Commentary: Copycat no more? China’s emergence as a global innovator

Commentary: Copycat no more? China’s emergence as a global innovator

The growth of research and development in the country is a much needed strategy to cushion the country from the effects of a trade war, says one observer.

China has struggled to steer its giant economy through a slowdown
A Chinese flag flutters in the wind. (Photo: AFP/Greg Baker)

BEIJING: As trade negotiations between China and Washington heat up, Beijing feels an urgency to transform the nation’s economy into a more services-oriented and consumer-driven market, while shifting away from manufacturing and exporting cheap products that had created huge trade surpluses with the US and other countries.

Accordingly, the “Made in China 2025” initiative is taking greater priority to encourage more innovations and entrepreneurship nation-wide, but developing breakthroughs in the fields of science and technology will not always go according to plan.

Nonetheless, one should consider failure as an important lesson to be learnt rather than something to be avoided. The Chinese government should overcome a fear of failure syndrome, even though Beijing relies on taxpayers’ money to grant subsidies and assistance to local science and high-tech start-ups.

Failures will lead to investments losing value but deeper support for research and development (R&D) centres will be crucial for China to take centre stage as a global innovator.

READ: The trouble with 'Made in China', a commentary​​​​​​​


California’s Silicon Valley is home to the world’s leading technology giants - Apple, Google and Facebook - while Shenzhen is emerging as the Chinese Silicon Valley and deservedly so.

Huawei, a telecommunications equipment and smartphone maker, has enjoyed remarkable success and stands poised to rival Apple and Samsung as a global leader in mobile devices. 

Huawei overtook Apple to become the world's number two smartphone maker in April-June, despite
Huawei overtook Apple to become the world's number two smartphone maker in April-June, despite being denied access the key US market. (Photo: AFP/Wang Zhao)

Huawei is based in Shenzhen and pours back a significant portion of its profits into R&D to create new devices and equipment upgrades that would instil long-term growth for the company.

Additionally, Tencent, which runs WeChat among many other apps, and Baidu, the Chinese search engine giant, are major players that have made huge advancements in the fields of Big Data, AI (artificial intelligence), robotics, SMART technologies, IoT (Internet of Things) and virtual reality, and have both opened up massive R&D centres in Shenzhen, located strategically near Hong Kong.

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Groundbreaking “Made in China” innovations have been introduced into the marketplace, but with successful ventures come copycats.

Beijing has failed to curb overt competition; therefore when there’s a new invention or a company generating big-time revenues, other Chinese firms rush in to compete, offering to sell counterfeit devices at reduced prices.

Although Beijing has made tremendous strides in protecting intellectual property rights and patents, China has a long way to go before innovative Chinese firms can keep illegal copycats at bay. 

This would explain why a Chinese company enjoying success are very reluctant to boast of their achievements in public.

To receive praise in China often leads to disaster. Last year, ofo, the darling of bike sharing, won much publicity from the Chinese and international media for its role in transforming the country’s urban mobility landscape.

ofo’s business model had allow Chinese pedestrians to rent bicycles by scanning a QR code with their smartphones.

Bike-sharing was touted as eco-friendly and good for health, since users could ride a bike instead of driving a car and pedestrians could exercise by pedaling to-and-from work or elsewhere.

READ: Going green in China - ride a bike, share a car, plant a tree, a commentary

But the consequences of ofo’s success turned into a nightmare after Mobike and Bluegogo were inspired to enter the market, which led to swarms of bikes crowding Chinese streets, reaching a peak last year when 2.35 million bikes cluttered Beijing’s streets alone.

The massive expansion of these companies and their intense competition led to shocking pile-ups of unused bikes dumped on sidewalks, parking lots and roads, and pictures of the urban mess that plagued various Chinese cities flooded the media.

FILE PHOTO: Bicycles of bike-sharing company Ofo are seen on a vacant lot in Zhengzhou
FILE PHOTO: Bicycles of bike-sharing company Ofo are seen on a vacant lot in Zhengzhou, Henan province, China May 20, 2018. Picture taken May 20, 2018. (Photo: REUTERS/Stringer)


China’s bike-sharing fiasco provides important lessons on why making haste does not necessarily deliver outstanding business results. 

Investment companies were so zealous to get involved and win market share in the business they forgot to consider the risks before pouring huge capital into bike-sharing start-ups.

READ: oBike’s closure, a cautionary tale about poorly conceived business ideas, a commentary

Nevertheless, Chinese companies acting more aggressive about chasing after innovations actually signals a brighter future ahead for the country. The Chinese are becoming bigger risk-takers and that’s wonderful news for the national economy.

President Trump plans to increase tariffs on more Chinese exports to the US, starting on Sep 24, which means Beijing has to change course and march forward on raising domestic consumption and boosting innovation to cushion the Chinese economy from the effects of these tariffs.

The Chinese must drive away a fear of failure in the science and high-tech industries.

It’s the only way to overcome these challenges arising from the brewing trade war that will likely get much worse for the country in the near future.

Tom McGregor is a commentator on Asia-Pacific affairs based in Beijing.

Source: CNA/nr(sl)