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Innovation In China. It’s Just Incremental.

By Dan Harris on Posted in China Business, Recommended Reading

Very interesting Reuters article, entitled, “Special report: Can China’s billions spur the next big idea?” The thesis of the article is that China is doing well with incremental innovation but is still nowhere near competing with a country like the United States on “bold” innovations. In other words, China does just fine in slightly improving or reducing the cost of existing items, but it is not yet become creative in developing the new.  

The article posits the following as the cause:

China’s innovation shortcomings are not merely the product of a preference for central planning over entrepreneurship, of course. Barriers include poor enforcement of intellectual property rules, an educational system that stresses rote learning, and a relative lack of independent organizations that can evaluate scientific projects and help police instances of plagiarism.

 ”There’s a political constraint, too,” said Arthur Kroeber, managing director of GaveKal-Dragonomics in Beijing. “In the long run, innovation arises in societies that are really open, where you can discuss anything. And China doesn’t have that kind of political culture yet.”

What do you think?

  • Justin

    I think you just aren’t looking close enough or missing the forest for the trees.
    China is forging ahead with an ambitious energy plan, which if it works will be the biggest “big idea” we will see in this century (on par with steam engines or internal combustion engine)
    One is using The Liquid Fluoride Thorium Reactor and one new generation reactor design, pebble bed reactor, either of which has the potential to literally solve the world’s energy problem and is hundreds of times safer, produces less waste than the current nuclear energy scheme (read Fukushima)
    Google talk on Thorium
    http://www.youtube.com/watch?v=AHs2Ugxo7-8
    Telegraph article
    http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/8393984/Safe-nuclear-does-exist-and-China-is-leading-the-way-with-thorium.html
    and you can just google China and pebblebed reactors.

  • http://jboyar.tumblr.com Jackson

    As a one time student in one of China’s premier institutions, I can speak to the ubiquitous nature of China’s plagiarism issues, not to mention the system’s emphasis on “rote memorization”. That said, I think it is an oversight to blame a lack of innovation on political culture.
    Just two weeks ago I attended a Low-Carbon forum in Shenzhen (third annual), hosted by local government and attended by leaders in business and education. Perhaps I am too young and inexperienced to judge such an event, but I was highly impressed by the local government’s effort to promote such a productive exchange.

  • DaMn

    Justin – lawyers are not paid to be optimistic, and that certainly holds for anyone advising clients on China business while living in the United States. It’s not all roses in China, for sure, yet most who have moved back stateside saw the “reality” of how China works and have a skepticism that belies any possibility in hoping for China to be the leaders of the “free world.”

  • Justin

    @DaMn I understand but most people in China could care less if China becomes the leader of the free world, whatever that implies. I’m just saying 1) big ideas and innovation doesn’t always mean the iPad, there are somethings that are much bigger and more important 2) give it time, why does China have to be a world leader in new tech + new products right now?

  • http://www.pbl.com David

    I think that Justin hits it nicely. Innovation can take many forms. Ironically, innovation in China tends to be more globalized than in many countries in the West, as Western companies and innvovators have flocked to China, from Europe, US, Canada, S America, Australia, Israel, etc.
    I’m not sure whether the first wave of Chinese innovation will be purely Chinese–but what diffference does that make, especially for the following waves?
    To quote a Chinese scientist (and entrepreneur) in a recent email about his latest project: “the project is on the horizon but the progress is slow. I always say that things like that are similar to the elephant’s sex life. It happens at a high place. Nothing is shown months afterwards. But the delivery is very big when it happens!”
    In my experience, if anything, the political environment in China regarding innovation is not unlike what we find in the West. It’s never fast enough for the governments, but they have unrealistic and oftentimes “blindered” expectations, that often mismatch the actual utilities and applications of the innovations.
    Give it time, and a healthy womb, with plenty of nutrition. No more metaphors needed.

  • Drew

    Innovation will tend to flourish among those individuals who are actually physically creating products. Innovation will also tend to flourish with greater societal freedoms that encourage collaboration and risk-taking. Right now China has great potential according to that first factor, and its societal freedoms do seem to be strengthening as well. The American economy, however, is losing that physical engagement between innovators and the products that they could potentially innovate. I don’t see how America’s arguably greater societal freedoms (hopefully only a temporary advantage that China does seem to be increasingly able to compete with) can make up for that gaping deficiency.

  • http://www.tinyurl.com/china-stories John Melendez

    I think another reason for China’s incrementalism is cultural. While China has made leaps and bounds as a leading industrial and technology force in the world, there are some Mao-era constraints at hand here.
    During Mao’s regime — some would say even before this — the needs of the many (however construed by those in power) overrode those of any individual. And this had a profound effect upon individual thought also.
    As a real-world example, in some less-developed cities in China, I find that while taking a taxi that I often have to repeat an instruction (“turn right… turn left… stop here”) several times before a driver will actually consent to following the instruction. The mentality behind this being that its better to just go with status quo (keep driving straight ahead) than to make a significant change. Another example includes a seemingly clear verbal agreement in a business task that leads to no action at all, and the need (from my side) to follow up persistently until something finally gets done.
    While these may be a somewhat simplistic examples of this mentality, it at least brings attention to the point at hand: Things take time in China – incrementalism at its worst (best?). Many things are done on a “group consensus” basis, and that getting any group to agree as one voice is a difficult feat indeed.

  • Justin

    @ John Melendez, and drew
    While the taxis example maybe a little far fetched, I agree with you two. It was not so long ago, within the life time of many Chinese today, that people starved to death and that everyday people were at risk of being political pris-ners (much better today I think). This naturally forces people to risk adverse behaviour. My parents for example, both chose the “safe” road of academia, with “safe” job prospects, and save a huge portion of their income despite living in a country with universal health care and pretty good societal support.
    But I think this will gradually fade as people are prosperous (less afraid of economic ruin) and as Chinese society comes to terms with political plurality and protection of speech.

  • DaMn

    Justin – fascinating dichotomy you expose about China’s people, i.e. whether they give a damn about becoming leaders of the world. I see both. In many instances they take an advantage because they are not out for the glory or the status of world leaders, they have their own priorities for China and they take what they need. On the other hand every other editorial article is about how this is Asian’s Century (Read China) and its the fall of the West, etc. etc. I definitely see and hear from every level of society a desire to not only gain in a period of lifestyle improvement after feeling they have sacrificed for a long period, but feeling it is their time to shine and lead. I think they are sincere in wanting to have the limelight.
    I agree innovation can and should solve the bigger problems (bigger than how to get my Facebook feeds linked to my twitter account) and China has a good chance of accomplishing many of these solutions, or implementing the technology innovations that have already been discovered yet not taken to market.
    Along the lines of David I believe most innovation in China will come from cross-cultural exchanges and joint ventures. It is the big wall of cultural isolation Justin points out that will be difficult for them to overcome (born of fear and distrust of foreign entities) yet I feel it is necessary to gain truly impressive innovation, the likes that will eclipse a western only innovation, a win/win best of both worlds type effort. China will not need the west to sell or send their technology if the brains come over and start fresh which may be necessary.
    This is a most fascinating dichotomy. China wants and doesn’t want, they need and say they don’t need. The US borrows and doesn’t allow repayment by selling prized assets. How and when will we all find the path to collaborative prosperity?

  • DaMn

    Justin – fascinating dichotomy you expose about China’s people, i.e. whether they give a damn about becoming leaders of the world. I see both. In many instances they take an advantage because they are not out for the glory or the status of world leaders, they have their own priorities for China and they take what they need. On the other hand every other editorial article is about how this is Asian’s Century (Read China) and its the fall of the West, etc. etc. I definitely see and hear from every level of society a desire to not only gain in a period of lifestyle improvement after feeling they have sacrificed for a long period, but feeling it is their time to shine and lead. I think they are sincere in wanting to have the limelight.
    I agree innovation can and should solve the bigger problems (bigger than how to get my Facebook feeds linked to my twitter account) and China has a good chance of accomplishing many of these solutions, or implementing the technology innovations that have already been discovered yet not taken to market.
    Along the lines of David I believe most innovation in China will come from cross-cultural exchanges and joint ventures. It is the big wall of cultural isolation Justin points out that will be difficult for them to overcome (born of fear and distrust of foreign entities) yet I feel it is necessary to gain truly impressive innovation, the likes that will eclipse a western only innovation, a win/win best of both worlds type effort. China will not need the west to sell or send their technology if the brains come over and start fresh which may be necessary.
    This is a most fascinating dichotomy. China wants and doesn’t want, they need and say they don’t need. The US borrows and doesn’t allow repayment by selling prized assets. How and when will we all find the path to collaborative prosperity?

  • http://www.inpraiseofchina.com Godfree Roberts

    If it’s true that the past is merely prelude to the future, then “Science and Civilization in China” by Joseph Needham points to a very Chinese future.
    Needham’s research suggests that the Chinese invented more things than the rest of the world combined–under some of the most repressive, totalitarian regimes on earth.
    China’s most admired profession today, as always, is engineering whose root is “ingenuity”, or problem-solving. Chinese technological breakthroughs will be the next surge in China’s return to center stage.

  • Justin

    I had another comment but I guess that didn’t get published. Oh well.
    @ DaMn
    There are no guarantees, little people like us can speculate and hope for the best. Also note the articles written about “the Chinese century” or the “Asian century” meaning India too, are written by non-Chinese.
    @Godfree
    I think China had an ardent admirer in Joseph Needham. I’m not qualified to comment myself, having not read his books or greater knowledge in the areas he cover but it seems he gives a generous reading of Chinese inventions.

  • LH

    When the U.S. is firing on all four cylinders (and it’s been a while since that was true), it’s innovation happens because of a perfect storm of culture and heritage, education and research structure, and business climate. We’re tinkerers and inventors, have been since day 1. That’s what happens when you end up on a big piece of land without many belongings I guess. Our universities, and several very prominent private labs like Bell Labs, IBM Research, etc., have been well-funded to do basic research, which leads to the most radical innovations. And we’ve had a sometimes-hot-sometimes-cold venture capital and acquisition landscape that placed a lot of the riskiest innovation in small companies where if a failure came it was relatively isolated, and allowed those companies that came up with something good to pass it on to bigger companies by acquisition. I don’t say that China doesn’t have any of those things, and they aren’t all working the way they should in the U.S. either at present, but I do think it’s true that China has a long way to go to reproduce that whole set of factors and forces from top to bottom. The mentality of grabbing other peoples’ IP and making do with it is terribly corrosive to innovation in the long run, not so much because it’s immoral or illegal, but because it is a kind of addictive get-rich-quick scheme that can’t give real strength in the long run.

  • DaMn

    Justin “Also note the articles written about “the Chinese century” or the “Asian century” meaning India too, are written by non-Chinese.”
    I have to disagree whole heartedly with this statement. Without a doubt there are many Chinese editorials about the “fact” of a coming Asian age and reign. They do not describe it definitively leaving the shape of the attributes to be discovered, yet the overall meaning is clear, China ascendancy.
    It is my opinion that most, if not all, well regarded western writers who call attention to an Asian Century are using it as a call for vigilance while understanding the challenges and long road involved in China having the type of power in the world the USA now wields.
    Seems you are hoping for a China rise to power and believe in their humility.

  • http://bizpanda.org David

    I gotta agree with DaMn here, the Chinese-language press love blowing their own trumpet. I don’t hear Dan or most other commentators I respect bleating on about the Chinese Century, rather there’s a minority of sensationalist writers who do, which the Chinese love to hear and quite clearly believe whole-heartedly