Recently, Prof. Liu Xielin, the director of the Research Center for Innovation and Strategic Management at the School of Management, GUCAS, accepted an interview from the Southern Daily.
With respect to Chinese enterprises’ competence of independent innovation, Prof. Liu stated that Chinese companies made some progress, but the progress is not yet significant.
Chinese companies’ competitiveness has been improved a lot. For example, Huawei, SANY, and Haier have significantly strengthened their competitiveness and overseas merger and acquisition capability, these companies, however, are growing slowly speaking of independent innovation. Such phenomena cannot be changed in a short-run. This is because innovation means a lot of investment, high-risks, and a long-time before profitable, but many Chinese companies are risk-averse and short-term oriented.
Prof. Liu further proposed that innovation first requires opportunity, followed by competency and motivation. Competence comes from accumulated efforts, which will ultimately result in innovation. However, some of the Chinese enterprises once gain competence, when facing the temptation of new business opportunities, tend to “diverse from their original business”. For instance, some leading Chinese companies tend to invest in finance and real estate industries. Such diversification sounds reasonable, but in essence, these companies’ core technological competence did not enhanced accordingly due to the diversification. This phenomena is worthy of caution.
As for the question of “how to solve the investment shortage for independent innovation”, Prof. Liu explained that different places should adopt different ways.
For instance, the government has invested a lot in the Yangze River Delta to compensate the disadvantage of private venture capital investment, which asks for a quick return. Other similar cases are Suzhou, Wuxi, and Guangdong. Some local governments also invest in enterprises’ independent innovation. As governments do not expect a quick return, such investment model is very effective particularly in the Chinese context. More specifically, the government should support the enterprises, whose independent innovation ability is low and meanwhile lack of funds. While money from the government is used for the transfer of innovation achievements, the major risk will be undertaken by the company, and the markets play a dominant role.
Although some of the local governments encourage innovation, however, their support is far from sufficient. As a whole, most of Chinese companies, scoring lower in independent innovation, adopt a ‘me too’ strategy, which refers to copying foreign companies’ new technologies and products for a rapid development. In general, most of Chinese companies follow the “me too” strategy.
In terms of the independent innovation level in Guangdong province, Prof. Liu pointed out that Guangdong entrepreneurs attach great importance to business, but the companies lack in their own research, designs, and sales. He suggested that in the future Guangdong should attract more professionals, increase government support in enterprises’ independent innovation, bring technology, education, and business together, pay more attention to strategic emerging industries, and build more name brands of their own while taking the advantage of globalization.
