Innovation in China

Published on February 19, 2015 Reviewed on November 30, 2016   25 min

Other Talks in the Series: Doing Business in China I

0:00
My name is Xiaobai Shen, Senior Lecturer in the University of Edinburgh Business School, and also the convenor of the East Asian research network for ISSTI, The Institute for the Study of Science, Technology, and Innovation. I'm very pleased to be invited to give a talk about innovation
0:19
in China, which is my primary research area. Before the talk, I feel it's important to clarify, what do I mean by innovation? We know that we use the term innovation in many contexts. It has become a buzz word. Joseph Schumpeter is considered the first economist who put innovation on the center stage in understanding the economic system. According to him, innovation which involves technological change and entrepreneurship is the key driver of economic growth. However all usage of the notion of innovation now has extended considerably over time. Initially, innovation was conceived in terms of a technological change, technological innovation, including both innovation and product design, but also in production processes. And the notion has been extended to include innovation in business models and services. Today, the notion is no longer limited to characterize technical changes, but also includes organization changes, changes of a wider social, cultural, and institutional elements. Recently, attention is paid not only to innovative firms, but also to broader national and regional innovation systems. For example, sectoral systems of innovation, knowledge institutions, and innovative governance. The way I use the term innovation here is not in a narrow sense of the changes in the technological paradigm, as highlighted, for example, by evolutionary economics. I'd adopt instead a more inclusive view of innovation along the lines prevailing in the UK business schools.
2:22
And also, my area of studies as a business and social study of technology. I would like to start my talk via a question which has been raised by many commentators. Today, many accept that China is now an innovative economic power. But in general, most people believe that China is lagging behind advanced economies as far as innovation is concerned. I remember two years ago, a BBC program, a BBC Radio 4 program, Stephanomics, which invited panelists to comment on what the future holds for the two global economic giants, America and China. I listened with great interest to one of the guest speakers. Economists said the fundamental structures of the Chinese society were bolted on the Communist party and hierarchical culture. Which, unlike those in the West, was not conducive to innovation. This view is widely shared, and the key point of the argument is that innovation works well only in the free market economy. So that's one point. And the second, the consensus that China is only good at imitation. After the Chinese government issued its 2006 to 2020 medium to long term science and technology plan, which promotes indigenous innovation, the US Chamber of Commerce
4:06
fiercely condemned that government plan as a blueprint for technology theft. The most recent article published in Harvard Business Review again echoed the similar view belief that China can't innovate. So the topic of this talk, is China innovative, is a really interesting question to debate. It is a start point for this talk to understand innovation, and the key to uncover China's rapid economic growth.
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So my focus is on debunking the myth from two angles, bottom up and top down. As far as innovation is concerned, one way to address this is through a range of statistics. Here are some figures for lots of indicators. These figures all show very rapid development over recent years. However, on their own they do not really tell you very much. Lets us examine patterns, for example. You can see that today, China has already become a major player in world intellectual property development. However, the enormous numbers of patents being issued in China