Chinese innovation is being reviewed in a new light, as a study published on Monday gives credit to Chinese copycats for the value they add to imported technologies.
China is becoming increasingly adept at attracting and profiting from global knowledge and networks alongside its more supportive environment for indigenous research and development, according to the study published by Nesta, an independent British innovation-focused charity.
The report offers a new angle to look at "Shanzhai" -- a Chinese catchphrase referring to substandard knock-offs, as it finds some Chinese companies have gone beyond simply imitating to adding value through re-innovation.
"Shanzhai is seen as a very negative thing, as China is copying and taking, and we have forgotten actually it's a form of innovation and adapting very quickly for the Chinese marketplace and different preferences of Chinese consumers," said James Wilsdon, one of the authors of the report.
The report cites some of China's leading tech companies as examples of copying existing products and constantly improving and tailoring to local consumers' needs.
These include Alibaba's Taobao, an online shopping platform considered the Chinese version of Ebay; RenRen, a popular social networking sites modeled after Facebook; and Sina Weibo, China's equivalent of Twitter.
"We see that model as very rapid absorption, and then on top of the kind of absorbing and repeating what others have done, also adding distinctively Chinese novelty and value to the process," said Wilsdon.
This 'imitation first, innovation later' model adopted by Chinese companies reflects a broader national strategy to promote indigenous innovation based on assimilation and absorption of imported technology.
Chinese companies invest more on applying the latest technology to improve efficiency and quality than on research and development, the study quotes an OECD finding, adding that such incremental efforts to adopt and adapt have been an important driver of China's industrial development.
However, the study also notes that Chinese companies have begun to boost their own research strength, as more companies have made the lists of world's most innovative companies evaluated against various measuring matrices.
China's total R&D expenditure exceeded 1 trillion yuan (163.7 billion U.S. dollars) in 2012 while the nation accounts for 25 percent of the world's R&D workforce, study finds.
The report came at a time when several high-ranking British politicians are visiting China this week to boost ties from trade and finance to technologies and education.
While recognizing the value of China's indigenous innovation, the report urges deeper engagement with China in research and innovation projects.
David Willetts, UK Minister for Science and Universities said on Monday that the United Kingdom overtook Japan in 2011 to become second after the United States in the number of joint research publications with China.
The minister also announced a 7-million-pound funding for joint research and innovation programs in sustainable manufacturing, stem cell and synthetic biology.
He also added that such cooperation with China should not be limited to the public sector, and both countries are looking for opportunities to commercialize innovation.
"I hope in the future the partnerships of the two countries' cooperation could go beyond public sectors, that the two countries' companies could be involved too," he said.
This sentiment is also reflected in the report, which argues that an overemphasis on the 'dark side' such as intellectual property theft and forced technology transfer will eclipse the opportunities Chinese innovation presents.
"Too much focus on certain risks will distract western companies or universities from the really big risk," Wilsdon said, "the real big risk is not engaging and not being here investing."