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Rose Deller

October 5th, 2016

Book Review: China’s Next Strategic Advantage: From Imitation to Innovation by George S. Yip and Bruce Mckern

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Estimated reading time: 10 minutes

Rose Deller

October 5th, 2016

Book Review: China’s Next Strategic Advantage: From Imitation to Innovation by George S. Yip and Bruce Mckern

0 comments | 1 shares

Estimated reading time: 10 minutes

In China’s Next Strategic Advantage: From Imitation to Innovation, George S. Yip and Bruce McKern suggest that China has leapt successfully from being an imitative to an innovative country. As Chinese companies become increasingly innovative and perform better in domestic and international markets, the authors argue that other countries need to learn from China or risk lagging behind. Besides analysing both Chinese firms and MNCs in China, the book also taps into questions of open innovation and intellectual property protection practices. Yao Han appreciates the use of detailed examples and cases in illustrating the process towards innovation in China.

This book review has been translated into Mandarin by Ning Ye (Mandarin LN828, teacher Jinxi Chen)as part of the LSE Reviews in Translation project, a collaboration between LSE Language Centre and LSE Review of Books. Please scroll down to read this translation or click here.

China’s Next Strategic Advantage: From Imitation to Innovation. George S. Yip and Bruce McKern. MIT Press. 2016.

Find this book: amazon-logo

chinas-next-strategic-innovation-coverThere are some common factors that lead to innovation for all countries in the world. In this new book, China’s Next Strategic Advantage: From Imitation to Innovation, George S. Yip and Bruce McKern outline the special characteristics of China’s path from imitation to innovation.

Four factors have driven innovation in China, which fall into two categories: customers and culture; and capabilities and cash. Besides this, enablers of innovation on both the supply and demand side lead local companies and MNCs to innovate. Supply enablers include the very large number of relatively low-cost engineers and scientists (especially the increasing number of returnees educated abroad), government support, the famed entrepreneurial spirit of Chinese business people and evolving local Internet-related industries extensively funded by the Chinese government. Demand enablers include the rapid growth of China’s market, multiple market spaces, a lack of tradition in terms of customers’ spending habits resulting from the discontinuity created by the early years of the Communist system, China’s need for simpler and cheaper products and fast-moving large-scale government projects.

The main method of this book is the case study. It uses vast cases and mini-examples to vividly illustrate the specific features of local companies and multinationals in China on their way to innovation. The samples for different topics usually cover a wide range of stakeholders. For example, on the subject of open innovation, the interviewees include representatives from Chinese companies, foreign multinational companies in various sectors, major Chinese universities, China’s Ministry of Education and Ministry of Science and Technology, the Science and Technology Committee of the Shanghai Municipal Government and the China Academy of Sciences. By conducting vast interviews with numerous representatives, the book is rich in detailed examples for readers to explore.

For example, China’s Next Strategic Advantage is useful for companies running businesses in China as it provides specific instances of the keys to success in ordinary operations – including a company’s relationship with the government. The book suggests that to be successful in China’s market, one needs to be embedded in China’s innovation ecosystem. That includes applying for funding from the local government first, and then from the central government. Another example relates to Chinese talents, who might be more conservative in speaking their ideas. Company managers may find the following practice useful: having these employees exchanged to experience working in headquarters in other countries or organising the brainstorm meeting in a different way.

chinas-next-strategic-innovation-imageImage Credit: Beijing CBD – Jianwai SOHO, Yintai, WTC, Jingguang (CobbleCC CC BY SA 3.0)

Besides these cases, the book utilises indicators of innovation to quantitatively illustrate the growth in the innovation performance of China. It numerates several global rankings to indicate the position of Chinese companies in terms of their innovation investments and outputs, such as the 2014 EU Industrial R&D Investment Scoreboard and the Thomson Reuters Top 100 Global Innovators list. To show the innovation output of China, this book chooses four groups of indicators: scientific scholarship; China’s share of global high-technology manufacturing; its share of global high-technology exports; and China’s ranking on indices of innovativeness. Researchers may raise some interesting questions for further study from those numbers: for example, what does the distribution of the industrial R&D investment look like for Chinese companies? And what hinders Chinese companies from increasing this?

A strand of research related to this book is the role of the Chinese government in promoting innovation in China. Yip and McKern recognise that the increasing number of returnees play a very important role in promoting the innovative capabilities of China and point out the value of entrepreneurial spirit in enabling innovation. These are analysed by this book more as a fact than a strategy actively promoted by the government, though it acknowledges the effects of government support. Behind the increasing amount of relatively low-cost engineers and scientists, it is the national strategy that expands the scale of higher education and adopts policies that can attract scientists educated abroad to return to work in China. Similarly, the large number of start-ups that are born and grow in an increasingly friendly environment surrounded by stimulating policies from the government. Hence, it may enrich the book to further explore the interaction effects of public policies with the low cost of high-level labour as well as the entrepreneurial spirit, just as it does with other characteristics such as the high flexibility, adaptability and inclusiveness of Chinese markets. For example, governments have played an important role in making the market able to tolerate failures in the trials of electric cars.

The book also assumes that government organisations and state-owned enterprises need to be changed to facilitate the formation of a competitive and open system. However, MNCs and local private companies enjoy special policies from the Chinese government for certain time periods. This poses the question of what ‘fairness’ really means for such a system. To have one type of entity enjoy the same policies as another type is one way of understanding fairness. Alternatively, companies with special characteristics can enjoy policies specific to their features and needs so that they can compete with other companies of similar capabilities at the same level.

State-owned enterprises are criticised for their lower productivity. However, using productivity or innovation outputs to compare the performance of state-owned enterprises with that of other types of companies may be slightly inappropriate. Some innovation and improvement in productivity may need more time and investment both in capital and labour, while the know-how produced during this process can be easily transferred to other companies within a short time. As a result, it may be observed that other companies have better productivity and innovation performance. Therefore, when evaluating the benefits and costs of companies such as state-owned enterprises, it is necessary to include the spillover effects.

In all, built on vast and detailed interviews, news reports and existing literature, China’s Next Strategic Advantage highlights the success of China’s innovative strategies and practices and reveals the keys to the successes of various types. The authors argue that there is much for MNCs to learn from China and there is an urgent need for them to do so. Readers of various backgrounds may find this book useful. Practitioners – both company managers and employees – may benefit from guidelines for strategies towards innovation complemented by the vast cases and mini-examples. Researchers may gain insights and be inspired by the data for their own research. The book is also valuable to policymakers at different levels, who can learn a great deal of what is needed from the demand side.

Yao Han is a PhD Candidate in School of Politics and International Relations at the University College Dublin and a PhD researcher in Geary Institute for Public Policy at the University College Dublin. Beyond her doctoral research on international trade and conflict embedded in networks, she has broad research interests such as innovation and development. Her related research includes the clusters of ICT industries in mainland China, industrial clusters and regional competitiveness and spillover effects of innovative clusters. Twitter: @hanyao_sara.

Note: This review gives the views of the author, and not the position of the LSE Review of Books blog, or of the London School of Economics.

书评:《中国下一步策略:从模仿到创新》 George S. Yip and Bruce McKern. MIT Press. 2016.

Review translated by Ning Ye (Mandarin LN828, teacher Jinxi Chen).

世界各国的创新之路具有一些共性的因素,伊普和麦科恩(George S. Yip & Bruce McKern)的新作《中国的下一个战略优势:从模仿到创新》对中国从模仿到创新这一旅程的特征进行了概述。

中国的创新推动因素包括两类、四个:客户和文化; 能力和现金。此外,供求双方对创新的需求也促使本地公司和跨国公司进行创新。供方的需求包括:大量成本相对比较低的工程师和科学家(特别是越来越多的海归人员)、来自政府的支持、中国商人久负盛名的创业精神、受到中国政府广泛资助的当地与互联网相关的产业等。需求方因素包括:快速增长的中国市场、多种市场空间、与传统截然不同的消费习惯(社会主义体制早期出现断裂所带来的结果)、中国对更简单、更廉价的产品需求、高速运行的大型政府项目。


例如,《中国的下一个战略优势》对那些在中国有业务活动的公司很有用处,因为它提供了成功进行日常运营活动的具体案例,包括处理公司与政府的关系等。本书提出的意见是:要想在中国市场取得成功,就必须加入中国的创新生态系统,包括:首先从地方政府申请资金,然后再向中央政府申请资金。另一个案例涉及到中国的人才,他们可能在表达自己意见方面比较保守。公司的管理人员可以考虑下面的做法:把这些员工调往其他国家的总部工作与交流, 或者换个方式来组织头脑风暴会议。

Image Credit: Beijing CBD – Jianwai SOHO, Yintai, WTC, Jingguang (CobbleCC CC BY SA 3.0)

除过案例,本书还用创新指标来对中国创新表现的增长做了定量的说明。它列出了几个全球性排名来说明中国企业在创新投资和产出方面的地位,例如2014年欧盟产业研发投资记分板和汤森路透100强全球创新者名录。为了展示中国的创新产出量,本书选择了四组指标:科学奖学金、中国在全球高科技制造业的市场份额、在全球高科技出口中所占的份额与在创新指数上的排名。从这些数字中,研究人员可能会提出一些有趣的问题,来进行进一步的研究,例如:中国公司的产业研发投资分布是什么样子? 它们若要在这方面有所增加,将会遇到什么阻碍?

中国政府在促进中国的创新究竟起着什么样的作用,这是与本书相关的多项研究的主题。 伊普和麦科恩承认,越来越多的海归人员在促进中国的创新能力上发挥了非常重要的作用,并指出创业精神在促进创新方面的价值。虽然该书承认政府支持的功效,但是这只是将其作为一个事实而非政府积极推动的战略作出的分析。中国具有越来越多的相对低成本的工程师和科学家,并将扩大高等教育规模与吸引在国外受过教育的科学家回国工作确定为一项国策。同样,大量的创业者在一种日益友好的环境中出现与成长,而这一环境是受到政府的政策鼓励的。因此,如果能进一步探讨公共政策与高层次、低成本的劳动力以及创业精神的相互作用,那就会使本书的内容更加丰富,就像中国市场的高度灵活性、适应性与包容性等特征使本书增色那样。例如,市场能够容忍电动汽车试验中的失败,政府在其中是发挥了重要作用的。

该书也作出这样的假设:政府组织和国有企业需要变革,以促进竞争和开放机制的形成。然而,跨国公司和当地私营公司在一定时期内享有中国政府的特殊优惠政策,而这为我们提出了一个 ‘公平’在这一体制下到底是什么的问题。对公平的一种理解是:一类公司实体与另一类实体享有同样的政策。另一重理解是:具有特殊性的公司享受其特有的政策,以便与同等水平、类似能力的其他公司竞争。



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Rose Deller

Posted In: Asia | Economics | Reviews in Translation

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This work by LSE Review of Books is licensed under a Creative Commons Attribution-NonCommercial-NoDerivs 2.0 UK: England & Wales.