China and Innovation
30 Oct 06
Soon to be designed in … Shanghai ?
The location of
a company’s designers, in Europe or North America, represents a point of
pride for many innovation-based firms. Even though bicycles,
televisions, and iPods may be manufactured in China or Taiwan, many of
these goods bear labels that remind us of the origins of their design.
These upstream
activities in product development are also moving to China, however.
Apple doesn’t have plans to move its design studios from California to
China, but many other global companies are establishing design shops
there. A 2005 BusinessWeek article mentions new Chinese design
studios established by Sony, Samsung, Motorola, General Motors,
Volkswagen, and Nokia, among others. In fact, designers from the US
and Europe are moving to Shanghai to participate in the design activity
there.
"The Chinese are going to become sources of innovation … They will find
themselves enmeshed in global R.& D. more and more.'‘
Denis Fred Simon, a specialist in Chinese science and technology, SUNY,
2004
Recent surveys
indicate that Chinese business leaders value innovation more highly than
do their North American counterparts. In 2005, the Human Resources
consulting firm DDI undertook a global survey of most respected
leadership qualities. They found that only four percent of North
American business leaders ranked innovation and creativity as the most
respected leadership trait in their organization. For the Chinese, the
figure was four times that high, at 16 percent.
China has
significantly increased its R&D capabilities, with applied research
expenditures growing from about $5 billion in 1996 to about $20 billion
in 2003.
Increased investment in China’s research
According to
Yale President Richard C. Levin, China’s top universities, like Tsinghua
and Beijing, will soon be among the world’s top institutions of higher
learning. Levin now goes to China twice a year, and Yale has a number
of joint research programs with major Chinese universities.
Babson Executive
Education just last week completed a program at Tsinghua University in
Beijing – providing custom education on innovation and entrepreneurship.
While experts expect China to become a major force in innovation and new
product design, most people in our recent POINTT survey don’t see
Chinese firms this way. When asked whether they agreed or disagreed
with the statement: “Within 20 years, Chinese firms will lead the world
in innovation,” only about 30 percent of our respondents agreed.
China and Innovation, as seen from North America
This finding
caught me by surprise. Based on all the recent reported activity in
China, I’d expected that most businessmen would predict China’s
ascendancy in this area. This turned out not to be the case.
As Chinese
investment in innovation continues to increase, the perceptions of China
as primarily a low-cost manufacturing source will change. As it is,
Chinese innovation capabilities appear to be both extensive and growing,
and underestimated by many North American managers.
More information:
-
Business
Week story on design in Asia comes from their 21 Nov 05 issue. It’s
available to subscribers
here.
-
Last week’s
update on the Babson Pointt Survey provides additional information
on our approach. That’s available
here.
-
The chart on
R&D spending in China comes from a New York Times article on
innovation in China, published 13 Sep 2004. For some reason, I can’t
link to it. Drop me a note if you want a copy.
