Innovation, China Style

Interesting thoughts, but what I find to be the most interesting thing to consider (that is not pointed out) is that the scientists themselves are Chinese.

Just because SIEMENS or GE hold the actual patent does not mean that they are the sole developers of it. If the underlying talent developing the patents are coming from Chinese scientists (using western money), then the equation is even more interesting.

China recently released their own DVD standard, the office I share includes a group doing industrial design, China is working on their own 3G standard, funds are being poured into clean energy initiative, and China developed the soft pebbleb nucleur reactor.

These may not be giant leaps for mankind or science, but the trend is there, and it is only a matter of time before Chengdu and Xi'an begin producing.

One problem in discussions like this is that they are very susceptible to "Cargo cult" thinking (look up the term in Wikipedia).

All you need to start something innovative is the right group of people in the same place. There are enough Chinese who have worked in high technology in the United States going back to China that this is going to happen.

Also, I disagree very strongly with the idea that innovation requires strong intellectual property law. Speaking as someone in the computer industry, some types of intellectual property law (particular software patents) have done far more harm than good in that they make it difficult for a start up to function, and they reward distributors rather than innovators. This is a complicated topic, but a lot of people are unaware and surprised at the degree to which software developers often hate some intellectual property laws because they make it much harder to develop software.

MBO's would likely reward people with good political connections. It's very unlikely that you can cause an established company with an established culture to suddenly "be innovative" so the name of the game is to encourage the formation of new companies.

The type of legal framework that does encourage innovation is mostly in the area of securities and contract law.

I have to disagree, respectfully, with rbrubaker (Hi, nice to meet ya!) on a couple of issues.
1.) China has NOT released their own DVD standard. China developed a (slightly) different encoding system so that Chinese Manufacturers could avoid paying the license fee on each DVD player. The standard is not compatible with the DVD standard.
2.) China's own 3G standard? Ditto.
3.)Soft Pebble Nuclear Reactor developed by China? WTF? That technology was developed in the 1950's in Germany.

A 15 MW reactor ran for over 20 years in Germany and was shut down when Germany decided to pursue non-Nuclear energy sources.

Actually, basic pebble bed reactors go back to the US in the 1920s, I think Fermilab designed the first one. The tendency towards water cooled was pushed by the Hyman Rickover crowd in the US navy.

IP has its good and bad points and investors demand fast turnaround so they can go shopping for a new trophy wife every six months.

In china, IP will always be sketchy, especially for consumer items. Do you think the police and enlisted PLA can afford 25 RMB "legal" DVDs? Who is going to make them pay?

As for those chinese DVD and 3G standards, they are basically patchwork standards skimmed from Japan, Europe and the US (CDMA + TDMA, c'mon). The DVD format is noted as being almost useless.

Mr. Wang --

I am familiar with cargo cults. In fact, I spent some time in Papua New Guinea on a case a few years ago and I have seen The Gods Must be Crazy Movies. So there.

You are certainly right to point out that strong IP laws are not the be all, end all for innovation and that contracts (non competes, trade secret agreements, etc.) are oftentimes the way to go.

But are you really saying China has arrived already in terms of innovation?

Mr. Li --

Is that really innovation though? I ask this knowing you know technology much better than I.

Admiral,

1) Doesn't changing a standard that is incompatible with the current technology require developing a new technology, and thus require some innovation? Like I said, not a giant leap, but it is at least a step, and if the 1.3 billion people of China are buying those DVD players, than small innovation will have huge consequences

2) 3G standard is still being developed, and from news stories the differences are big enough for the U.S. to ask China to assure they are not creating an entirely different platform.

3) For the Soft Pebble reactor, there was a lot on it a couple years back when western scientists did not believe China's ability to take their reactor operational. See Wired Sept 2004 article Let a Thousand Reactors Boom or Jamestown Foundation November 2005 newsletter article CCP CELEBRATES 50 YEARS OF NUCLEAR ACHIEVEMENTS

As stated in original post these examples are not giant leaps for mankind on their own, and while they may not be originating entirely new products the move from improving an existing product to creating new products is not a huge leap.

Some efforts will be failures, some will become second generation products, and others will be entirely new creations that come out of this process.

rbrubaker,
Thanks for your response.

Having read the Wired Article, I still stand by my original response that your statement that "China developed the soft pebbleb nucleur reactor" would be more correct if [their own] versus [the]. The implication is impossible to avoid. I am quite proud of the Work being done by the engineers on that project, and am believe their successful innovations will bear fruit in the near future.

EVD cannot compete with DVD much less Blu-Ray or other advanced standards. It was/is a pipe dream. Let me ask you a question. If I take the entire Nike Cross Trainer, remove the logo, and then weaken the stiches and lessen the trad is that innovation?

Lastly, I will concede that on 3G serious money is being spent on development. Not by Chinese companies though.
The "Chinese standard" was only approved do to IMMENSE political pressure from Beijing. The standard is inferior to 2g in many respects, especially if you're moving faster than 8 mph. Not innovation, at all.

rbrubaker --

Actually, I think you are exactly right. It is utterly absurd to expect China to be on par in innovation with a highly developed country like the United States or Japan. What we should expect of China is to be on par with a country like Korea of maybe 30 years ago. I actually agree with you that it is amazing where China is today in terms of innovation.

BUT, what drives me crazy are the people out there who act as though China is going to eat every country's lunch in everything. These people act as though every other country might as well just give up. For example, I was at a seminar (only because I needed the continuing education credits -- CLE -- as a bar requirement) at which one of the speakers pronounced that China is capable of making everything we in the United States are making and went on to talk about his rides in Chinese made SUVs of Land Rover quality. Then there are the politicians who talk about how we need more taxes for this or that because China is already graduating 600,000 engineers a day....

It is against that which I am fighting. I am not saying China is not an amazing story, because it is. I am not saying there are not a huge number of capable Chinese scientists and engineers, because there are. All I am doing is trying to put China in its proper perspective.

Why should China have its own Silicon Valley already? Countless US cities have tried to become Silicon Valley and most have failed miserably. It just is not that easy and it takes time. China will almost certainly get there eventually, but it is not there yet.

Mr. Li --

I agree China's innovation is amazing for a developing country. All I am saying is that China is a developing country and it is no US or Japan when it comes to innovation and it is going to take it some time to get there.

I like your examples of innovation, none of which should be discounted. Dell and Toyota are innovative companies and those motorcycle companies out of Chongqing are too. Innovation is definitely more than just technology.

Dan,

An innovative technology always has to fight the big established standard bearer.

Look up the story of Qualcomm. MEN (Motorola, Ericsson and Nokia), Lucent, and Nortel have all put out statement saying CDMA would never work or it would be inferior to the TDMA used in GSM. Motorola back in the analog cell phone age had put out statement stating TDMA digital could never work or it is inferior to analog. Bell Lab also had put out reports that packet network (Internet) could never work. Now, telecom are saying WiMax (wireless broadband back by Intel) won't work or it's inferior to 3G.

The licensing of standards at the telecom level aren't about innovation. It's all about lobbying and politics.

I am not implying EVD or TD-SCDMA (China 3G standard) of any technical merit now but innovations don't mature overnight and more often then not get killed by the establishments.

There are two factors which have made Silicon Valley a success: outstanding research universities (Stanford and UC Berkeley) and open immigration laws which make it possible for the best people in the world to work and study together.

Until China can become a magnet for students from all over the world to come, work and study, it will be unable to reproduce SV's success. Even though China has an immense talent pool domestically, it is not enough. The Chinese educational system is focused too much on passing exams, not original thinking. Passing exams are good for the first cut, but are not enough to make the second cut, which is why Chinese like to go to SV to study, then work.

Something magic happens when you get brilliant people from diverse backgrounds working together, both from a personal view and a business view. Until China allows immigration the way the US has, it will be hard to compete on the same qualitative level as the US.

Michael S. Malone has an interesting book "The Valley of Heart's Delight: A Silicon Valley Notebook, 1963-2001" which talks about the early days of the valley and the spirit of experimenting. One of my favorite was the use of LSD as the mind enhancer of creativity. The good old days... The valley of the early days is very different from its present days looks but the spirit live on as well as its icons like Steve Jobs.

AnnaLee Saxenian's "The New Argonauts: Regional Advantage in a Global Economy" presents the story of immigrants t the valley from Taiwan, China and India and how they are building bridge between their homeland with the valley.

It's impossible to distill the richness, history and success of Silicon Valley some bullet points.

CLB,

I think your bringup up Toyota is the best example of innovation. Not only in it's products, but in it's management techniques as well.
As some of old timers know, the US lost tread on the road of auotmotive innovation (and other industries) while Japan's companies leap-frogged us.

Here's an example of innovation:
Quality Control and Assurance (Japan) versus Warranty and Service (USA)

Mr. Li --

Thanks for checking in. Any client that falls for that trick deserves it. And let us remember this is Boston Consulting Group we are talking about so it is not as though they are selling $19 widgets to some guy on the street.

Chengdu and Xi'an? Someone is drinking way too much of their municipal Kool-Aid. For support work, CD and XA are great locations. But don't expect much (if any) innovation to come out of either city. Not realistic. Don't cite statistical outliers, either; in the grand scheme of things, CD and XA are second tier. Cheap, good, but not innovative.

To comment about something Joseph Wang said, I have to say that I'm not terribly impressed with the sea turtles I've met. Most couldn't cut it in the States. At best, almost all were in middle management, although more often than not, they were in supervisory management positions (at best). Lousy experience in the States; never high enough on a G2000 company food chain to learn much more than SOPs. SOPs are not, but strategic thinking is lacking.

This whole area is very tricky. What is "innovation"? What is "creativity"? What is the difference between "R" and "D"? If something is experimental, is it "R" or "D"? (No clear answer.) If it's practical, but from a core tech perspective, is it possibly innovative?

Our company is the outsourcing hub for Tsinghua University, China's MIT (as many readers know). We're struggling with a lot of these issues. The academia/commercialization gap in China is wider than the Grand Canyon, much worse than in the States. But there is a lot of good talent that can be groomed.

As a rule of thumb, if a sales guy can sell it, it's probably not innovative ... or has anything to do with R&D. It still might be complex, however. If a sales engineer has to lead the sales process, more innovation might be involved. Then it might depend on where it plays within core tech ... and where the core tech gets real traction: Is it in controlled circulation freebies or something like CACM?

My point is that it isn't always so clear as to the "innovativeness" of a product or service line. (Some might even argue than services are rarely innovative. Perhaps clever marketing, but not innovative. But this is for another discussion.)

When talking about innovation, we should also talk about the educational system and its eductional culture. What I saw in management education (Nanjing, Shanghai, where I taught) is a combination between Confucianist authority relations in the classroom - the teacher talks, the student listen or do as if they listen - and a very individualistic opportunistic attitude of students who need short-term success in order to succeed in their jobs. The over-valuation of diplomas and undervaluation of competences creates a type of student who is often not very creative.

Changing this culture will be a condition for innovation in Chinese industry. I think many government officials and politicians in China are aware of this, but change will take time.