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It's a very capitalistic view to think that the only motivation to innovate is the profit motive.But isn't your entire argument self-contradictory with the story? This isn't a case of them developing them same thing and then, say, ignoring being sued over patent infringement or something. This is them just taking it instead. If your argument was right that IP wasn't useful for innovation, then they wouldn't need to take it from others, they could create it themselves. They've certainly got enough of a unified population, and can even see where others have gone first.
More fundamentally, IP is not at the core about "motivation", it's a hack to deal with a limited resource problem. Replicating information is essentially free, but generating it is not. R&D, particularly in areas where iteration requires enormous capital expenditure and there is a lot of finding paths in the dark, takes significant resources. And since we don't have unlimited amounts of those, decisions have to be made about how and where to spend them. The market, properly used, has proven to be one of our most effective tools for dealing with efficient resource allocation. Markets though normally are based around the specific resources and replication. IP attempts to graft that. IP also is intended to encourage sharing and decrease inefficient efforts to hide valuable information through technical and personnel based means.
As I said it's a hack, because information isn't the same as real world materials. There are different costs to society in maintaining it, and it requires societal cooperation in a way that defending limited physical property does not. It's more than reasonable to debate the frameworks for IP, such as how long it should last (be it fixed term or dynamic terms with ever increasing renewals required), what exceptions should be made, etc. But if you've got a steep hill to climb if you want to claim IP should be done away with. It'd help if you could even posit a better way to direct resources, keeping in mind the failures of the past. It'd help even more if you could point to anyone developing valuable information better without IP, which right now you cannot. China hacking into places to take it vs developing itself certainly doesn't help you there.