January 2007, Vladislav Boutenko, David C. Michael and Collins Qian of the Boston Consulting Group published the report: Beyond the Great Wall: Intellectual Property Strategies for Chinese compenies. Head tip to Brian Schwarz' China Challenges.
The report distinguishes five phases of IP development and compares China's development with the developmental phases Japan, Taiwan and South Korea have been through.
First phase: Driving growth through export
Second phase: Climbing the value ladder
Third phase: Paying the price
Fourth phase: Getting serious about IP
Fifth phase: Profiting from IP
The report asserts that China's focus on protecting their inventions only domestically may result in exclusion from international markets, and that they have to pay onerous royalties, or are forced to take on disadvantageous partnerships.
The report gives the example of the DVD player industry in China that had to pay 20 US dollars in royalties for each DVD player they manufactured, so that China in the case of DVD players is not a low-cost location after all.
The Boston Consulting Group famous for its BCG Matrix (remember dog, cow, star and question mark) has come up with the 'BCG IP Strategy Matrix': using the symbols of shark, minnow, target and superpower, to show how companies with IPR grow strong and how those without become vulnerable.
Read the BCG 26 pp. report here (pdf).