Analysis of Patenting Behaviors of Foreign Firms in China: the Case of Japan

Though the weak enforcement of intellectual property rights (IPRs) protection in China is widelycriticized, there was an upsurge in numbers of patent applications and granted since the late 1990s,suggesting the science and technology take-off in China. After China joined the WTO in 2001, it becamefully integrated into the world trading system and played the main producer role in the East Asianproduction network. Utilizing the export-oriented growth strategy, it experienced a persistent high economicgrowth. During the process of China’s economic development, foreign-owned enterprises (FOEs) play apredominately role in terms of output share and export share in the manufacturing sector. Correspondingly,表CM02 共 2 頁 第 1 頁foreign firms also appeared a sharply increase in patent granted in China. Though studies regarding firms’patenting behaviors in China emerge recently, there are scarce studies examining why FOEs’ seek shelterfrom imitation by applying for patents in China.Indeed, FOEs’ R&D activity depends on their operation modes being local-market oriented orexport-oriented, thereby affecting their patenting behaviors. Even though focusing on exporters, thepatenting behavior probably vary considerably between assembly exporters and ordinary exporters。Moreover, MNEs generally reallocate production lines abroad by leaving R&D activity at home, implyingthat characteristics of [aren’t firms might affect their foreign affiliates’ patenting behaviors in China. Thisproject aims to examine the determinants of FOEs’ patenting behavior in China by using a panel dataset ofJapanese affiliates over the 2000-2007 period. Several novelties contained in this study compared with thisline of literature. First, although the dramatic upsurge in patenting in China has gradually receivedattentions recently, patenting by FOEs was not investigated thus far. Thus, this paper helps unravel whyFOEs patent in China. Second, FOEs are generally undertaking process exports in China, implying the tradetypes and intermediate goods imports may matter to their patenting strategies locally. The possibleinfluences of trade types on patenting are not considered in extant studies and they will be examined in thisstudy. Third, a foreign affiliate’s ability to create local innovations relies heavily on parent firms’ ability torespond to unique opportunities in local circumstances. Therefore, FOEs’ patenting behavior is linked toparent firms’ innovation capability. We thus consider parent firm characteristics.