China, Science & Trade
Grand Theft China?
The U.S. Chamber of Commerce released Tuesday a report about the rise and implications of China’s “indigenous innovation” policies. This is a think piece by long-time China watcher and journalist James McGregor of APCO Worldwide. I urge any of you working in China, or thinking about doing business there, to take a look at “China’s Drive For Indigenous Innovation: A Web of Industrial Policies”. Though the current debate focuses on tech industries, it has far broader implications.
Beijing has realized for several years that its industries soon will not be able to depend on being the world’s low labor cost supplier. This wasn’t a startling insight, but an inevitable progression as other countries begin their own march to development and seek to attract the industries that gave China its launch as an export powerhouse for cheap goods. Ergo, China must move into higher value-added industries. Domestic considerations are at play, too, reflected in recent labor unrest and sudden decisions to increase factory worker pay scales. China is, whether Beijing wants it or not, becoming more of a consumer market and needs to up its game in the quality of production. Beijing saw this several years back, culminating in the 2006 issuance of the “National Medium- and Long-Term Plan for the Development of Science and Technology (2006-2020)”. Given the catchy title, I’m not surprised I missed it at the time. The plan has become known by the acronym MLP, less of a mouthful.
The MLP is a blueprint for China’s scientific development – and for applying new technologies to Chinese industry. All sorts of policies have grown from the plan, such as determined schemes to build a modern Chinese-designed airliner. But the policy that really caught the business world’s attention was last fall’s announcement of the “indigenous innovation” policy, which seemed a pretty blatant attempt to force non-Chinese firms to hand over their technical know-how and secrets free-of-charge. Reactions from companies worldwide and the world capitals that support them have been predictably negative. Indigenous innovation has become the collision point between China’s necessary development of science and technology, and a form of protectionism Beijing deems necessary to foster industrial applications of this technology. It crosses the line when it becomes an excuse for wholesale theft of other people’s technology.
The MLP is a curious document. It says the expected things about developing science and talks about new labs, science centers, that sort of thing. But when it comes to innovation, it becomes protectionist and xenophobic in tone. “Indigenous innovation” is defined as “enhancing original innovation through co-innovation and re-innovation based on the assimilation of imported technologies.” This doesn’t sound particularly indigenous, but seems an exhortation to copy or somehow obtain non-Chinese technology, but then camouflage it somehow in Chinese decorations. The MLP gives this advice to Chinese tech developers: “One should be clearly aware that the importation of technologies without emphasizing the assimilation, absorption and re-innovation is bound to weaken the nation’s indigenous research and development capacity.” While embellishment on someone else’s inventions can be productive, and is common around the world, where is the emphasis on developing new and original ideas? Has the nation that has brought the world so many inventions over the ages lost its nerve, or its belief in its own people and systems to create something new? One wonders.
The U.S. Chamber report sums this up neatly: the MLP “… is considered by many international technology companies to be a blueprint for technology theft on a scale the world has never seen before.” The emphasis is mine.
