China and the Steve Jobs Problem


At the back of an IPad it says “Designed by Apple in California, Assembled in China” – this crucial distinction means that 95% of the value created by an IPad ends up in the USA. While China has made a huge success out of manufacturing electronic goods, in order to get to the top, a country and its companies have to be innovative and create (and control) cutting edge ideas and products.

China has been impressive as an absorptive state, utilising global knowledge, combined with its own industrial base and intellectual capabilities to put astronauts into space and build high speed trains, the shift to become an innovative economy in its own right is the next step. If managed successfully, China could become a high income economy, while Africa and emerging Asia would see Chinese low-tech manufacturing sectors relocate to their shores as costs (and wages) rise in China.

China’s research base has increased rapidly in tandem in line with economic growth, but size has not always meant quality, and research and innovation centres have been concentrated on the East Coast in cities like Shanghai, Beijing and Shenzhen, creating an uneven landscape. Now the new leadership needs to implement reforms which will help innovation and research take off in China, these would include engaging with Chinese students studying abroad, (so called sea turtles) encouraging them to return along with their knowledge and networks, at the same time encouraging more foreign students to study in China to facilitate the cross-fertilization of ideas.

Improving the legal and business environment to ensure intellectual property rights are respected is another obvious step. Although reports that IP rights are ignored in China are exaggerated, things could be made clearer and easier for foreign and local companies.

Some Chinese firms and institutions are already highly innovative; WeChat – a company offering a similar messaging service to WhatsApp, seamlessly takes on board user suggestions and turns them into new applications, while the CAS Beijing Institute of Genomics is an international leader in its cutting edge field.

Innovative technologies can have a massive impact in a wide number of areas, but can be particularly effective in combating China’s environmental and social problems, carbon neutral cities and renewable energy can all help transform (in a good way) the day to day lives of Chinese citizens. While for the business community, innovation can help its companies develop China into a high income economy and conquer the world.


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