Incentives for Chinese inventors: A proposal for a new inventor remuneration scheme with German elements

Abstract

China has stated its intention to more efficiently improve its capability to innovate by reforming its reward and remuneration system for employed inventors. Recently, a new draft Service Invention Regulation (SIR) has been published and is intended to significantly increase the amount of remuneration available to employed inventors in order to increase the level of innovation. The draft SIR follows a system and methodology similar in some aspects to Germany’s principles of defining statutory remuneration rewards. The simplification of the procedure together with fewer possibilities to make deductions will, in effect, lead to employed inventors receiving especially high remuneration. As a result, the SIR may conflict with the interests of existing research-based companies with sizable R&D activities in China. These companies will undoubtedly attempt to legally define and affirm their own remuneration schemes, but potentially face uncertainty concerning the validity of their schemes, and regular disputes with employed inventors could follow. The unpredictability of the requirements for remuneration could become a negative factor for companies contemplating R&D investments in China. It also remains to be seen whether China’s proposed rewards and remuneration incentives will have the desired effect of stimulating innovation by individual employed inventors working outside of the large well established research companies.