Innovations in China – How Lean principles support to solve the main challenges of successful R&D activities in China

March 7, 2014 | News China

Over the last decades China has successfully developed its reputation to be the factory of the world, but during the past years there have been dramatic changes in the Chinese economy, as many recent written reports and studies have shown. The goal has changed: China wants to become the world’s global R&D leader within the next years and will overtake the USA in terms of patent applications very soon. The question ‘why’ is also of easy answer. On the one hand the 12th five year plan of the central government strongly focuses towards Research and Development. On the other hand the expectations of the Chinese customers have been changing, which makes R&D in China and for China necessary. Besides the domestic enterprises, also multinational companies and foreign-invested enterprises are increasingly locating key R&D activities in China, to be closer to the market where the products are sold. As the Chinese market requires specific product functions, a high risk for the above mentioned companies would be to not identify the market needs correctly. This trend has also become obvious in the German Business Confidence 2013 Survey conducted by AHK and Staufen (part: “Innovations in China”). The globalization, the increasing requirements of Chinese customers and the Chinese law are more and more forcing foreign invested companies towards local development of products in China. Almost every German company in China is doing at least product or service customization and more than 400 of the Fortune 500 enterprises have already R&D centers in the country. This is creating new challenges. The need of waste reduction in R&D environments has strongly increased in western countries over the last years and it is now one of the main focus points of technology driven companies in China. Therefore it is necessary to understand what it means to be ‘lean’ in this complex business area, in order to be able to reduce waste and become more efficient. The principles of Lean in Product Development have been already described in articles and books, like e.g. “The Toyota Product Development System” (James Morgan, Jeffrey Liker). These principles are based on the same concepts as those of the Lean approach in manufacturing areas. The main goal of Lean Development is to reduce lead times through the elimination of waste. Innovation and product development represent the most effective levers for securing long lasting corporate success. In these days complex products are the result of complex development processes. Competition and market conditions condense the life cycles of products as well as the ‘time-to-money’ ratio. These challenges cannot be mastered by troubleshooting – the demands on modern development organizations have undergone a fundamental change. Minimizing waste in the process coupled with flexibility and breathability of the development organization are the starting points.

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