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We shall be unable to turn natural advantage
to success unless we make use of local guides.
-The Art of War, Sun Zi

China’s Goals & Key Challenges – and the opportunities they generate!

China’s Goals & Key Challenges – and the opportunities they generate!
February 2018

Yet, while Chinese have entrepreneurship almost coded into their DNA (a Chinese abroad is more than often a business owner), China has not lead in technical innovation since its opening up. Indeed, there are so many businesses to be built and so much money to be made by adapting existing innovation made abroad that, today, “Innovated in China” entails mostly “business model” innovation.

Wechat is a good example. It is the third largest social media platform worldwide. And, when using it, one can only agree that by combining the functions of Facebook, Whatsapp and PayPal (and adding some more) Wechat is a fantastic solution. Still, it relies on technology and ideas that were initially developed abroad. The same is true of Alibaba, Xiaomi (smartphones) or Huawei, Cisco’s competitor. (Despite the fact that Huawei is among the top 3 companies, worldwide, filing the largest number of international patents and could well become a true technology innovator in the future.)

As a result, China’s technology sector, from cars to machinery and robots is dominated by foreign players who have come to and invested in China.

If China hi-speed rail technology is fully dominated by the one and only Chinese railway company (the state-owned CRRC), this has been achieved by requiring that foreign companies offering railway technology make joint-ventures with Chinese counterparts or transfer their technology to Chinese companies.
(This has also been required from foreign auto-makers. However, international car producers are in charge of the design of the finished vehicles, which are fast and constantly evolving. Train engineering development is a much slower process.)

To fill in the gap and jump start domestic technological innovation, the State Council has launched in 2013 the “Made in China 2025” plan. It essentially aims at upgrading China’s industrial sector and supporting technology made in China (by Chinese companies) in key sectors. (Such as electric cars, advanced machinery, industry 4.0, IT and integrated circuits, biopharma and advanced medical products.)

In taking up the challenge to upgrade its indigenous technology production, China is launching a frontal challenge to international businesses operating in the country.

Still, if the plan is going to succeed, foreign technology will remain critically needed.

Robotics is a good illustration of this situation. Since 2015, China is the biggest industrial robot market in the world. Yet, even though local robot makers are fast taking market share from the likes of ABB and Kuka, those very robots made by local companies rely totally on imports for critical components (controllers, decelerators and servo-motors) [5].

[5] http://thediplomat.com/2017/05/who-will-satisfy-chinas-thirst-for-industrial-robots/


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