Richard Li-Hua on Innovation in China
China’s ambition of become an innovation-oriented country by 2020 is an important part of the nation’s long-term strategic plan. Being the second largest science and technology thesis producer, and running the second largest economy next to the US, a lot of things are happening in China. Innovation Management spoke to Professor Richard Li-Hua, word-leading expert on innovation about his thoughts on China’s innovation.
How would you describe the importance of innovation to China?
The debt crises threat the very future of the Euro and still overshadow the slow recovery of the US economy. The uprising in Middle East and North Africa, in particular in Libya, presents uncertainty and instability. The global economy is at a crossroads. In the meantime, Japan and Europe are feeling uncomfortable with China’s pro-active merger and acquisition strategy. The major fear is that China could embrace the technology-led firms such as Volvo, and manage properly the technology and innovation capacity among multinational companies.
IMF produces even bolder forecast that China’s GDP will exceeds the US by 2016.
Some observers point out that China – being second largest science and technology thesis producer – runs the second largest economy next to the US after surpassing Japan in 2010. Goldman Sachs predicated that the Chinese GDP will exceed the US by 2027, while the World Bank economists forecast that the Chinese economy will continue to create wonder and surpass the US economy in about twenty years – by 2030. IMF produced and even bolder forecast that China’s GDP will exceeds the US by 2016. However, economic scale and innovation capacity are different concepts. The complexity of China’s innovation strategy has not been well understood and explored; this not only pre-occupies Chinese politicians and entrepreneurs, but also leads to the anxiety and misconception of the Western counterparts.
Some observers point out that the Chinese economy relies on foreign technology and FDI. Innovation represents a great leverage in creating economic value. Innovation has never been as important as today, and is closely related with the sustainability of China’s economy. China has been seeking innovation framework and implementation strategy for sustaining and upgrading its economy. China took 12.3 percent of the world total R&D spending in 2010, second only to the US. China had 200,300 patent applications in 2008, which ranks third next to Japan and the US.
However the accident in Wenzhou in July with the high-speed train system has put China’s innovation strategy under scrutiny. The Wall Street Journal describes China’s innovation as “paper tiger”. Clearly this is an exaggeration by western media. If you look at the product life cycle theory and the technology S curve theory, there is certain risk when a new technology is applied at the very beginning.
What are the goals connected with innovation in China?
This is a big and important topic that attracts world attention. I would like to discuss this topic by starting with China’s technology strategy, followed by innovation strategy and its challenge.
Current Debate on China’s Technology Strategy
Technology strategy is, no doubt an important, but often ignored factor in strategic formation of enterprise development. Technologies by themselves do not establish the overall strengths of a firm or nation. However, the appropriate and effective technology strategy is a key component and driving force in attaining competitive advantage for industries and firms. By integrating proper technology strategy into its overall strategy, a nation can develop a well-defined technology policy towards technology development and innovation.
There has recently been serious and continuous debate on China’s technology strategy about getting technology by sacrificing its market. Many believe that China’s technology strategy has played a significant role in developing its economy and building technology capability, while some critics challenge that China’s technology strategy has failed to secure core technology.
The typical example that has always been cited is China’s car manufacturing industry. The striking phenomena is that the cars made in, and running in China are all almost foreign brands. It has been recognized that the Chinese traditional brand and research and development (R&D) are disappearing. Therefore, this makes people think that it is necessary to re-think China’s technology strategy of market in exchange for technology profoundly. With close examination of the appropriateness and effectiveness of the technology transfer in China, how to provoke strategic thinking of technology and innovation, and how to create sustainability, there are arguably a number of crucial issues on technology and innovation to take into consideration.
As “real core technologies cannot be purchased but can only be achieved by self-innovation”, there is growing need to consolidate the technology capacity building through developing an appropriate technology strategy. However, I believe that the important points are: What kind of technology strategy should China have? Should China take a technology leadership strategy? Should China take a follower strategy to avoid the risk and cost of basic research? Are the mega-programmes, such as, “211” and “985” launched by the national government effective in technological capacity building?
China’s Innovation Ambition and its Challenges
China’s increased prominence in international and regional science and technology affairs has created a growing need for a deeper and more sophisticated understanding. A broad range of policies and programs have been put in place over the last two decades to initiate major improvements in the country’s innovation system. Following the traditional “3I” pattern of innovation strategy, China’s leaders have made “indigenous innovation” a cornerstone of the country’s future development.
China’s leaders have made “indigenous innovation” a cornerstone of the country’s future development.
Many indicators and statistics, such as, number of science and engineering papers that Chinese researchers publish in international journals, the amount of investments made in R&D, and the number of patents, indicate that China’s science and technology capacities have been developing dramatically.
In the meanwhile, China’s research environment has often been criticized as detrimental to individual creativity, and too politically charged. Science and technology policy makers have been regarded as overbearing, and researchers in China face numerous hurdles. It should be noted that the education system in China that has made great improvement in the last two decades, is based on rote learning. Students, having tradition, tend not to be critical thinkers. However, in the Western educational system, students are encouraged to challenge professors and develop independent thinking, as in the teaching practices of Yale and Harvard in the US. The Chinese tradition of deferring to authority is not conducive to innovation either. As such, how realistic is the ambition to make China an innovation-oriented society by 2020?
What kind of actions are taken in China to increase knowledge about how to increase innovation capabilities?
China’s ambition of “becoming an innovation-oriented country by 2020” is not merely part of the nation’s long-term strategic plan. There have been rising policy initiatives gearing towards the development of science and technology (S&T). China’s science and technology prowess is expanding, and is underpinned by the national network of S&T research of 5,400 national governmental institutions, 3,400 university-affiliated research institutions, 13,000 research institutions operated by large state enterprises, and 41,000 nongovernmental research-oriented enterprises.
According to the Chinese government’s plan, R&D budget is to increase substantially. By 2010, China’s investment in R&D will account for 2 percent of GDP, compared to 1.34 percent in 2005. By 2020, the figure will be increased to 2.5 percent of GDP. If true, this means China will be at the same level with several countries of the Organization of Economic Cooperation and Development (OECD). China would surpass the European Union in R&D investment intensity. However, our recent research and publication on China’s Highway of ICT clearly demonstrates that an appropriate and effective “innovation strategy” will play a vital role in China’s S&T capacity building. Nonetheless, China’s legacy is that China has secured second position next to the US.
Nonetheless, China’s legacy is that China has secured second position next to the US.
China’s remarkable global economic impact presents outstanding and interesting innovation models. How could a small village like Shenzhen become a large prosperous city of 10 million people? How could local collectively-owned firms become global competitors in a mere 30 years? How could local Chinese firms, such as, Haier, Lenovo, and Geely, etc., become world famous brands in such a short period? Some observers believe that these remarkable achievements can only be done in China, as a result of the radical economic reform in the integration of Chinese characteristics and entrepreneurial spirit.
In the meantime, China’s pro-active acquisition strategy and purchasing technology, from green technology to renewable technology from the US, from air bus technology to manufacturing technology from Europe, causes concern in the West. However the major worry for China is if China can get the key technology through procurement and acquisition. International technology transfer is now regarded as a new focus, while the emerging powers and the Western powers are trying to collaborate. It can be beneficial for China, the US and the EU. Successful technology transfer can not only translate China’s innovation strategy into achievable objectives; it leverages innovation capacity building but also turns EU and US research and technological efforts into profitable business.
The major concern from the transferor is that China has yet to establish an appropriate and robust IP implementation strategy.
Due to fear of losing competitive advantage, it is not surprising that the transferor will block the channels of technology transfer if the transferor feels uncertain of IP protection. Both the transferor and the transferee will lose once the blockage occurs. However, the major concern from the transferor is that China has yet to establish an appropriate and robust IP implementation strategy; this is widely recognized as strategic approach to unblocking the channel of technlogy transfer and boosting innovation.
Kindly give us a brief description of CAMOT, including its goal/purpose and your role in it?
CAMOT is acronym of China Association for Management of Technology www.camot.org that was registered in the UK. CAMOT was initiated in early 2006, with great support from IAMOT, IFTM and Tsinghua University. It has now become genuinely an international academic network organisation, which attracts academics, researchers, practitioners and policy-makers globally in the area of strategic management of technology and innovation in China and the West. It has been well positioned because it has chosen an important topic that not only China has been trying to better understand, but also the other parts of world, like the European Union and the US. CAMOT is a little boat that rises as China’s status rises. For more about CAMOT, please see below.
Questions by Karin Wall, Chief Editor
CAMOT is an international academic organization committed to encouraging and supporting researchers and professionals who are engaging research in management of technology and innovation in China. It aims to establish national, regional, and international collaborative research programs in the field of technology management, technology innovation, technology transfer as well as knowledge transfer, by engaging government agencies, funding agencies, educational institutions, state-own enterprises (SOEs), as well as private sectors in China. It stresses the importance of keeping-up with the fast pace of technological change and the emerging new global paradigms of the business environment. Management of technology (MOT) is an important strategic instrument to improve competitiveness and create prosperity in China. CAMOT believes that there is a need for appropriate infrastructures, strategies and mechanisms to be established in order to support the diffusion of management of technology principles throughout China, as well as a need to address the existing gaps in the process of technology management. This will assist in implementing more sustainable arrangement for successful technology transfer and development.
CAMOT Aims and Objectives are:
- To provide a platform for researchers and professionals to debate about how competitive advantages can be achieved through the application of successful technology management and innovation.
- To provoke the current and strategic thinking about how core competences can be achieved through technology management.
- To provide a platform for Chinese researchers, academics and practitioners to have close interaction with counterparts in the West,
- To provide a platform for researchers, academics and practitioners in West to have close interaction with their Chinese counterparts.
- To advance MOT research in China.
- To promote MOT education in China.
CAMOT Academic Activities
The Aims and Objectives of CAMOT are to be achieved through the following activities and collaborative activities with other organizations:
- To organize annual international academic conferences attended by its members and those who are interested globally.
- To organize international symposium on MOT in China.
- To publish current thinking and strategic planning of MOT through its website, its newsletter and proceedings of conferences.
- To cooperate with IAMOT and IFTM in promotion and advancement of MOT research and MOT education in China.
The following are official CAMOT journals:
- Journal of Technology Management in China
- ISSN: 1746-8779. www.emeraldinsight.com/jtmc.htm
- Journal of Technology Management and Strategy in China (Chinese version)
- ISSN: 1756-4425
- Journal of Chinese Economic and Foreign Trade Studies.
- ISSN: 1754 – 4408
- Journal of Chinese Entrepreneurship
- ISSN :1756-1396 www.emeraldinsight.com/jce/jourinfo.jsp
- Journal of Know Based Innovation in China,
- ISSN :1756-1418 www.emeraldinsight.com/jkic/eabinfo.jsp
- Journal of Science and Technology Policy in China ISSN: 1758-552 www.emeraldinsight.com/products/journals/journals.htm?id=jstpc
As Founder and current President of CAMOT, my passion was, and is, that competitive advantage and sustainability can be delivered through robust technology strategy and appropriate technology management and innovation. Thus, I launched in early 2006, the China Association for Management of Technology (CAMOT), which has become an international forum for debating and provoking the current and strategic thinking about how core competences can be achieved through strategic management of technology and innovation.
CAMOT along with people.com.cn successfully organized CAMOT 2008 International Conference at University of International Business and Economics, Beijing, in October following the Beijing Olympics. CAMOT organized CAMOT 2010 International Conference at Shanghai University in October after Shanghai World Expo. We have now received more than 50 quality papers from over 20 countries for presentation at CAMOT 2011 International Conference at Hong Kong Polytechnic University to be held in December, 2011. I am sure that we are going to have another exciting and successful conference in Hong Kong. I am looking forward to it.
CAMOT International Conferences are successful because of its well crafted strategy and the special features, such as, the selection of conference location, focused strategic theme, high profile keynote speakers, round table forum and workshops, all of which have made CAMOT International Conference special and distinctive.
For each conference we have a slight different thematic focus. However, our strategic theme is always strategic management of technology and innovation in China and the West. The goal of the conference is: to inspire current and strategic thinking; provide a platform for exploring linkages and mechanisms; explore appropriate and effective modes of technology transfer; technology innovation; and technology collaboration between China and the western countries. Our intent is to provoke creative and innovative ideas, by bringing together various stakeholders, including academics, researchers, corporate leaders, policy makers, venture capitalists, managers, and senior students, for the exchange of ideas, research findings, current experiences, best practices, and lessons learned. The intellectual lens will rotate to address various questions with the thematic content of ‘East-West” modes of collaboration in this field.
As for academic conference, it seems appropriate to attract as many academics and researchers as it can. Additionally, CAMOT Conference did attract senior university administrators. On many occasions, I have been asked why CAMOT invited university President/Deputy President, Vice Chancellor/Deputy Vice Chancellor of universities, Dean/Associate Deans to attend the round table forum. In fact, each conference has attracted a good number of senior university administrators. I would like convey a message through this interview. I am keen to see technology management and innovation course to be delivered in business/management school. As mentioned previously, the lack of knowledge in higher education has created an under-representation of management of technology and innovation in business schools and universities.
I have a firm believe that technology and innovation strategy delivers competitive advantages, and the sustainability of business, in contrast to the burst of financial bubbles. As an evidence, I along with other colleagues, organised Roundtable Forums during CAMOT Conferences that attracted senior educational administrators globally, including:
- Future and Challenges of International Business School, 2008, Beijing
- Developing Senior Management Capacity for Innovation and International Excellence, 2010, Shanghai
- Innovation and Changes in Global Higher Education, 2011, Hong Kong
For each conference, we sincerely hope to provide strong impact in the international community, so that the senior university administrators can make the decision to include innovation management as a core module in their programmes.
Richard Li-Hua, PhD, is Professor of Strategic Management and Development, and Director of International Centre for Research, Innovation, Sustainability and Entrepreneurship (RISE) at Sunderland Business School. He is a world leading expert on technology and innovation, and an internationally recognized authority on international technology transfer and Chinese business and management. He is a frequent speaker at international conference, and publishes frequently in leading international journals.
His recent two UK Prime Minister Initiative 2 Projects (PMI2, UK-China Connect and UK-US Connect), aim to promote and re-conceptualise entrepreneurship, employability, innovation and internationalisation in global higher education, particularly the UK, US and Chinese context. This has enabled him to build strong cross-culture, and university research teams for the consolidation and establishment of strategic alliances among prestigious universities in the UK, US and China. The strategic dialogue continues.
His current research interests lies in the effectiveness and appropriateness of international technology transfer and IP implementation. This attracts the attention of the EU and MOST in China. Richard’s passion was, and is, how competitive advantage and sustainability can be delivered through robust technology strategy and innovation. Thus, he launched in early 2006, the China Association for Management of Technology (CAMOT) that has become an international forum for debating and provoking the current and strategic thinking about how core competences can be achieved through strategic management of technology and innovation.