china\'s many types of innovation
On September 10, Chinese Premier Li Keqiang said at the Tianjin World Economic Forum that China will strengthen scientific and technological innovation and improve the technological maturity, quality and brand awareness of China\'s industry.
This comment reflects the government\'s continued emphasis on technological innovation, including R & D spending, which currently accounts for about 42% of U. S. levels.
However, our research on Chinese Enterprise Innovation shows that there are at least eight types of innovation, and the success of China so far is more based on non-innovation.
Types of innovative technologies.
Cost Innovation: when a change in product design, production or delivery process, technology or materials leads to a reduction in production or delivery costs, China\'s first advantageous ecological innovation is emerging.
In China, it is well known that low-cost unskilled or semi-skilled is widely used
The products created by skilled labor are cheaper than those produced in developed countries.
Chinese companies often use low
Cost Labor for high cost capital and machinery.
Chint, the manufacturer of electrical equipment such as transformers and power supply equipment, is flexible in replacing automation with manual to reduce costs and better align the automatic production line with the manual production line.
But this cost advantage is rapidly disappearing.
Process Innovation: When a company creates a new process for producing or delivering existing products or services, a major focus of process innovation in China arises.
Many technological innovations in China are designed to reduce production costs.
For example, while maintaining the same performance, Guangzhou crane company took the lead in reducing costs by using segmented single welding instead of double welding.
Application Innovation: when existing products (or services)
Or combine technology together to produce new products in a new way.
Ordinary but ubiquitous sandwiches and credit cards are typical examples.
With its strong pragmatism and customer-centered, Chinese companies are eager to embrace application innovation.
Anta chemical reformulated and packaged the benzene.
Easy-to-use basic sealing materials in the construction industry;
Extensive use of waste heat or natural gas directly generates cold air for large enterprises
Scale of construction (e. g.
Skyscrapers or airport terminals).
Supply Chain Innovation: China needs it very much, and China has become crucial in the global supply chain of foreign companies, but there is still much room for improvement in China\'s internal supply chain;
Infrastructure is needed to catch up with China\'s rapid growth.
But there are more and more examples of Chinese enterprise supply chain innovation.
Vanke, for example, is the first real estate company in China to widely use prefabricated building materials for construction.
Product Innovation: China\'s product innovation is relatively small and new to the world.
However, based on the rich experience in incremental innovation, Chinese enterprises are shifting from incremental innovation to breakthrough innovation.
Huawei is an example.
Its distributed base stations and SingleRAN-based LTE solutions for mobile operators are beginning to innovate fundamentally.
Another example is Sany\'s production of the world\'s most powerful crawler crane.
Technological innovation: the Chinese dream is not high yet
Influence technological innovation of global significance.
But we \'ve seen some small, but world-class examples of technology being used to create innovation.
We visited one of the svgoptroopers
The up company, which uses nanotechnology to make very thin films, provides holographic patterns that can be printed on things like ID cards and are difficult to replicate.
Thanks to the film, Chinese ID cards are now actually safer than driving licenses in Europe or the United States.
Another company in Suzhou Nano
The particles produced by micro biotechnology are very, very small, uniform in size and shape, suitable for the specific needs of customers.
The particle size and shape have very high precision, which is very important for some complex applications from the LCD display to the efficient led.
Business model innovation: it is often copied and adapted in China. Most business model innovation starts from the Western model, adapts to China, and then adapts to China.
Com, for example, copied the eBay platform with its rival Taobao, and quickly overtook eBay based on its early B2B platform experience and innovations suitable for Chinese customers.
Tencent, China\'s largest Internet portal, has tried a variety of business models in order to monetize its products, and most of Tencent\'s current revenue comes from Internet value. added services.
Like some foreign companies such as Apple or Google, Tencent has created a service ecosystem centered on QQ instant messaging services.
Tencent\'s instant messaging service QQ does not replicate the business model of the world\'s leading enterprise ICQ without unprofitable.
Instead, Tencent has created a new business model, the first to include advertising, including an ecosystem in which Tencent can monetize all its values --
Added service around the free QQ instant messaging app. Non-
Customer Innovation: great opportunities
When businesses are able to serve customer groups that have not previously served in this category in other parts of the world or in specific countries, customer innovation will emerge.
One example is the Tata Nano car, which is designed at such a low price that it first serves car buyers who use motorcycles or other models.
A better example is Apple\'s iPad, which has attracted many old users who had previously been unable to use more sophisticated personal computers.
China\'s modern market economy is so new,
Customers are tapped in almost every category.
In banking, for example, many small businesses still do not have bank accounts.
Minsheng Bank successfully won the small-
As a pioneer in creating a new market segment, the business of large companies.
Chinese companies are good at taking advantage of all these forms of innovation because of their relentless focus on their customers, their search for unmet needs, and their amazing speed.
If competitors want to succeed in China, they must surpass technological innovation. George S.
Ye is professor of strategy and cooperation
Director, China Innovation Center, China Europe International Business School. (gyip@ceibs. edu).
Bruce McKern is a visiting researcher at the Hoover Institute at Stanford University and a former co-Professor of International Business and
Director, China Innovation Center, China Europe International Business School. (bmckern@ceibs. edu).