China has a poor record on value-creation and capturing value of innovation outside the country itself. But times are changing, very fast, suggest IMD-professor Bill Fischer on the website Management-Issues. China might surprise the world again.
Interestingly, there was no disputing the role of appropriating the ideas of others to build China’s innovative capital, as evidenced by the clustering of many of China’s new economy champions in the lower left-hand quarter. Bu this is not so surprising: many Western firms also owe their historical origins to the ideas of others. Google, for example, was judged by my Chinese observers to have originated by building upon the prior search-engine innovations of others, but then, as the arrow indicates, has subsequently grown through mastering the ability to both create and capture its own value – something that few of the Chinese firms have apparently achieved.
But what is more notable about these impressions is that all but a handful of the Chinese firms are essentially only capturing value in the Chinese domestic market. They have, to date, been unable to launch strategies to create value and they have not been very successful in capturing value outside of the Chinese domestic market.
This could start to change, however. Baidu announced earlier this year a new “box computing” strategy aimed to differentiate it from Google, and Sina Weibo has recently entered the Japanese market and is rumored to be launching an English language rival to Twitter. If these are, in fact, realized then perhaps we’ll see more value-creation in the growth trajectories of Chinese firms?.
Also interesting is that Lenovo and Huawei, two of the Chinese three firms most “northeast” in their location on the chart (both creating & capturing value — presumably where we would find the most sustainably successful innovators), would probably regarded by outside observers as being the least “entrepreneurial”, the least “new economy”, and the least “independent” of all of the firms represented. If we had added Haier to this set, the results would have been similar. So much for the innovation stereotypes so cherished in the West!
- Can China become a leading global innovator? – Bill Fischer (chinaspeakersbureau.info)
- The debate: The End of Cheap China – Shaun Rein (chinaspeakersbureau.info)
- Working with the digital cowboys – Bill Fischer (chinaspeakersbureau.info)
- China innovation fueled by US education – Shaun Rein (chinaspeakersbureau.info)