Innovation and China have not been an obvious combination of the past few decades. US vice-president Joe Biden even challenged us to name any innovation from China. Business analyst Shaun Rein takes Biden on in his upcoming book The End of Copycat China: The Rise of Creativity, Innovation, and Individualism in Asia.
Because there is so much low-hanging fruit in the marketplace there is really no need to innovate. So rather than being a government, regulation, [or] cultural problem, the issue is that there [had been] no need to be innovative. If you [were] well connected in the 1990s, you could get a plot of land for below market price and put up a skyscraper; you could go out and get a monopoly delivering wine to a ministry and you could make tens of millions of dollars on very low-end production. There [was] simply no need to innovate. Entrepreneurs had to be very shortsighted because of the market condition on the way to make money. But that’s all starting to change now. What we started to see in the last two to three years is that [the] low-hanging fruit is starting to disappear. It’s still there, but it is starting to disappear. It’s not quite so easy to make money anymore.
The market is maturing, competition is going up, and companies are moving up to value chain. So a lot of entrepreneurs say: “How do we stay ahead? How do we beat the competition?” Now it’s not about low cost. It’s not about sales and distribution. It’s about… innovation. That’s one major part of why you are seeing the shift from a low-cost copycat, business environment to an innovative environment—they have to [change] in order to survive.
Are you interested in more experts on innovation in China? Do check out our recent update.