Innovation a long-term commitment

Urbanisation is expected to bring 100 million more residents to large Chinese cities by 2020, as management consulting company McKinsey recently noted. This will create demand for 10 million new urban jobs every year, even as manufacturing employment drops. 

But with China’s economy slowing, and its stock market melting, there is risk that its companies might pull back on the research and development needed for the country to become a global leader in innovation. 

I firmly hope this does not happen, and that business leaders maintain their commitment to long-term R&D, regardless of the current economic environment. 

China is certainly on the right path. Last year the country spent nearly Bt200 billion on R&D, the second-largest investment by any country in absolute terms – behind only the US – and equivalent to about 2 per cent of GDP.

China’s universities graduate more than 1.2 million engineers each year – more than any other country – and it leads the world in patent applications, with more than 825,000 in 2013, compared with about 570,000 for the US.

Another positive trend is rising Chinese investment in US R&D labs in an effort to generate patents. This will help China make the shift from manufacturing to becoming a driver of innovation. 

According to Reuters, patented inventions by Chinese firms involving a US researcher have almost doubled worldwide in each of the past three years, reaching 910 in 2014.

McKinsey describes four types of innovations – customer-focused, efficiency-driven, engineering-based and science-based. 

Let’s hope China’s business leaders, academics and policymakers pay attention to all these aspects as they all are important to China and will require significant R&D. 

Historically, of course, the Chinese have always been innovative, giving the world the compass, gunpowder, paper and printing press. 

It will be to everyone’s benefit if the current generation of Chinese innovators matches up to its ancestors.

This will create a demand for 10 million new urban jobs every year, even as manufacturing employment drops. 

But with China’s economy slowing, and its share market shedding value, there is a risk that companies might pull back on the research and development spending needed for China to become a global leader in innovation. I firmly hope this does not happen, and that business leaders maintain their commitment to long-term R&D, regardless of the current economic environment. 

China is certainly on the right path. Last year the country spent nearly Bt 200 billion on R&D, the second-largest investment by any country in absolute terms (behind only the US) and equivalent to about 2 percent of GDP.

China’s universities graduate more than 1.2 million engineers each year – more than any other country – and it leads the world in patent applications, with more than 825,000 in 2013, compared with about 570,000 for the US.

Another positive trend is rising Chinese investment in US R&D labs in an effort to generate patents and this will help China make the shift from being a manufacturer to becoming a driver of innovation. 

According to Reuters, patented inventions by Chinese firms involving a US researcher have almost doubled worldwide in each of the past three years, reaching 910 in 2014.

McKinsey describes four types of innovations: customer-focused, efficiency-driven, engineering-based and science-based. 

Let’s hope China’s business leaders, academics and policymakers pay attention to all these aspects as all are important to China and will require significant R&D. 

Historically, of course, the Chinese have always been innovative, giving the world the compass, gunpowder, paper and the printing press. 

It will be to everyone’s benefit if the current generation of Chinese innovators match up to their ancestors.