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Why China Is Eclipsing Japan in Innovation

Is China overtaking Japan in science and technology? originally appeared on Quora: the place to gain and share knowledge, empowering people to learn from others and better understand the world.

Answer by Misha Yurchenko, author of The Star Interview, on Quora:

Japan used to have the highest number of patents registered each year but was taken over by China a few years ago. China currently sits as the top leader of number of total patents (one million filed last year), over the US and then Japan.

However, Japan still has a lot of patents (300k+/year) and technically speaking, when you look at the patent per million people, Japan (with 130 million people) has more patents than China (1.4 BILLION people) in proportion to their population. Actually, South Korea beats both Japan, China and the US in terms of patents per million people.

But still, patents in Japan actually decreased by 2.5% last year, so this is concerning.

Why is this happening?

#1 China is a Beast

Part of this is simply a numbers game explained by the population growth in China as well as the emergence of the middle and upper middle class. It’s the Wild West in China right now and despite the communist stamp and some obvious governmental regulations, China’s actions are more capitalist than most countries. They are producing wealth, people, companies, and even cities at an unprecedented rate.

#2 Japanese Companies are Focused on the Wrong Things

Most of the patents in Japan are registered by corporations like Panasonic, Toshiba, Sony and Mitsubishi. Unfortunately, most of these companies aren’t really innovating and are focused on cost-cutting and maintaining their current legacy portfolio.

If you look at the types of patents these companies are registering, it’s primarily electronics, energy and electric machinery (these saw an actual increase in number of applications). Patents in biotech, food chemistry, IT management, and digital communications all decreased in Japan. Where as if you look at China, the US and even Russia, patents for biotech, food and IT are all increasing. Japanese companies are focusing on the wrong things.

#3 Commercialization of Technology is The Real Issue

Here’s a quote from the head of licensing at Tokyo University:

In Japan, there are only a few university technologies that are licensed to startups, whereas two-thirds of the technologies developed in US universities are licensed to small and medium-sized companies (SMEs) and startups – this constitutes a major difference between the US and Japan in the university-industry technology transfer process, and is one of the significant problems in IP for Japan.

I’m less concerned about the number of patents and more worried about the rate of commercialization for these patents and what they are being used for. The patents mean nothing unless people are actually creating the products and technologies and birthing them into the real world, right? In Japan most patents are created by these large companies, where as startups account for a very small portion. But the innovation tends to come from the startups. Therein lies the problem.

The solution? I don’t know. But strengthening the ecosystem between universities, startups and venture capital (corporate included) should be the starting point.

This question originally appeared on Quora – the place to gain and share knowledge, empowering people to learn from others and better understand the world. You can follow Quora on Twitter, Facebook, and Google+. More questions:

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