McKinsey report and Clarivate data identify global innovation’s pivot to Asia

IP activity in Asia has undergone two unmistakeable shifts in recent years, both spearheaded by Mainland China. The first has progressed over the long-term and seen Asia become a global innovation hub and take the lead in global patent filings. The second shift, which has taken place much more rapidly, concerns a pivot away from patent quantity towards patent quality.

A recent report from McKinsey & Company uses Clarivate data to explore Asia’s impressive technological transformation over the past decade according to a number of measures, including IP creation and strength.

McKinsey used Innography from CPA Global, part of Clarivate, to delve into the IP data to uncover 10 technologies where Asia holds a higher than average share of ‘globally impactful’ patents – four of which also attract a higher than average level of start-up investment: mobile services, AI, Internet of Things and manufacturing equipment. It found that from 2016 to 2018 Asia represented 87% of global patent growth, with Mainland China alone accounting for 45% of the world’s patents during this period.

This IP analysis reveals Asia’s increasingly strong position in high-growth technologies, but as we found in our 2020 report there are further signals that innovation and IP in Asia is swiftly maturing.


A new IP strategy in Mainland China

While Mainland China is dominant across all IP metrics, a closer look reveals a change in tack. For years Chinese patent volumes increased exponentially, spurred on by a coordinated industrial and IP strategy. In 2019 however, Chinese patent applications fell by 9.2% – the first decline in 24 years.

This watershed moment was no accident. It reflected a purposeful shift away from leading on patent quantity towards leading on quality. Mainland China’s flight to quality (and growing international influence[1]) is also evidenced in the growing percentage taken up by invention patents versus utility model patents, increase in international patents and perhaps above all, in the country’s rising share of Highly Cited Researchers™, with Chinese fundamental research now frequently referenced in Western studies.

The prominence of Mainland China’s intellectual capital is indicative of a change in strategy. Whereas previously the government focused funding to facilitate research and large volumes of patent filing activity (resulting in widespread IP awareness), incentives are now more closely aligned with patents that have the potential to have a commercial and global applicability.


This watershed moment was no accident. It reflected a purposeful shift away from leading on patent quantity towards leading on quality.


To a large extent, this has caused the Chinese economic landscape to split into a three-tier pyramid. The few at the top are those which are already leveraging IP assets and have a globalized business model. Those in the middle are dynamically approaching IP creation and seeking to internationalize – it is these who are most likely to benefit from state funding for innovation. And those at the bottom, for whom IP is less of a strategic imperative, are those that have little or no international strategy and focus only on the domestic Mainland Chinese market.

In addition to this, the world’s second largest economy is also increasingly becoming a major venue for IP enforcement and litigation (including for international patent holders), a further sign the country is reaching maturity as an IP jurisdiction.


Beyond Mainland China

While Mainland China’s scale and rate of development makes it a focal point, it’s crucial to consider the size and diversity of innovation across Asia to paint the full picture. IP trends in advanced Asia-Pacific economies such as Japan, South Korea and Australia are more similar to those of Western countries, with high levels of innovation but slower growth. Companies in these countries perform strongly across the full spectrum of IP rights, greatly contributing to the continent’s clout in terms of brands as well as technologies.

While Mainland China remains a dominant force in key sectors, this heterogeneity across Asia means there is far more to come from the continent.

Further innovation is expected out of Southeast Asia, with the Association of Southeast Asian Nations counting a 13% compound annual growth rate in patent applications from 2010 to 2019 and forecast to be the world’s fourth largest economy by 2030. In the long-term, South Asia is also likely to emerge as a powerful (and as yet largely untapped) source of innovation. Learn more about this developing innovation center by reading the Clarivate South and South East Asia Innovation report.

Global IP production is spearheaded by Asia, but these IP trends indicate an underlying reality. As Asian economies continue to lead the way in generating new IP assets, Mainland China is repositioning on the world stage and helping to transform perceptions of the continent from being a manufacturing center into a credible and world-leading innovation hub.


Learn more by reading the Clarivate IP Asia 2020 Special Report.