Can you name any innovative Chinese companies?
As the final part of my four-part blog series from China (on EETimes.com), I wanted to explore one of the big questions that China faces today, and that is can it innovate?
The reason I feel so strongly about this is that if you followed my first three blog posts, I tried to make the case that the "existential lack of trust" in China fosters an environment where innovation cannot thrive. China has no independent legal system to protect intellectual property so this leaves all forms of technology vulnerable to copying. Several people I have met recently who work in China have explained that there are a few historical precedents that we need to consider before being too critical of this issue; first much of Chinese cultural history is based on highly accurate copying of calligraphy, painting and hand-crafted pottery and furniture. The ability to copy and slightly modify classical art forms is highly treasured and goes back millennia. That's the long view. The short view is that the economic revolution in China over the last 30 years has moved much faster than legal or ethical standards. Most Chinese people you meet who are over 40 have stories of incredible deprivation and hardship that most of us in the West find horrific. Many families had no control over their livelihood, education and even freedom, so when these constraints were removed, they made their own rules and why not?
Given the absolutely incredible growth of China as a low-cost producer of the world's mass-market goods, can China now become an innovative economy? On my trip I asked several people who work in China if they could name some innovative local companies. It's interesting how hard they had to think about the question. For those of you in the electronics industry you might point at Huawei, Lenovo and ZTE but I argue that these companies have grown by acquiring western companies (and their IP) to compete in tech markets. One friend in China who I worked with in the U.S. before he returned to China actually teaches innovation to Chinese companies so I took his opinion seriously. Ironically he teaches innovative thinking to Western companies in China because local firms are reluctant to educate their workers for fear of them leaving to work for a competitor. This constant turnover in the workforce is far more acute in China than it is here in the U.S. and I have heard numbers of 25% a year in the electronics industry and may be much higher in companies like Foxconn. When I pushed him to name local companies who he sees as innovative he could only give me two; SINA the Chinese internet leader who has created very interesting online platforms particularly around micro-blogging (Wei Bo), which is very popular. SINA could be seen as a combination of Facebook and Twitter, which are both banned in China so they have essentially recreated western platforms through protectionism (Google is having a hard time there for similar reasons). The other company he cited is a hot-pot restaurant chain that differentiates itself with excellent customer service and attention to detail. The name of the chain is hard to translate but I went to one in Shanghai with a couple of colleagues and was impressed with the experience but it's hardly innovation by western standards.
One of the reasons I write this blog is to stimulate debate in our industry and I'm sure this blog will get things moving but I do want to make clear that I am not trying to incite a culture war or make this a platform for China bashing. If history is any guide I think that there will be some Chinese companies who emerge in the global electronics design industry and I look forward to working with them but what their path to success will be is not yet apparent. Please feel free to comment and when I come across innovative companies, I will blog about them here.
David Blaza is vice president of UBM Electronics, which publishes EE Times.