Innovation Lessons From China

Despite China’s long and established demand for high-technology products, many leading global companies have become increasingly wary about operating in the Chinese market. They see unfair competitive practices, discriminatory regulation and intellectual property theft as part and parcel of the Chinese experience. Authors Edward S. Steinfeld and Troels Beltoft acknowledge that some of these concerns are valid. However, they focus on a different side of China, one that requires foreign companies to remain actively engaged. Their research describes unique forms of China-based technology innovation, mastery of which is becoming increasingly indispensible for any company aiming to succeed in the global market.
The authors concede that China today may not yet be the place to go for path-breaking R&D or radical new invention. But it’s becoming the place to go if you want to learn how to make new ideas commercially viable.
The authors provide detailed examples involving wind turbine manufacturing and semiconductor design. They group China-based knowledge into four categories: capabilities for rapid tempo operations and speed to market, accommodation of unique customer preferences, world-leading capabilities for cost reduction and capabilities for new forms of networked production.
In China, the authors note, many people worry that their society’s focus on manufacturing has come at the expense of innovation. Conversely, many in the West believe that the migration of manufacturing to offshore locations has impeded their innovative capacity. But the authors say that both views miss the mark, noting that even the most groundbreaking ideas are devoid of commercial value unless they can be delivered as products in a manner, at a price point and within a period of time that suits the preferences of customers.