From copycat to tech trailblazer, China now inspires the West
- With companies such as Ant, ByteDance, Huawei and Nio inspiring clones in the West, China is becoming an innovation epicentre
- Rather than keep Chinese companies out, the West, especially the US, should make clear the areas of collaboration or protection
Chinese tech entrepreneurs are today increasingly taking the global spotlight. For a long time, Chinese companies, in particular tech companies, were dismissed by their Western counterparts as mere copycats.
The business model for the New York-listed Nio, for example, goes beyond simply product sales and includes building a “user community” – through digital connectivity, the company can interact with its user community, down to the individual. This intimacy allows Nio to leverage user data not only for product sales but also to monetise other services.
The shift in the innovation epicentre from the West towards China is significant. Innovation is not only about tangible products, which people can touch, but also about the intangible, such as philosophies encompassing strategic thinking, organisation and business model design.
Innovation has become core to China’s culture and is the foundation of its development model. Since Deng Xiaoping’s experiments in the 1980s, China has grown a unique and resilient development model.
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On the one hand, its “three-layer model” drives economic progress. At the top, the central government sets the stage and outlines directions. At the grass-roots level, dynamic entrepreneurs drive growth and innovation. In the middle, local governments compete against each other and cooperate to form regional clusters, becoming a glue between the central government and grass-roots businesses.
On the other hand, in a dual economic structure, state-owned enterprises provide the public goods while private companies leverage these public goods to create commercial value for stakeholders. Together, this “three-layer duality” gives the economy significant resilience and continues to evolve and refine itself.
Western countries must shake off the old stereotypes of China’s intellectual property theft, lack of market access, unfair competition, state subsidies and the like. They must also forget the idea that China’s model is simply like that of the Soviet Union, which was unsustainable.
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The West, in recognising that China’s innovation capability has taken another leap forward and that it has an effective governance model, must devise an appropriate strategy in response.
For Western businesses, the message is clear. China is not only a large market with much to offer economically. Most importantly, it is becoming a source of inspiration for technological innovation. Using this platform to generate knowledge and new practices, not only for the Chinese market but also for global businesses, will be critical for the long-term competitiveness of companies and industries.
Edward Tse is founder & CEO, Gao Feng Advisory Company, a global strategy and management consulting firm with roots in Greater China