From the extended workbench to the world’s development centre: China on route to becoming an innovative power

October 23, 2012 | Global news

Patent applications tripled since 2007. China is no longer satisfied with manufacturing simple products in large quantities and selling these cheaply throughout the world. The world’s second largest economic power is well on the way to becoming a key player in new developments and innovation too. This is best exemplified in the solar and wind energy sector. According to Staufen AG, although it will take a while until an extensive innovative culture has asserted itself in the country, Western companies should prepare now for the high-tech competition. “To date, most innovations apply to the Chinese domestic market, and are not yet really present here in Germany,” explains Markus Franz, Managing Director of Staufen AG in China. “However, that will change in the foreseeable future”. According to the European Patent Office, in 2012 patent applications from China have tripled compared with those five years ago. Therefore, China is in fourth place behind the USA, Japan and Germany. “The increase in patent activity in China shows that both companies and statesmen in the People’s Republic are increasingly acknowledging the value of intellectual property, and want to secure it permanently,” says Franz in his interpretation of the development. The country had made major progresses, but the implementation was inadequate. “However, the government had announced that its efforts in this respect were to be reinforced. After all, the future of Chinese companies and their innovations naturally stands and falls with the increasing development activity.” Fertile soil for innovations
The Chinese government actively promotes research and development in its own country, including by way of restrictive measures imposed on foreign companies and a purchasing policy that favours domestic enterprises. “The political decision-makers consider the development away from the west’s workbench to an innovative power essential for the country’s long-term economic success,” says Franz. “After all, due to the increasing energy prices and wages, China cannot pin its hopes alone on the cost advantage in the long term.” In addition to the government, the Chinese innovative efforts also play into the hands of the high training standard of the new generation. “Young Chinese with university degree are well-trained, in particular the large number of those who have spent time abroad and who therefore bring additional know-how back to the country,” explains Franz. However, that is not only an advantage for domestic companies. “Although such talents are hotly contested in China, European and, above all, German companies often have the advantage, however, in that they enjoy a good reputation and therefore a corresponding image for their employees.” According to Franz, ever more companies are identifying these opportunities, and in the meantime also conduct research and development at their Chinese branches. Processes and quality are becoming more important
The quality and process awareness of the Chinese is increasing in conjunction with the innovative efforts. “The demand for consulting and training in this area is growing very rapidly,” observes Franz. “The companies really want to improve – starting with purchasing through primary materials to assembly, the final product and quality controls. The fact that Chinese products appear to be of an inferior quality compared with Western products only applies to a certain extent.” Progress can be clearly seen, above all in the case of technical products that are sold on the European and US American market. “The competition in China is not idle, on the contrary,” assesses Franz. For Western companies the situation likewise calls for them to “go that extra mile.” Only efficient processes, well-trained and loyal personnel as well as new, innovative products that are swiftly launched will secure long-term competitive advantages.

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