graphical user interfaces (GUIs). The report argues that the role of intangible assets, both product manufacturers and technology providers, is extremely important and coordinated effort is needed in all fields.

"Today's intangible capital in the global value chain will gradually determine the wealth and fate of the business." As Francis Gurry said, the "invisible and tangible" power of intellectual property will give rise to unlimited impetus in economic development.

(Source: China IP News)