From Imitation to Innovation: The Inevitable Path for China's Medical Device Industry

Author: Valve Little Superman

This year marks the 100th anniversary of the founding of the Communist Party of China. On July 1, vibrant celebrations were held across all sectors of society. Amidst extensive publicity campaigns, I have genuinely felt the nation’s strength and witnessed the remarkable achievements made by the Communist Party of China. Today, China’s national power has risen to a leading position globally, while its level of technological innovation has reached new heights, gradually positioning the country at the forefront of the world. Currently, the state’s advocacy for and emphasis on innovation and intellectual property protection have reached an unprecedented level. Against this backdrop, as an investor in the medical device sector, I believe that transitioning from imitation to innovation is the inevitable path for the development of China’s medical device industry and a key consideration for current healthcare investments.

Mr. Mao Dun once said, “Imitation is the first step toward creation and the initial form of learning.” This demonstrates that imitation is one of the important methods for humans to learn and master skills. In the history of national development around the world, many powerful nations initially achieved progress through imitation, pursued innovation on this basis, and ultimately realized surpassing their predecessors.

Today, “Made in Germany” is a globally renowned symbol of impeccable quality. However, historically, “Made in Germany” was once synonymous with cheapness and inferiority. The First Industrial Revolution marked a monumental leap in the history of human technological development, propelling Britain to rapidly rise as the world’s most powerful nation. During this period, Germany had not yet achieved national unification and remained significantly underdeveloped. At that time, Germany’s industry was backward, and its products were disliked even by Germans themselves. The “Made in Germany” label then largely denoted products that were “copied” from British designs, provoking intense resentment in Britain. The British frequently shamed German goods through various public statements and actions. This boycott and humiliation prompted Germans to engage in thorough self-reflection. German companies embarked on a path of innovation, prioritizing quality as the primary objective of their products. By vigorously advancing technological research and development, increasing R&D investment, and actively innovating in design, Germany rapidly gave rise to a cohort of globally renowned enterprises such as Siemens, Mercedes-Benz, and BMW. Through their own efforts, Germans spearheaded a “quality revolution,” achieving a remarkable transformation and establishing Germany as a manufacturing powerhouse.

"Made in Japan" has long been synonymous with precision and durability in the public perception. From heavy industry, automobiles, and home appliances to consumer electronics, Japanese manufacturing today boasts leaders in nearly every sector. However, historically, Japan was also a major player in the world of imitation. In the mid-20th century, "Made in Japan" was synonymous with "knockoffs" in Europe and the United States. For example, in the early 20th century, after Western countries introduced a wave of advanced home appliances, Toshiba, then in its infancy, traveled to the United States for study tours and promptly copied the technologies back home. The first vacuum cleaners and refrigerators produced by Toshiba were direct replicas of General Electric’s products, with even their appearances meticulously imitated. At that time, the Japanese did not view imitation as shameful; instead, they coined a more palatable term for it—"reverse engineering." Starting in the 1950s, however, through digesting and absorbing knowledge gained via "reverse engineering," Japan kept pace with Western innovations in fields such as computers, communications equipment, cameras, home appliances, and automobiles. By mastering core technologies and introducing its own innovations, Japan gradually evolved into its current state, characterized by high levels of innovation and excellent quality.

History always repeats itself in strikingly similar ways. Today, “Made in Germany” and “Made in Japan,” hailed as global benchmarks for industrial excellence, once shared a history of imitation. Thus, China’s past penchant for mimicry is hardly surprising. However, no nation can build its foundation on counterfeiting. The path from initial imitation to upgraded replication, and ultimately to original, high-quality innovation, is one that countries such as Germany and Japan have traversed—and which China is now following.

Since its inception, China’s high-speed rail has been plagued by allegations of “copycatting.” However, the “Fuxing” (Rejuvenation), a high-speed train built to Chinese standards with a designed speed of 400 km/h, has recently begun operations. Among its 254 key standards, 84% are Chinese-developed, signaling that Chinese innovation is going global. Huawei, now renowned worldwide, was not an innate innovator. For its first 18 years, Huawei adopted an imitation strategy, with no original products of its own. After 2001, the company moved beyond this early phase of imitation, gradually achieving independent innovation and launching a large-scale expansion into overseas markets. In recent years, Huawei has further intensified its independent R&D efforts, investing 10% of its total revenue into research and development. Huawei’s products now lead the globe, making it a competitor that even the United States fears.

China, having undergone decades of imitation and plagiarism, is now emerging across various industries with independent innovation, even producing products that lead the world. Innovation has become the main theme of China’s industrial development. In May this year, a joint research report released by the international economic consulting firm BDO and the Hamburg Institute of International Economics stated that “China is transitioning from a ‘nation of imitators’ to a ‘nation of innovators.’” According to this global study, Germany ranked fifth worldwide with an average of 916 patents per million people between 2012 and 2014. China has made significant progress in this indicator, surpassing France and the United Kingdom with 501 patents and rising to tenth place globally.

At present, China has elevated innovation to an unprecedented height, putting forward the important assertion that “innovation is the primary driving force for development.” Official media have pointed out that “protecting intellectual property rights (IPR) is protecting innovation. IPR protection is closely related to high-quality development. Only by strictly protecting IPR and severely cracking down on market entities and lawbreakers involved in infringement and counterfeiting in accordance with the law can we improve the quality of the supply system and effectively promote high-quality development. IPR protection is also crucial to China’s overall strategy of opening up to the outside world. Only through strict IPR protection can we optimize the business environment and build a new system for a higher-level open economy. Furthermore, IPR protection bears on national security. Only by strictly protecting IPR can we effectively safeguard key core technologies independently developed in China and prevent and mitigate major risks.”

Earlier this year, a special group study session on intellectual property (IP) protection was organized during the 25th collective study session of the Political Bureau of the CPC Central Committee. General Secretary Xi Jinping put forward important requirements for IP protection work once again, from the perspective of national strategy and the demands of entering a new stage of development. It is evident that the country has elevated IP protection to the level of national strategy. The state is encouraging all industries to transition from imitation to innovation.

As in other industries, the development of medical devices in China has historically been dominated by imitation of foreign products. In the past, due to a weak industrial base, inferior raw materials, lagging medical standards, and limited innovative awareness among physicians, it was nearly impossible for China to manufacture original or innovative medical device products. Almost all products were either direct imitations of foreign counterparts or featured only minor modifications. For instance, early coronary stents, occluders, large-vessel stents, electrophysiology catheters, and orthopedic screws and plates were all imitations of foreign products. The vast majority were developed through reverse engineering based on foreign models, often without any involvement from physicians. It can be said that the early rise of domestic medical device companies was inextricably linked to this approach.

Encouragingly, under the country’s current strategic direction and overall development trends, original medical devices have gradually emerged in recent years, demonstrating a positive growth trajectory. Although a gap remains compared with other sectors such as high-speed rail, quantum information, and aerospace, I firmly believe that only truly original medical devices with proprietary intellectual property can establish genuine product barriers, possess the potential to go global, and prove to be truly sustainable products in the future. The business model of relying on imitation for market entry and growth is becoming a thing of the past.

Based on the above analysis, the author believes that intellectual property (IP) rights will play a critical role in the selection of future investment projects. Given the current macro environment, it is highly likely that landmark patent infringement lawsuits will emerge within the industry in the coming years, serving as a deterrent. However, many investors lack a deep understanding of IP issues. In light of this, the author offers several practical recommendations:

1. Conduct thorough intellectual property due diligence on core products. Has the product been patented? Is it an invention patent or a utility model patent? Have the applied patents been granted? A comprehensive patent search for similar products is required. It is advisable to have the company’s patents evaluated by qualified professionals and compared with those of competing products.

2. Some companies promote their products as innovative; however, careful scrutiny is required in practice. Generally, the claims of many medical device patents cover core structural designs and operating principles, resulting in broad scopes of protection. Minor modifications to appearance or dimensions alone do not constitute innovation and cannot circumvent the scope of patent protection. Caution should be exercised against pseudo-innovations that are essentially imitations.

3. The term of protection for invention patents is 20 years, and that for utility model patents is 10 years; once the protection period expires, the patent no longer offers legal protection. In such cases, imitation is permissible and lawful.

4. The grant of a relevant patent does not necessarily mean that the product is protected by patent rights. Due to the highly technical nature of patent specifications, it can be difficult even for experts in the field to assess whether an applied-for patent possesses sufficient novelty and inventiveness. Some patents lacking genuine innovation—merely superficial modifications—may still be granted, yet such patents offer no real protection for the product. Furthermore, a patent serves as a spear, not a shield. A granted patent can be used offensively to challenge competitors and file infringement lawsuits against their products. However, if your own developed product infringes upon another party’s valid patent, your own patented rights will not shield your product from liability.