China innovators

Is China’s innovation boom producing too many useless inventions?

Expert says it’s better at disruptive innovations that boost efficiency

PUBLISHED : Monday, 11 July, 2016, 2:00am
UPDATED : Monday, 11 July, 2016, 2:00am

Robotic suitcases that follow the owner like a puppy, smart baby feeding bottles that monitor food intake, soil testers for potted plants that send out smartphone alerts about the growing environment – they’re all examples of Chinese innovation.

More and more novelties from China’s most innovative companies are now entering mainlanders’ life as many embrace new lifestyles. But a lot of innovative products are being released in a hurry, at the expense of quality, industry insiders and consumers have warned.

Too many people are hurrying for quick success and instant benefits, without a thorough understanding of what the market really needs
Amy Yang, RoboMing

The central government wants innovation to be the key driving force for the mainland economy, and numerous individuals and firms have been racing for start-up success.

China ranked 29th among 141 economies around the world in the World Intellectual Property Organisation’s Global Innovation Index 2015, between Slovenia and Portugal and 18 places below Hong Kong. Beijing has vowed to improve that position by spending 2.5 per cent of gross domestic product on research and development by 2020, up from 2.1 per cent last year.

But critics say it could be a false boom.

China’s innovation drive should first target its grossly inefficient state-owned companies

“In my opinion many of the new products being made today do not really know what the users need,” Sun Yue, a Shanghai resident, commented after visiting the CES Asia consumer technology trade show in Shanghai in May.

A 30-something mother, she said the inventors of the smart feeding bottle had focused too much on fancy new functions and neglected important details.

“I tried such bottles once and soon gave it up,” she said. “It’s hard to screw down the lid. The nipple discharge was too big, so the baby would choke … I doubt whether there was any mother of a young baby engaged in the development of the product.”

Amy Yang, chief operating officer of RoboMing, a Shanghai-based robot-making start-up, admitted such customer complaints were valid.

“Too many people are hurrying for quick success and instant benefits, without a thorough understanding of what the market really needs,” she said.

To transform truly innovative technology into a marketable product or service took more than just a few years, she said.

“Many of the so-called innovations in a preliminary stage are false innovations in this sense,” Yang said.

Theoretically, China is a global leader in innovation, with the biggest number of patents granted each year and second-biggest number of academic papers published in key publications.

“But the reality is totally opposite,” said Xu Chunming, deputy head of Shanghai University’s Intellectual Property Institute.

Chinese province Guangdong raises R&D target, turns to innovation to revive economy

For decades, science-based innovations had been dominated by the government and remained an administrative task, instead of being generated by the market, he said.

That had led to the awkward situation of corporations desperately looking for innovative and feasible technology while a great deal of scientific research, which failed to meet their demands, lay idle in government-owned universities and academies.

The government appears to have recognised the problem and has started building bridges for both sides in recent years.

Uni-Power Group, a financial services firm based in Hangzhou, Zhejiang province, was one of the companies invited by the government of neighbouring Haining to provide financial support for local start-ups.

Beijing aims to lead world in innovation by 2050

Uni-Power representative Zhu Jiakai, who looks for the right projects to invest in, said few of start-ups had truly novel products or approaches and it had been a difficult search for promising ones.

“Most of them are just going with the tide and have no advantages of their own,” he said.

But some analysts say China will be a strong competitor globally in another important kind of innovation – improving efficiency.

Clayton Christensen, a Harvard Business School professor and expert on innovation and growth, said China was doing very well in what he called “disruptive innovations” – transforming complicated and expensive products and services into ones that were affordable and accessible.

He gave the example of Chinese home appliance maker Haier, which made the world’s cheapest refrigerator.

“Every time someone is going to China and manufacturing something at a 20 per cent lower cost, that’s an efficiency innovation … and China has been very good at it,” he said. “This is a very important type of innovation and that’s what leads China to grow.”

In a report on China’s effect on global innovation last year, consulting firm McKinsey concurred that it could be a global leader in efficiency-driven and customer-focused innovations, while saying it needed to catch up in science- and engineering-based ones.

Chinese innovators used China’s massive consumer market to commercialise new ideas quickly, and its consumers enable innovation by accepting early iterations of products and services and providing feedback for rapid refinement, it said.

To spur innovation, Beijing offers state-backed researchers cut of profits

Sally Weng, who started a health services firm in Nanjing, Jiangsu, targeting senior citizens living alone, is one young entrepreneur aware of the huge potential of the consumer market.

Weng, who sells a blood-pressure meter that records test results and sends alerts to the user’s children via a smartphone app, decided the key to success would be post-sales services, including inviting professionals to provide health advice for the users.

“It’s difficult and costly for us to keep creating new technologies for intelligent hardware, but we can focus more on services,” she said.

Premier Li Keqiang said in his government work report in March that 12,000 start-ups like Weng’s were blooming on the mainland every day.

He said the number of newly registered companies grew by more than 20 per cent last year, pinning much hope on entrepreneurship and innovation to drive the slowing economy.

But most start-ups ended in failure, said Zhou Hang, the chief executive of car rental firm and Uber-like ride-hailing service

“I think China’s new generation has generally been quite innovative,” he said. “But on the other hand, it’s a common rule that only few of the start-ups would survive.

“To rely on start-ups for the revival of the economy doesn’t make sense.”