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Beijing Summit Ponders Chinese Innovation

But the real burning issue on many minds--intellectual property protection--was not on the meeting's official agenda.

Lv Guozeng, China’s Assistant Minister of Foreign Affairs at the China Business Summit organized by the World Economic Forum.

BEIJING — The rise of China as a global force for technology innovation emerged as a keynote theme at the World Economic Forum’s China Business Summit held here over the weekend (Sept. 9 to 10).

But in interactive discussions throughout the summit, delegates cautioned that taking China’s technology companies global poses challenges due to several critical factors. Among these are a lack of innovation in product development, an immature domestic capital structure, and a critical shortage of talent in the ranks of top management.

The economic overtones of China’s technology development ambitions heard at the 2005 China Business Summit echo concerns voiced by tech industry analysts in the run up to the government/industry sponsored International Creative Industry Forum that took place earlier in the week across town, in northwestern Beijing’ Haidian District’s Zhongguancun Technology Zone (see Sept. 12 story)

Paul DiPaola, managing director of Bain & Company China, delegates and panelists summed up the key issues in an extensive series of comments posted on the World Economic Forum’s China Business Summit website. He noted that China has been building strong companies since the 1990s and he ticked off a list of the gating factors holding back more rapid business and technology development in China today.

“They are critically short of talent and their management teams (are) spread very thin. Their products are not unique enough — they need more product innovation. They also need to maintain a strong core business at home.”

China Business Summit delegates chewed over the innovation issue in depth at one panel session entitled: Innovation in China: Smart Money or Smart Strategy? Many of the issues they discussed have been sensitive topics among U.S. business executives in the U.S. semiconductor and electronics industries for several years. Many U.S.-based electronics makers have pioneered their way into China by setting up R&D centers but executives at these companies are also mindful of the high risks involved in new product innovation back in Silicon Valley.

While the issue of intellectual property protection was not on the China Business Summit agenda it’s the subject of ongoing discussion for many on the sidelines (see story)

Cheng Siwei, vice chairman Standing Committee, National People's Congress, People's Republic of China, noted that China is currently introducing technological innovation and resources from abroad.

“We have to upgrade our industries. We have to do our own innovation; we have to do our own R&D; and [invest] our own venture capital.” He described China to a “body country” rather than a “head country” implying that there is much more focus on labor than on innovation.

Edward Yao-Wu Yang, vice president and chief technology officer of Hewlett Packard’s Personal Systems Group, responded to a question on the evolution of innovation by noting that “...innovation has a very high failure rate,” adding “We should not be afraid of failure.”

Going forward in China, partnership and collaboration are two core competences. In the 20 years that HP has been in China, it has moved from manufacturing to software development to research and developing university relationships.

“China has always been creative,” Yang noted, adding that China is where paper and gunpowder were invented. “New skills are necessary to take it to the next plateau. We are not taking advantage of the full potential.”

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