Can China produce game-changing innovations again? We posed that question to tech buff Tom Standage, Digital Editor of The Economist. According to Standage, “China’s ability to innovate is massively underrated, particularly in America.” He feels that in many ways the developing world will come up with new monumental inventions and the world will move to a model of innovation that comes from cross-border collaborations, rather than from a particular country.
Excerpts from a two-part interview (you can see Part 1 in which Standage talks about the top technology trends like 3D printing, driverless cars and low-cost genomics here ):
Q. When we look at the developed world, that’s operating in a very different scheme of things, and then you have emerging economies that operate in a set of constraints. The reality in China, India or Africa is very different than what it is in Europe and the US, which may give rise of interesting innovations. For example, mobile payments, one of the things you often highlight, in your fuller list of technology trends to watch out for. That has seen greater–and early–adoption in developing world countries such as several East African nations. What do you think will be the role of emerging and developing countries in giving rise to disruptive innovation?
A. Essentially necessity is the mother of all invention. So we see amazing innovation coming out of China, India and Africa in mobile, for example, simply because in order to reach much poorer people you have to innovate and find new models. In fact what’s happening now is that European operators are borrowing aspects of the business models from India or from Africa, which I think is fascinating.
The other thing you talk about is operating within constraints, but in many ways developed economies are constrained by the systems they already have. This is the reason we don’t have mobile payments in Europe and that is that it is easier to pay for your taxi with your mobile in Nairobi than it is in New York. We essentially have incumbent payment systems, banks that work well enough that there’s really no incentive to change them. And of course the banks want to keep things the way they are.
So actually starting with a clean sheet, and the best example is the way that the developing world is leaping from no telephony to mobile telephony and not bothering with fixed telephony in the middle. Similarly mobile payments are another good example–people are going from no payment technology to mobile payments and not bothering with the intermediate bank account stage. I think this is great. For instance, Kenya leads the world in mobile money. India has these amazingly innovative mobile operator models, and so does Africa. Variable pricing in Africa that came out of Tanzania and South Africa. And then the Indians go to Africa to compete with the African operators. That’s going to be fascinating to watch as well.
Out of China you have companies like Huawei, who come up with actually very innovative technologies for things like remote radio head or software-defined base stations. They have to because of the special characteristics of the Chinese market such as the need to upgrade base stations and the lack of space. They come up with these great innovations that can then be applied in other countries. In many ways the center of gravity of innovation is moving, or has moved towards, the developing world.
Q. Where do you think China really figures in this scheme of things?
A. China’s ability to innovate is massively underrated, particularly in America. I consider it to be a form of complacency that American executives assume that all Chinese technology is just stolen from the West. We’ve seen this film before–the Japanese were just copyists and then they completely took over the consumer electronics industry. Now South Korea is doing the same in cars and consumer electronics, and China is next.
There is an amazing amount of innovation going on here. Just in the areas I have been looking at, clearly in 3D printing there is quite a lot of interesting stuff happening in China. The biggest 3D printer in the world is in China, and what are they using it for? To build aircraft parts for the Chinese homegrown airliner that’s going to take on Boeing and Airbus. And Boeing and Airbus laugh at this going, ‘Don’t you know it takes decades to develop and we don’t have to worry about that’. This is what people said about Japanese watches and Japanese radios and look what happened–Sony took over that industry. This is all very much worth keeping.
Q. But if you look at Chinese innovation today, that is kind of different from Chinese innovation of the past centuries–what are famously known as the ‘Big Four’ technology inventions that came out of China. So where did China go wrong? It has gone from those big breakthrough innovations to incremental innovations, which are big in their own way but not the same.
Q. Talking about the Great Firewall. Do you think, in a sense, it has worked very well for Chinese tech companies? If Baidu would have had to continue to compete with Google, maybe it wouldn’t have grown so big, or Tencent wouldn’t be the giant it is today if it was just a free industry where anyone could come in.
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[This article has been reproduced with permission from CKGSB Knowledge, the online research journal of the Cheung Kong Graduate School of Business (CKGSB), China's leading independent business school. For more articles on China business strategy, please visit CKGSB Knowledge.]
Innovations and improvisations are basic tools of human survival. As a civilization we will perish if we don\'t innovate. Now we have several tools and road maps that tells which way we must choose. What we should develop. But still we don\'t have a Smartphone which can work as hearing aid, or metal detector.on Mar 6, 2014
Excellent interview. Yes. China is advancing on many fronts and I visited China 5 times in the last 12 years. I could see innovations in every product they make. Multiple use is the secret of success of household appliances,mobiles,solar domestic products etc.from China. China's success in Wind and Solar is spectacular, so is power production in general. Dr.A.Jagadeesh Nellore(AP),Indiaon Jan 13, 2014