My two years in China have overturned many previous paradigms that I held, including the stereotype of China as merely an IP copier and not an IP generator. While the West clings to that view, largely discounting the patents and innovation capability of China, a rapid transformation is occurring in which China has taken the global lead in national patent filings and is about to tie with Germany as the #3 international patent filer (expensive, generally high-quality PCT filings). China is now #2 internationally in scientific publications, behind the US but ahead of England and everywhere else. In hot areas like graphene, the two-dimensional carbon nanomaterial that is opening whole new vistas of nano-possibilities, China has a clear global lead in the number of patents filed so far.
In my own innovation-related experiences, I have seen that teams of Chinese college graduates, though often seemingly shy and unresponsive at first when challenged to contribute in ideation and innovation sessions, can, with the right guidance and framework, become as energetic and innovative as any Western team I've worked with. One must understand Chinese culture a little and take some steps like removing the boss from the room and setting up rules and guidelines that make it clear they won't lose face by participating and might lose face (or delay lunch and bathroom breaks) if they don't. Once we get past the initial shyness, it can be hard to get them to turn off the innovation juice.
For some, the biggest challenge in China has been the IP system, which many have felt was too weak and lacked adequate means for enforcement. This is being addressed, and the new 4th Amendment to Chinese patent law looks like it will bring some major steps forward, including opportunities for discovery of evidence and stronger penalties. The trend is clear, though, that China is working to strengthen its systems and is treating foreign IP holders as fairly as Chinese companies in general.
Do not ignore the rising tide of IP and innovation in China. Some extremely importance advances in technology and business models are emerging here. The nations and companies that can respect China and its IP are the ones that will benefit most. The opportunities are staggering.