China: leader or follower?
05 June 2007
China should not be mistaken as purely a manufacturer - it has a proud history of innovation as Gordon Wong reports
Historically, China’s industrial growth has followed a number of marked trends, shaped as always by its Government’s vision on how the country should be developing on a domestic and now global level. Superficially, anyone can see how China’s industrial reputation has been enhanced as it moved from relatively simple technology, through increasingly advanced technologies, and now onto cutting-edge innovations.
As China’s entrepreneurs have been given the permission and the tools to advance themselves commercially, so the landscape of China’s technological development has changed at a pace not seen anywhere else in the world. Arguably, in certain industry sectors, China can be seen, once more, as a global innovator rather than a replicator or follower of existing technologies. I say ‘once more’ because of the country’s know-how historically; fireworks, printing, and paper were all born from the resourceful minds of Chinese pioneers; and some even argue that it was the Chinese who first discovered America (in 1421), but I digress!
Admirably, such current and future advancements are not taking place on any random basis, but rather as part of a structured medium to long-term plan, as laid out by the country’s 5-year and 10-year plans. In the most recent of these, the 11th Five-year programme on National Economy and Social Development, ‘independent innovation’ is singled out a key driver for the country. Alongside this, it can be seen that R&D has not been prominent enough historically, and recent figures showed that China spent around half as much as the US on R&D, when calculated as a percentage of GDP. That said, according to China’s Ministry of Science & Technology, the levels of R&D spending are on the rise in China (RMB184.3 billion in 2004, compared to RMB128.8 in 2002).
This growth in R&D is also strongly influenced by the strategies of the multinational companies that are active in China. As these international companies increase their R&D investment in China, the levels of innovation locally are inevitably rising. For example, by the end of June 2004, there were more than 600 R&D centres in China.
Technology transfer has been a major influencer in how China’s companies have made huge leaps in their knowledge over the years. As foreign companies began to invest, many through joint-venture partnerships, local China partners were able to improve their technology knowledge step-by-step. The outcome of this has been an industrial backdrop made up of the manufacturing capabilities that have been the backbone of China’s industrial strength, but now allied to increasing nous and knowledge in product and technology design and innovation. In the electronics sector for example, this is illustrated by the shift from pure manufacturing and assembly, through to back-end assembly, and now driving into electronic product design.
As for the future? Well, watch this space.
Next time, we’ll take a look at some of the geographical trends in China’s industrial growth.
Author: Dr Gordon Wong, Media Director, Techworks Asia Ltd
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