China Innovation Efforts

CHINA INNOVATION EFFORTS.  As I continue to document global strategy and innovation, I was thrilled to connect with a leading innovation organization in Shanghai to discuss the latest challenges and trends. Discussions included insights into how corporations are investing in innovation, how there are large numbers of new startups each day, how students are learning, how the levels of risk tolerance and creativity impact innovation decisions, and what the IP landscape looks like in China. This conversation has paved the pathway for upcoming introductions to industry startup leaders and the director of innovation at a large semiconductor manufacturing company.

Here are a few key learnings:

  • Corporate innovation typically begins in small pilots.  One large multi-national company developed its emerging market innovation center a few years back. They are running idea competitions about once each year. Ideas are driven from the open innovation center. Challenges continue to be risk adversity, resources and funding.   Another organization typically runs 4-6 teams of startups through its 14-week program twice per year. As one of its products has successfully launched, it will be funded for years to come.  Corporate innovation challenges are many and include how to enable intrapreneurs to feel safe to innovate as many still prefer the security of a consistent paycheck.
  • The startup community is growing. It has been estimated that there are about 1,200 new business registrations per day, many of them startups.  The startup support network is growing as well.  Incubators such as Startup Grind provide an online and offline network to “help fuel innovation, economic growth and prosperity at the local level.”  Discussions also centered around the concepts of structure, program and people.  Specifically, they are focused on the importance of getting the right, committed people on the team and as mentors.  Innovation centers in China are evolving. Initially they were run by civil servants and sponsored by the government.  Some multi-nationals have recently secured space and/or they have become co-working spaces.
  • Asian markets are growing large but there is a very different innovation culture than in the US. There is no lack of creativity but students moving into the workforce often find it difficult to apply concepts as education is focused on technical aspects and exercise repetition. In addition, reward systems are often based on individual depth of knowledge and not based on initiative.
  • Companies are beginning to look outward and while typically very risk adverse, they are realizing that doing nothing is risky, too.  If the last century was defined by vertical industries, the next century will likely be defined by the horizontal conglomerates such as Alibaba and new capabilities will be needed to compete. Specifically, companies that make widgets are needing to make the shift to become lean companies that can constantly adapt and create new markets.  One large home appliance company prefers not to develop its technology in-house and instead become an aggregator, creating a niche in its specific area.
  • The IP landscape was described as almost non-existent. It was not identified as a barrier to entry as in some other countries.  It was noted that it was as if there is some acceptance that someone could create a knock off and that companies need to seek rapid innovation and create evolved business models to compete.