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China is innovating faster than you imagine [Copy link] 中文

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Post time 2018-4-18 08:55:33 |Display all floors
(Forbes) When I talked to a group of Chinese executives recently about their trip to Silicon Valley last year, the consensus was disappointment: “Honestly, I don’t know what all the hoopla is about,” said one.

The world lauds Silicon Valley as a center of innovation, but many Chinese visitors, particularly from China’s growing technology sector – aren’t that impressed.

In turn, many Westerners still insist Chinese products are cheap, low quality copies.

While such perceptions may represent a portion of China’s market, the country has more than its share of world-class companies that are increasingly rising in rankings on size, growth – and most significantly, innovation.

Many Chinese executives in the burgeoning tech sector take umbrage at the idea they don’t innovate. They feel increasingly confident they can compete head to head, engineer by engineer, with the best in Silicon Valley, Israel or other innovation hubs.

For example:

Huawei, the world leader in networking equipment and now #3 smartphone maker, has unparalleled technical breadth and has refined its models both in China and the developing world to the point where it now dominates in some Western markets.

Xiaomi, which took the smartphone industry by storm several years ago to enter the top 10 smartphone makers worldwide, produces great designs at affordable prices. It took an innovative approach to marketing by selling online only, with new models emerging rapidly. Xiaomi’s operational efficiency is second to none.

Alibaba, the largest ecommerce company in the world (the company jokes it should not be compared to Amazon, as it is so much bigger), has revolutionized the way small businesses sell and has created one of the most sophisticated and lucrative retail online ecosystems in the world. No wonder their one-day sale on November 11 (China’s “Singles Day”) grosses more revenue than Black Friday and Cyber Monday combined.

TenCent, whose Wechat application may be the world’s most dominant, with 960 million users, has not only surpassed Facebook to become the world’s fifth-most valuable company, but has become a case study for mobile gaming and the fremium model to generate revenue.
DJI is the world’s top drone maker, while Haier and Midea, top white goods and electronics manufacturers, are producing high and low-end market winners. All are rapidly upping their game through robotics and internet applications. (Midea bought Kuka, a leading German robotics maker).

These firms and many others have succeeded by applying a mix of world-class management and adapting to China’s highly competitive domestic market. Cities like Shenzhen have become software hubs for sectors such as the IOT by providing access to rapid and cost-effective hardware manufacturing.

The West often complains that the Chinese government protects its industries through protectionist policies, providing easy access to capital and turning a blind eye to IP protection. There is some truth to this in certain sectors, but it ignores the fact that almost all the companies mentioned operate to world-class standards.

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Post time 2018-4-18 08:58:26 |Display all floors

In sectors like ecommerce and the internet, China has succeeded in creating an ecosystem so big and attractive that it drives innovation. Many innovative Chinese don't need to look for international markets because there is so much room to grow in China.


Take Didi, the ride-share app (which has now gone global). Many accuse of it of copying Uber’s model, but the simple truth is that it outplayed Uber in China, from marketing to speed to market. The company has constantly introduced innovations, like a service to send a driver for your car when you have had too much to drink, and an SOS feature to improve safety.


Such is the ride-sharing leader’s omnipresence that it is calling car ownership into question. China is increasingly seen by many Western carmakers as the laboratory for the future of transport, including bike sharing, a sector led by Ofo and Mobike. With access to capital and demand, both have become huge, fast.


China’s growing domination of AI, machine learning and algorithms is reflected by the success of companies like LingoChamp (Liulishuo), an English language learning application that evaluates your spoken English. With some 50 Million plus users in China alone, it has filled a need, enabling eager Chinese to learn English without access to native language teachers. LingoChamp also reflects how many of China’s entrepreneurs pass on Silicon Valley (several of its founders spent time in the USA), and now see more opportunity in China.


Meeting a more basic need is Three Squirrels, one of the country’s fastest growing snack food companies, typical of the ever-growing swathe of packaged goods and consumer companies able to come up with new products on accelerated cycles, unheard of in the West. All this and a delivery and logistics sector able to provide virtually anything on demand means that China has the conditions for continued innovation.


In fact, as one Chinese entrepreneur recently told me, Darwinian competition means Chinese businesses have no choice but to innovate. Those bike share companies? Within months, dozens of startups had entered the market. And eager Chinese consumers seem particularly skilled at finding loopholes in company policies, forcing companies to improve service at light speed.


The same entrepreneur said there are so many opportunities in China that entrepreneurs don’t need to conduct deep R&D innovation, which takes longer and is costly.


Which is where the government comes in. China has made impressive investments in key sectors. Clean energy, electric cars, clean energy, batteries, aviation, robotics, genomics, space, security – these and others have been targeted as part of China’s ambitious Made in China 2025 policy, which explains China’s priorities and where Chinese firms are likely to make big acquisitions or focus.


When China sets its sights on a goal, as it did with the 2008 Olympics, serious effort and planning move into place. Top-tier strategy consultancies have never been busier and have moved into providing leadership development, design and prototyping, analysis and execution, so that Chinese firms can keep innovating – and Western companies in China have a chance of keeping up with them.


By following the examples of Chinese firms, the West can learn much about scaling up and operating in fast moving markets, applying Chinese companies’ experience to our home markets. A Chinese approach might also better help us succeed in emerging economies like Africa. China may even take the lead in management and leadership, long considered the ‘expertise’ of the West.


China now has the money, an educated and ambitious workforce, a can-do spirit, impressive companies, and a dogged spirit to achieve that will carry it far.


Next time someone tells you China doesn’t innovate, suggest that they to take a closer look.


On my most recent trip to China, I sat next to a retired French executive who was making his first visit. A global, multi-lingual VP, he had spent his career between France, Spain, the UK and the United States, home to the leading companies of his day.

He was intrigued that I was taking a large group of 20-year old students from around the world on their first trip to China: they were heading, I told him, to the home of the leading companies of today.

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Post time 2018-4-18 10:03:31 |Display all floors
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Post time 2018-4-18 14:32:56 |Display all floors
This post was edited by pnp at 2018-4-19 12:48

China's semi-closed economy has denied its citizens and consumers access to many innovative foreign products and services.  Take banking for example,  it is dominated by the big four Chinese banks which are so complacent, they have boring products and poor services!  Looking forward to the day Chna's economy is fully open, with many foreign banks and insurance companies all competing and offering innovative products and services!

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Post time 2018-4-18 15:18:11 |Display all floors
many Westerners still insist Chinese products are cheap, low quality copies.


Mostly it is exactly these cheap (an subsequently low quality) products that westerners want to buy from China. If China had a range of expensive high quality products to offer (as I'm sure it does), why would western customers buy those?

They can get the same expensive offerings from their own brands (even if manufactured somewhere else).

Secondly as Chinese products move up in value chain, the issue remains about trust - not so much about trusting the quality, but for example trust issues related to security, privacy and politics.

Western companies themselves struggle with those issues (for example case Facebook), so why would they trust companies from country like China (which is notoriously against individual freedoms and privacy) to do even half as good?

The problem is obvious in new technologies and services like social media, but extends to traditional services like education. For example there are reasons why some countries are kicking Confucius institutes out.

China's biggest source for innovation remains it's own big population. Without that domestic market China wouldn't have any innovation. But even that does not help with innovation toward western markets - they still only want cheap copies from China.

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