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Chinese Innovation – Lessons from the East

Chinese Innovation – Lessons from the East

In the past few years, Chinese have surfaced as uniquely innovating. Today, they have even raised formidable challenges for the traditional multinationals worldwide. While Chinese practice of “copying” and “improving” has led Chinese innovation to be misled as piracy by the West, Chinese philosophy asserts that students need to learn to copy first, before they can master the art and develop their own style. Chinese innovation has indeed compelled the Western nations to learn lessons from the East.

In this article, we discuss the findings of Prof. Winter Nie, who has highlighted some of the unique features of Chinese Innovation.

Rapid Development in Chinese Competitiveness

While just a decade ago, China’s rail system was poor and inadequate, today China boasts of its high speed rail and world’s fastest trains (350 km/hour) in regular commercial service. There has been a rapid development in ship building, aviation and automotive industries.

It has been observed that the “me-too” phenomenon is a strong driver of new developments in China. Chinese industry has witnessed considerable increase in its R&D output in some section. Emerging as a tough competitor to the West, China has become one of the champions of the leading economies in the East.

Chinese innovation is characterized by four (4) unique features, namely:

  • Innovation on-site: In the past few years, the focus of Chinese companies has shifted from “lab testing” to “testing on-site”. Earlier all the mechanical modifications were done in-house by a trained technician who would spend several months testing and rectifying issues before final installation. However, today the equipments are installed and tested on-site. This type of testing on-site has made the client’s factory more like a research lab and has tremendously reduced the time to market, and even helped with the company’s cash flows. So, when the new model was finally released, it incorporated the client’s precise needs and no further modifications were required.
  • Innovation to reduce costs: Today, Chinese companies are fundamentally reengineering the manufacturing processes to reduce production costs. The focus has now changed from “volume production” to “cost efficient production”. This not only raises their capacity to produce but also improves process innovation lowering their capital expenditure. The companies are now seeking newer and better methodologies that would improve their production cycle and save money on volume production. As the costs go down, their capacity to produce more innovative products propelling their goal towards more Chinese innovation.
  • Tailored innovation: Chinese companies have increasingly turned to more innovative solutions that are tailored for the need of the customers. For example, since the Chinese consumers use mobiles phones for a variety of purposes, the Chinese mobile phone producers have now starting offering features that enable the consumers to maximize the use of mobile phones in a variety of ways without having to purchase any add-ons. Such innovation is simply meant to meet local consumers but it impacts the broad vision of the Chinese to innovate for specific needs. More and more products are developed that are meant to address specific kind of needs. This indeed is a good lesson to learn considering such a tailored innovation gives rise to more innovation and more demand by the consumers. Local customization enables better fulfilling consumerism and meeting localized market demands at home and abroad with tailored innovation.
  • Rapid product innovation: One of the most important characteristic of Chinese innovation is the sheer speed at which the innovation occurs and the speed at which the new products are launched to the market. Chinese rapid innovation is a perfect example of its triumph at leading the innovation in the local and international markets. Chinese innovation has reached almost all parts of the world but at this speed, it is difficult to say when the product was released and when the newer version of the same will be available in the market. Given the rapid product innovation in China, it is for the people to look out for the newer release before going to buy even the latest product available.

Chinese Innovation for the Future

Needless to say, Chinese companies are taking more unconventional approaches to innovation. But why? It appears that Chinese innovation is primarily propelled by sheer necessity. With limited research budgets, lean and ultra-dynamic strategies; and absolutely no brand identity to protect, the Chinese companies have nothing to fear when allowing the customer to test the product.

However, one downside of this purely entrepreneurial approach of Chinese innovation is that as the companies mature, they will start to think globally and build successful brands that are recognized worldwide. In order to compete against the global technology giants (like Apple, Microsoft, Google, etc.), China would need to be proactive in investing more in R&D, innovation and protecting its intellection property rights.

Yet since this nimble approach of “we win some, we lose some” is cost effective for the Chinese companies, multinational competitors must take a note of this domestic Chinese companies’ innovation techniques for mass markets.

Note: The preceding is a summary of an article found though our research, and is provided here with editorial comment for members only. Please see the full article at the following link for full original content:

The New Asia Innovation Team