Markets for everything -- including creating new markets
China wants a dynamic, innovative economy. And that means patents. So China wants its citizens to apply for lots of patents. And so:
Professors who do so are more likely to win tenure. Workers and students who file patents are more likely to earn a hukou (residence permit) to live in a desirable city. For some patents the government pays cash bonuses; for others it covers the substantial cost of filing. Corporate income tax can be cut from 25% to 15% for firms that file many patents. They are also more likely to win lucrative government contracts. Many companies therefore offer incentives to their employees to come up with patentable ideas. Huawei, a telecoms-equipment manufacturer that craves both government contracts and global recognition, pays patent-related bonuses of 10,000-100,000 yuan ($1,500-15,000).
Such incentives produce results. In 2008 Huawei filed more international patents than any other firm in the world. China’s overall patent filings grew by 26% a year between 2003 and 2009, says a new report from Thomson Reuters, an information service. Growth was much slower elsewhere: 6% in America, 5% in South Korea, 4% in Europe and 1% in Japan. . . .
Yet there are reasons for scepticism. The bureaucrats in Chinese patent offices are paid more if they approve more patents, say local lawyers. That must tempt them to say yes to ideas of dubious originality. And the generosity of China’s incentives for patent-filing may make it worthwhile for companies and individuals to patent even worthless ideas.
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