China: for innovation, too big to fail?

John Quelch writes in the Harvard Business Review that China has a clear, coordinated innovation strategy -- and the U.S. does not. Is the "Asian Century" upon us?

Much like the difficulties of upgrading aging infrastructure, the United States is falling behind emerging economies such as China and Brazil because its corporate tax code, political gridlock and bureaucratic red tape are too much to bear for the biggest multinational companies.

John Quelch writes at the Harvard Business Review that there's too much going right in China for it not to surpass the U.S. when it comes to international economic clout, and that American dismissal of the Asian powerhouse as a manufacturer, not innovator, severely underestimates the nation's ability to do so.

He writes:

From gunpowder on, the history of Chinese innovation is strong. Chinese society is highly competitive. When the Chinese can no longer make easy money imitating, they will start innovating. Home-grown innovations will motivate tougher enforcement of intellectual property regulations.

Within his post, I gathered three reasons China is going to succeed.

Those were:

  1. Education. Chinese parents invest heavily in their children's education, often because it directly impacts their comfort in old age.
  2. Regional competition. The Chinese understand that owning a brand is much more profitable than simply manufacturing it; major corporations in Japan and South Korea are great targets to compete against.
  3. The new generation. What China is today will not be what it is tomorrow. Millennials are "leading vibrant arts and fashion scenes in the major cities," building cultural infrastructure that encourages innovation.

The silver lining for the U.S. as far as competition is concerned is that it will take several decades for China's innovation play to reach maturation. But the writing is on the wall: China has a clear, coordinated strategy, and the U.S. does not.

Get Ready for China's Innovation Juggernaut [HBR]

Photo: An art gallery exhibition in Shanghai. (Dave Morrow/Flickr)

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