For many years, Western governments have assured their citizens that while Europe and the USA could not compete with the low wages of the emerging market countries, there was only one place to turn to when it came to innovation and know-how: the West. But if you think emerging markets are incapable of coming up with good ideas, think again. Recent years’ investment from domestic and especially overseas companies has not only targeted production, but increasingly research and development. Emerging markets have grown from cheap production partners with assembly line jobs to countries forging their own highly specialised paths.
In 2000, China filed approx. 26,000 international patent applications with the World Intellectual Property Organization, WIPO, corresponding to roughly 20 applications per million people. In 2007, the figure had risen to more than 150,000 patent applications or roughly 116 applications for every million people, corresponding to a rise of over 500%.
Even though there is still a long way to go before catching up with the most inventive countries such as Japan and Korea, which annually file about 3,000 applications per million people, a country like Russia has been more inventive over the last ten years than countries such as Canada, Australia and Holland.
Both Russia and China belong to the so-called BRIC countries (Brazil, Russia, India moving forward in leaps and bounds. Having said this, Japan and the West are no more or less inventive than in the past, but rather seem to have reached a stable saturation point.
“Looking at the statistics, it is likely that the BRIC countries and Southeast Asia will be on an applications par with Japan and the West in ten years - only to subsequently overtake them,” says Jesper Kongstad, Chairman of the Administrative Council of The European Patent Organization and Director General, CEO of the Danish Patent and Trademark Office.
The countries’ national companies are driving the patent applications, which fall within all areas of the knowledge industry, including pharmaceuticals, technology and electronics.
“The number of patent applications is one of the best indicators we have to assess a country’s knowledge level and inventiveness, just as it shows how good you are at applying inventions in industry and production. So if you think that the West will continue to win the knowledge race, you are very much mistaken,” says Jesper Kongstad. His view is supported by Hellmut Schütte, Emeritus Professor at INSEAD countries, for example, prefer to imitate rather than innovate is outdated.
“I think we have to see this in a very dynamic perspective. Many companies in China, for example, are moving away from low-cost production and upgrading their technologies, to a certain extent benefiting from foreign firms operating in their countries. And they’re upgrading their technologies quite significantly,” says Helmut Schütte in an interview with INSEAD Knowledge.
And consumers are embracing the new trend – in particular the growing middle class and the young generation have their eyes fixed firmly on the future.
José Gustavo Vivacqua is Senior Engineer in NNE Pharmaplan and consultant to Novozymes in Brazil. He has experience from several emerging market countries, he explains, among other developments with the tremendous competition that growth helps to create. Even though growth is equal to the need for more qualified and highly specialised manpower, there are many skilled people on offer.
“The positive development and growth have undoubtedly created great working opportunities in the emerging market countries. But opportunities are still limited, which means you have to be innovative and creative in your approach to become part of the development. Ultimately it is about survival,“ he says.
“Research and development are not the only fields where the emerging market countries are fostering new ideas. The ability to innovate can be found at all functional levels. But the western companies do not always have an eye for when Chinese or Brazilian innovation behaves differently in practice than you’re used to in the West,” says José Gustavo Vivacqua.
“Many emerging market countries are good at creative problem-solving. They are used problem for relatively little money. And they are not frightened if something goes wrong or a new situation arises. People are generally good at finding solutions even to the most complex problems and it is very much the Western investors and companies who benefit,“ he says.
“Actually, it is not so surprising that emerging markets are stepping out of the shadow of the West and finally have begun to conquer their own territory,” explains Vincent F. Hendricks, University Professor of Formal Philosophy at Columbia University (USA) and the University of Copenhagen.
“When you can see a way out of poverty, you become highly motivated. It’s also worth bearing in mind that the West has only been a driving force in human civilisation for a very brief period. In the past, civilisations in Asia and North Africa were the dominating ones. While in more recent times the West has held sway in matters of knowledge, earlier civilisations had a deep understanding of astronomy, physics and mathematics - building pyramids while we ran about in goatskins, rubbing stones together to make fire.
This consciousness remains part of their cultural heritage today. It’s only natural that they don’t want to be a cheap copy of the West, but rather to have their own identity. Together with the current opportunity to break out of poverty, people are determined to forge their own destiny in a way that we haven’t seen in the West for a very long time,” explains Vincent F. Hendricks.
Want to read more about emerging markets within pharma and biotech? Download our Angle magazine on the topic.