There has been a lot of global interest surrounding Chinese innovation in recent times, thanks partly to the rapid ascent of uniquely Chinese digital platforms, models and culture. China’s Shenzhen is arguably the global capital of digital hardware innovation and manufacturing.
Meanwhile the likes of tech giants Baidu, Tencent and Alibaba are matching and, in many cases, exceeding their Western competitors in re-inventing commerce, financial services and entertainment. China is the top source country of patent applications and grants today.
“Often, I meet people in Silicon Valley who still think all China can do is clone their ideas, but that’s backwards. Now, I see more Western companies copying China”, Rui Ma, an early-stage investor working between China and Silicon Valley, was quoted as saying in WIRED’s February story. “To Copy China” (2CC) may soon replace the once popular “Copy to China” (C2C) in tech discussions.
But, barely a few years ago, there was a widespread view that, while China is a master copycat, it can only be an inferior innovator at best. As recently as in March 2014, Harvard Business Review published an article entitled “Why China can’t innovate”.
The Diplomat ran a different piece with the identical title in August 2014. The often-cited reasons for China’s perceived inability to innovate are its rote-learning-based education system, top-down and centralised control and conformity culture.
Former Hewlett Packard CEO Carly Fiorina summed up this sentiment in her 2015 book “Rising to the Challenge: My leadership journey:
Although the Chinese are a gifted people, innovation and entrepreneurship are not their strong suits. Their society, as well as their educational system, is too homogenized and controlled to encourage imagination and risk-taking.
These misconceptions about the Chinese inability to innovate are due to “historical myopia” – superficial appreciation and narrow stereotypes about China. To unravel the true essence of Sino innovation, we need to look into the history, psyche and ingenuity of the dragon’s descendants.
A long history of innovation and discovery
Ancient China was a world leader in engineering, metallurgy, irrigation, agriculture, navigation, shipbuilding and infrastructure. Around the time when the Greeks were establishing democratic practices, the Chinese propounded meritocracy, which persists even today as its guiding philosophy of government.
The four great Chinese inventions – paper, printing technologies, the compass and gunpowder – enabled the early globalisation. Paper and printing fuelled the transmission of knowledge and religion, while the compass and gunpowder accelerated international trade and conquest.
Many Chinese inventions were either diffused through the Silk Road or developed separately in the West several centuries later. For instance, movable-type printing was first invented in China during the Northern Song Dynasty, some 300 years before German inventor Johannes Gutenberg introduced the same technology to Europe.
The Chinese were also well ahead of the rest regarding practical creations such as horse collar (1,200 years before Europe), cast iron (2,000 years), paper money (1,400 years),seismograph (1,600 years) and matches (1,000 years).
It was not a well-known fact that China was the victim of arguably the two biggest intellectual property thefts in history: its most coveted ancient exports of silk and tea. Silkworms and tea seeds were arduously smuggled out of China, which was orchestrated by the Byzantine and British Empires respectively, so they could be mass-produced elsewhere. In other words, China was among the most technologically inventive and advanced societies in pre-industralised times.
Interdependence vs independence
In his 2003 book, “The Geography of Thought: How Asians and Westerners Think Differently and Why”, author Richard Nisbett analyses the differences between Chinese-influenced East Asian form of thinking and the Western one originating in Greece.
The Chinese are natural systems thinkers. For them, the relationships between the parts and optimisation of the whole are more important than the parts themselves. By contrast, Western thinking is discrete and reductionist; it breaks up a problem or system into smaller parts in order to solve.
In short, the East focuses on the whole while West focuses on the constituents: interdependence vs independence, systemic vs atomic.
The Chinese way of life – from Taoism, Confucianism, fengshui, acupuncture and qigong to its governmental system – places the utmost importance on achieving harmony as a whole.
Confucianism, for instance, defines a person’s virtues through five core relationships – with the spouse, parents, siblings, friends and ruler. In Chinese psyche, the stability and success of the society outweigh the ideals and interests of the individual.
The unsung hero of modern China’s astounding resurgence is its 2,000-year-old system of governing and multilevel relationships that binds the highest authority in the capital to the most remote of villages.
‘Middle Kingdom mentality’
China’s vastness and abundance bred an introspective mindset, more concerned with unifying the imperial empire than outward expansion. While refraining from excursions, it has treated outsiders with suspicion and erected barriers – The Great Wall, Qing’s Close Door Policy, Opium embargo and more recently, the Great Internet Firewall – to block out unwelcomed actors. The Middle Kingdom mentality left a deep imprint on the innovative character of the Chinese.
First, the Chinese had been world-class innovators in spite of intellectual, cultural and linguistic homogeneity, even though diversity is widely known to be an important ingredient of creativity and innovation.
Second, the huge domestic market – 13th-century Song China accounted for up to 30 percent of the global GDP at the time – meant that China had rarely felt the need to adapt its innovations for use in the outside world.
Third, while copying is eschewed in Western culture and business practices, it is desirable in the Chinese psyche.
Traditional Chinese education was based on rote memorisation of ancient classics, rhythmic recital of Tang poetry and calligraphy by repetitive writing – all acts of copying. In the imperial system ruling over a significant fraction of humanity, successful engineering techniques, agricultural methods and social innovations invented in one locality were quickly replicated in the rest of the country.
This copying strategy was critical in improving productivity, raising living standards and, most importantly, keeping the empire intact.
Now, let’s relate all this historical and cultural backdrop to the modern context of Chinese innovation.
Chinese innovation is disruptive and systemic
The quality and practice of Chinese innovation still lag behind the world’s top innovators, but it is improving rapidly. It is disruptive to the technology leaders such as the US, Europe, Israel, Japan and South Korea because, while it is currently inferior, it could surpass the best-in-class in time to come.
Already in selected fields, such as manufacturing, renewable energy, digital finance, automotive production, agriculture, artificial intelligence and telecommunications, China is a serious contender. The age-old faith of the Chinese in strategic long-term vision, investment into the future and commitment to education puts it in good stead to win the race over the long haul.
The most distinguishing feature of Chinese thinking and, by extension, innovation is its systems approach. From the innovation perspective, the ability to integrate diverse domains, supply chains, customer touchpoints and data streams triumphs over the performance of individual applications.
The value resides in the integration, interactions and information flows of the components, and less in the components themselves.
China’s WeChat super-app platform and the proposed Social Credit System embodies this best. The WeChat platform revolutionised the Chinese internet and set it apart from the rest of the internet.
As a super-app, it mirrors a host of Western apps such as WhatsApp, Amazon, Facebook, Uber, PayPal, Instagram and much more. The various apps integrate and interact seamlessly with one another, using a single source of customer data.
Contrast this to the Western best-of-breed approach where users have to download, log in and use separate apps which poorly interface with one another, if at all. China recently unveiled a highly controversial Social Credit System computing the dynamic score of a citizen based on positive or negative encounters, such as online activities, traffic offences, timeliness of tax filing or even heroic actions.
These social scores are then used to prioritise or prevent the citizen’s access to public goods and services. It aims to align a person’s behaviour with social and governmental objectives, strengthening the national agenda.
The diffusion of Chinese innovation is relational
The Chinese style of diffusing its technology base is relational, not confrontational. Rather than competing with international contractors and vendors in the conventional way, it has instead relied on building mutually beneficial and reinforcing linkages between the home and overseas markets. Again, this prioritises the links over the parts.
The Belt and Road Initiative (BRI) and Chinese tech giants’ expansion into the rest of Asia illustrates this. BRI is a vast intercontinental network of capital, energy, materials, goods, communications, knowledge and human flows connecting previously isolated places and people. Investing in the flows would increase the interdependency of China and outside markets, giving it an edge over other big powers, both politically and economically.
Instead of setting up self-branded platforms in Asia to compete head-on with native ventures (as was the case for Amazon, Uber and other Western plays), the Chinese are building interdependencies with them.
Chinese tech mammoths Alibaba (investing in Lazada, SingPost, Tokopedia, Snapdeal, Big Basket), Tencent (investing in Flipkart, Go-Jek, Ola), Ant Financial (investing in Mynt, Ascend Money, M-Daq, Paytm), and Didi Chuxing (investing in Grab, Careem, Ola) have put tens of billions of dollars in regional tech players and one day will be integrating with them. These bridge-building forays are the tech equivalent of BRI, one might say.