BEIJING -- Focus on China’s progress in technologies like high speed rail and biotech misses the value of most Chinese innovation, which is about making small and incremental improvements to existing technologies, mostly in the electronics sector, according to two researchers at The Georgia Institute of Technology.
Most of us associate innovation with the invention of wholly new products such as the World Wide Web or the iPhone, according to Georgia Tech researcher Michael Murphree, who visited scores of Chinese companies as co-author of “Run of the Red Queen,” a book about Chinese innovation. “People are always on the look out for invention,” he said.
But China’s advantage lies in “second generation innovation,” making incremental improvements to existing designs, according to Murphree. China is the world leader in such innovation, he said. “We discovered that China is a wonderful example of how you don't need to have novel product innovation to be innovative,” he said.
One example of second generation innovation is the power-supply box for Apple's notebooks, which have been "improved with continuous R.&D,” the co-author of “Run of the Red Queen,” Dan Breznitz, told the New York Times. “The company that makes the power supplies is constantly doing research to make them smaller, more efficient, cooler, cheaper, and less energy intensive,” he said.
Second generation innovation can be better than invention at generating employment. “If your goal is broad economic growth, then original product innovation is not the best means to achieve that,” Murphree said, pointing out that Apple Inc employs around 40,000 people in the US, whereas Foxconn, the Taiwanese firm which manufactures the iPhone, has over 400,000 staff in China.
China’s lead in second-generation innovation depends on its large pool of IT and Engineering graduates. “Chinese universities are good at producing mid to mid-high level engineering talent,” Murphree said. That pool of talent enables companies like Foxconn to take Apple’s blueprints and turn them into realisable products. “In addition to its army of workers Foxxcon also employs armies of engineers,” he said.
Analysts who worry about whether China is headed for a “middle-income trap,” as labor costs rise and multinationals relocate to cheaper countries, while China is unable to create original products of its own, have overlooked the importance of second-generation innovation, according to Murphree.
“China runs as fast as possible to stay at the cusp of the global technology frontier,” Murphree said. China’s next innovation is not likely to appear spectacular, but that doesn't mean China isn't innovating. “A lot of innovation in general is very boring,” he said.