China Is Innovating Faster Than You Imagine

20 April, 2018 / Articles
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When I talked to a group of Chinese executives recently about their trip to Silicon Valley last year, the consensus was disappointment: “Honestly, I don’t know what all the hoopla is about,” said one.

The world lauds Silicon Valley as a center of innovation, but many Chinese visitors, particularly from China’s growing technology sector – aren’t that impressed.

In turn, many Westerners still insist Chinese products are cheap, low quality copies.

While such perceptions may represent a portion of China’s market, the country has more than its share of world-class companies that are increasingly rising in rankings on size, growth – and most significantly, innovation.

Many Chinese executives in the burgeoning tech sector take umbrage at the idea they don’t innovate. They feel increasingly confident they can compete head to head, engineer by engineer, with the best in Silicon Valley, Israel or other innovation hubs.

For example:

Huawei, the world leader in networking equipment and now #3 smartphone maker, has unparalleled technical breadth and has refined its models both in China and the developing world to the point where it now dominates in some Western markets.

Xiaomi, which took the smartphone industry by storm several years ago to enter the top 10 smartphone makers worldwide, produces great designs at affordable prices. It took an innovative approach to marketing by selling online only, with new models emerging rapidly. Xiaomi’s operational efficiency is second to none.

Alibaba, the largest ecommerce company in the world (the company jokes it should not be compared to Amazon, as it is so much bigger), has revolutionized the way small businesses sell and has created one of the most sophisticated and lucrative retail online ecosystems in the world. No wonder their one-day sale on November 11 (China’s “Singles Day”) grosses more revenue than Black Friday and Cyber Monday combined.

TenCent, whose Wechat application may be the world’s most dominant, with 960 million users, has not only surpassed Facebook to become the world’s fifth-most valuable company, but has become a case study for mobile gaming and the fremium model to generate revenue.

DJI is the world’s top drone maker, while Haier and Midea, top white goods and electronics manufacturers, are producing high and low-end market winners. All are rapidly upping their game through robotics and internet applications. (Midea bought Kuka, a leading German robotics maker).

These firms and many others have succeeded by applying a mix of world-class management and adapting to China’s highly competitive domestic market. Cities like Shenzhen have become software hubs for sectors such as the IOT by providing access to rapid and cost-effective hardware manufacturing.

The West often complains that the Chinese government protects its industries through protectionist policies, providing easy access to capital and turning a blind eye to IP protection. There is some truth to this in certain sectors, but it ignores the fact that almost all the companies mentioned operate to world-class standards.

The science man and innovator, Fernando Fischmann, founder of Crystal Lagoons, recommends this article.

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