turing scene. However, if it is to keep
growing as it has in the past, China must
become more innovative, it must work
smarter, not harder. The question to ask is,
“Can China become a true innovator and
distance itself from the role of imitator”?
Obviously, China’s current leadership
feels it can and that an important measure would be the number of patents filed
as described earlier in this article. But is
this really a true measure of innovation?
In the past, China’s innovation gave the
world silk, printing, paper, gunpowder, the
compass, etc. These were fresh, novel
ideas that the Chinese developed and exploited value from with the rest of the
world. Literally, the world was beating a
path into China to access its wonders.
Unfortunately, China’s leaders appear
to have chosen to follow a model that is
being pursued by current U.S. leaders of
having the state pick and choose winners
and losers. So far the Chinese results from
this policy have fared no better than the
U.S. in this pursuit. There are very few
winners but a lot of losers.
Governments mandating the rate of
inventive activity will only get you so far.
Telling scientists to innovate without
providing a culture and an atmosphere
for such a happening has proven over
time to be ineffective. In order to make it
big on the global stage, China’s indigenous firms need to be able to capture the
economic value associated with their innovative activity. This means changing
the way that they have conducted traditional business activities. They must
make an investment into organizational
design on a global scale including the establishment of brand visibility, constructing worldwide supply chains and
building channels of distribution, and all
of the rest of the complex set of activities
that go into making a successful multinational corporation. If they are unwilling or unable to do this then they will
relegate themselves to their own domestic market with few sales overseas.
There is no doubt that China has the
manpower and the brainpower to become a serious innovator on the world
stage. There are more than 100 million
registered private enterprises in China all
trying to become something bigger and
54 | Coatings World
China
“It appears that often
it is far too difficult for
new Chinese ideas to
move from the labora-
tory to the market-
place.
Since
the
middle class consumer
is a fairly recent hap-
pening inside China
very few Chinese firms
really understand the
need to get close to
their
ultimate
cus-
tomer and learn what
the market really wants
and needs.”
better than they are today. Surely, within
all this infrastructure and mass of humanity there exists at least one Steve
Jobs. Unfortunately there are numerous
reasons why the Steve Jobs of China may
never be found.
Following years of complaints from
foreign and domestic companies China is
still beset by continuing intellectual property (IP) theft. On paper there are good
IP laws in China but enforcement is another story altogether. In some instances
various parts of the government have
even been seen as being complicit in the
taking of technology from one company
and placing it in another company that is
felt to have a better chance of developing
that technology. Even the banks, with
guidance from government leaders, tend
to place extremely attractive, low cost
loans with certain companies that they
feel will be the ultimate winners thus
starving true entrepreneurial development in smaller, less likely to succeed
firms. Based on current and past practices, Steve Jobs would have never succeeded had he been born in China.
This practice by the Chinese leaders
has led to many foreign companies deciding not to venture into China and thus not
to expose or share their most valuable IP.
China’s leaders know this, and are now
pouring billions of dollars into research
and development. The current five-year
plan calls for “indigenous innovation”,
which the government thinks it can foster
by subsidizing strategic industries and
strong-arming foreign firms to transfer intellectual property to selected national
champions, or state chosen winners. The
tried and proven system of state capitalism worked well when the objective was
to simply copy and adapt other people’s
ideas in the cheapest way possible. But can
new ideas truly be created by decree?
Around the globe governments have
tended to run into two problems: the state
is not a good innovator, and it always gets
in the way of others who are. We are seeing this happen in the U.S. today proving
that China leaders are not alone in the belief that they know best.
Although the Chinese government invests a fortune in research and development, analysis of this expenditure
indicates that much of this investment is
wasted. Based on published data it appears that most of it goes into the development arena with the result that not
enough finds its way into research. It appears that often it is far too difficult for
new Chinese ideas to move from the laboratory to the marketplace. Since the middle class consumer is a fairly recent
happening inside China very few Chinese
firms really understand the need to get
close to their ultimate customer and learn
what the market really wants and needs.
In this area, the Chinese could learn a lot
from their Japanese neighbors.
China leaders also have the opinion
that to become the great innovator you
must have a huge bevy of PhDs available.
Unfortunately this position can often stifle
innovation unless it’s tied to other interlocking factors. True, you need highly
