China---an innovator

Until only a few years ago, talk of China as an innovator would have elicited scorn from most Western business and government leaders. The country was widely derided as a haven for copycats and pirates, or grudgingly acknowledged as an efficient manufacturing platform whose factories depended on the uneasy union of cheap Chinese labor and foreign technology.

Business in China today, however, is being led by innovation-obsessed execs like Ren Zhengfei, founder of Huawei Technologies, which last year filed more patent applications than any other company in the world. And Allen Zhang, who led the team that developed Tencent’s WeChat, the smartphone app that allows its 900 million users to chat, shop, pay, play, and do just about anything else. And Robin Li, CEO of Baidu, the Beijing-based search company, who has vowed to have autonomous vehicles ready for sale in China by next year.

“The copycat era is behind us,” says venture capitalist Kai-Fu Lee, former head of Google China. “We are way beyond that.”

Their success is fueling a virtuous cycle of innovative activity. The country’s two largest Internet companies, Alibaba Group (BABA) and Tencent Holdings (TCEHY), lead the world in e-commerce, mobile payments, social media, and online gaming. They and other Chinese tech giants are investing aggressively in new businesses, helping to transform China into a massive market for venture capital investments. Those ventures, in turn, are nourished by China’s huge and growing market and its unique ecosystem of suppliers, logistics specialists, and manufacturers. The result: China has spawned a new generation of homegrown entrepreneurs who are creating world-class products, developing their own technologies, and rolling out new business models on a scale and with a speed the global economy has never seen. “The copycat era is behind us,” says Kai-Fu Lee, CEO of Sinovation Ventures 山东山大华天软件有限公司and the former head of Google China. “We are way beyond that.”

Consider that between 2014 and 2016, China attracted $77 billion in venture capital investment, compared with just $12 billion in the preceding two years. China is now among the world’s top three markets globally for venture capital in digital technologies including virtual reality, autonomous vehicles, 3D printing, drones, and artificial intelligence. And about a third of the world’s 262 “unicorns” (startups valued at more than a billion dollars) hail from China, according to McKinsey & Co., and account for 43% of the global value of such companies.

 A unicorn in business refers to a startup company with a value of over $1 billion.

Discuss: 

1. Collect more info on China's innovation in recent years with tables and figures. 

2. Try to compare China's innovation with that of other countries like America and Japan. 

Jul 17,2020

China will build national high-tech zones with better layout and innovation capability by 2025, according to a circular issued by the State Council on July 17.

Mechanisms in the high-tech zones will be continuously updated to improve the environment of innovation and entrepreneurship and build high-tech industrial systems, as planned in the circular.

May 20,2020

China has initiated two batches of key projects on new generation AI technologies, with the investment amounting to 1 billion yuan (about $140.7 million), said Qin Yong, director-general of the Department of High and New Technology of the MOST.

These key projects target at those AI-techs, which are of the world's cutting-edge fields and in line with the national strategic needs, Qin said.

         Shenzhen--- a vanguard in innovation 

An innovation center near Shenzhen Bay has become a magnet for innovators from around the world to start up their businesses.  

Shenzhen, a Chinese vanguard in reform and opening-up located in South China's Guangdong province, has set a goal to become a city of innovation and creativity with global influence, according to Wang Weizhong, Party secretary of the city.

The city is home to a group of world-leading high-tech companies such as telecommunications giant Huawei Technology, internet company Tencent, medical device provider Mindray (迈瑞医疗）, new energy vehicle manufacturer BYD and commercial and civilian drone developer DJI.

Research, industry and talent should be interactively connected and supported in the systematic project of innovation, Economic Daily quoted Wang as saying.

He noted the city has advantages in its industrial system and innovation environment, but the integrity and synergy of the industry must be improved.

To enhance innovational capability from the very beginning would be a decisive move that could lead to an apparent advantage in the competition, Wang said, adding that the city will develop fundamental research and applied basic research.

"We have learned from experience that only by embracing key and core technologies can we take control of the initiative of innovation and development," Wang said when addressing the root technical problems.

The city government has allocated at least 30 percent of the city-level scientific development and research funds to fundamental and applied basic research since 2018, Wang said. The proportion was fixed through a local law in 2020.

As a result, the city's fiscal inputs in these types of research reached 2.8 billion yuan ($433.4 million) and 4.8 billion yuan in 2018 and 2019 respectively, accounting for 30 percent and 37.2 percent of the city-level funds that went to the research and development sector. In 2020, the amount increased to nearly 5 billion yuan, representing 42.7 percent of the city-level expenditure on R&D, official data show.

The total investment in R&D from all channels in Shenzhen surged from 73.2 billion yuan in 2015 to 136 billion yuan last year. The figure in 2020 accounted for 4.9 percent of its GDP, a level equal to or even better than some developed countries.

According to a government mid-to-long-term plan for 2025-35, issued on June 9, the R&D investment in Shenzhen is projected to be further raised to 200 billion yuan in 2025, accounting for 5 percent of its GDP.

"The dynamic innovation system and generous financial inputs of Shenzhen allow scientists to explore freely to their hearts' content," said Hu Xiaojun, Party secretary of SZBL.

More than 60 high-level laboratories and R&D institutes as well as more than 2,700 innovational platforms and entities have been set up in Shenzhen, according to official statistics.

DJI

When it comes to the consumer drone industry, China’s DJI came, saw, and conquered. Just ask companies like 3DRobotics, Parrot, Yuneec, and GoPro what happened to their drone programs afterDJI devices like the Phantom 4 and Mavic Pro came along. Now, DJI is hoping torepeat its success with the enterprise and industrial side of the drone market.

Already, DJI had offered mobile and onboard software development tools that allowed third-party developers to buildsoftware solutions on top of DJI drones. Now, it’s adding hardware to the mix–and that is likely to substantially broaden the number of ways businesses use the company’s drones, making it ever harder for its competition to keep up.

Today, it unveiled what it calls Payload SDK, a tool that, in conjunction with DJI’s new Skyport gimbal adapter,allows third party sensors, cameras, and things like air-to-groundcommunication tools and devices to integrate directly with its M200 seriesdrones. It may seem like an incremental move, but the company is hoping thatPSDK will allow it to grab a stranglehold on the lucrative enterprise andindustrial drone business–things like agricultural and infrastructureinspection, construction, emergency-management, and much more–by making it easyfor third parties to plug their sensors, and the data they generate, directlyinto DJI’s already robust end-to-end system.

And while many enterprise users werealready deploying DJI drones with third-party sensors and applications, theyhad to jerry-rig them, and it would be difficult to get real-time data from thesystems without adding substantial weight in the form of extra batteries and communications equipment. Now, it can all be integrated, streamlining theprocess and giving these users easy access to real-time data from a wide rangeof external cameras and sensors.

Discussion:

1. Figure out how the breeding ground in China, in Shenzhen for technological innovation has contributed to the success of DJI.

2.  What is DJI' s development path? What has distinguished DJI from other companies? How do you look at its innovation?

“jerry rig” something--- means to set up or arrange a system crudely, or in an unofficial, unapproved manner. Making a functioning car with an airplane engine in your garage would be an example of jerry rigging.

https://pro.dji.com/cn

Japan's Emerging Culture Of Innovation: The Invisible Things Can Be The Hardest To Change (forbes.com) 

Japan's Emerging Culture Of Innovation: The Invisible Things Can Be The Hardest To Change

Over the past 50 years, Japan has helped to shape the world's technology landscape. Looking at the massive global impact made by companies like Sony and Toshiba , we can see an interesting comparison to the nature of technology developments in Silicon Valley and the United States. While Silicon Valley is populated by companies that have emerged from startups over the past decade or so, Japan's technology landscape is still very top-heavy with little to show of 'idea-to-company' success stories. The large corporations command such an influence over the talent pool, legislation, market channels, and a thousand other aspects of the economy that what is less well seen and talked about is the Silicon Valley-style startups that could be changing and molding the technology and cultural landscape.

Change from the bottom up is not happening in Japan. Is it just a matter of time?

While startups like Facebook , Amazon, Tesla and Google are changing the way Americans live, and indeed how the American economy as a whole functions, this kind of disruptive innovation from upstart groups is not yet a common occurrence in Japan.

Why is this? Capital, talent, and a reliable legal framework are all present in Japan, so what is missing from the scene? What elements are still needed for Japan to begin to produce more of the generative, disruptive, and economically stimulating effects from a robust and active innovation ecosystem?

Cultural Norms For Innovation

Tolerance for Failure

Startups require risk-taking. They require testing hypotheses by trying ideas and seeing what happens – and by definition not all ideas are going to work out as hoped. The cultural norm of risk-tolerance is a tough one in many cultures including Japan’s, which has a strong built-in aversion to failure. One of Silicon Valley’s strengths is its celebration of ‘noble failures’ as badges of accomplishment amongst its startup culture members.  In Japan, the dominant norm of corporate culture values low risk, step-by-step improvement, and predictability. The Japanese social structure highly values business leaders that can correctly prognosticate both action and outcome and the framework of control in organizations can quickly strip leaders of their social currency when predictions fail to materialize. In a culture where failure likely marks the endpoint of a career, the field of pure innovation fails to bloom.

An entrepreneur puts his relationships with parents, friends, family, and colleagues at serious risk when pulling away from existing social expectations and declaring an intention to build something new – and in Japan the social price for this step is still very, very high.

Barrier to Trust

When an entrepreneur seeks to create something new without precedent or an existing support network (such as that found within a corporation), he or she must synthesize new relationships spontaneously and at low cost to take the many steps required to pull to the new venture together. Legal assistance for company formation, software and design engineering expertise, marketing, messaging, business acumen – these various skills represent a focused contribution from a collection of individuals when they come together to create a new business. When limited resources are available, you need a low barrier to trust and cooperation in place in your social network in order to pull them all together. The ambient barrier to trust for such things is still relatively high in Japan, putting a damper on innovation.