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China: Imitator or Innovator?

By: Dr. Andy Tiller

Imitator is Innovator

China has expressed its aim to build an innovation economy, and the evidence would suggest that the country has gone some considerable way towards achieving its ambition. China may have grown into a technology powerhouse by initially following the example of the West, but the country is now carving out its role as a global leader in mobile Internet: setting trends in telecommunications, mobile devices and social commerce. 

At a recent meeting about copyrights in China, State Internet Information Office VP Peng Bo stated that China was becoming a “fast-lane innovative nation.”  He went on to say, “This nation that once bore the stain of a shanzhai reputation is becoming a globally-renowned innovator.”

Shanzhai is the Chinese expression for “knock-off” or “copycat" and, when it comes to the Mobile Internet, he’s right. China is leap-frogging to the forefront of global innovation. The thing that needs to change now is the foreign perception of China. At AsiaInfo we see the tired, old stereotype of China as a "follow fast" market perpetuated on a daily basis. In reality, it is an outdated image as China has, in many ways, redefined markets like search, commerce, social and entertainment. The nation is ahead in mobile, having already tackled many of the challenges that operators in Europe are now facing. Ironically, it is we in the West who will be taking inspiration from them soon.


The innovation nation

The power balance is already shifting from West to East. This was flagged earlier in the year when Chinese e-commerce firm, Alibaba, began public trading, and immediately joined fellow Chinese companies, Baidu, Tenecet and Xiaomi, in the world’s top 10 largest Internet companies (by stock market value). Headlines such as "Internet Power Balance tilts towards Asia" (Wall Street Journal) showed that people were finally waking up to the power drain from Silicon Valley.

But still, many people questioned whether this dominance was anything to do with innovation. For a start, skeptics argue that Chinese Internet firms benefit from some serious scale – and they do. Joseph Chen, chief executive of Renren, has acknowledged this himself saying that the size of the market is a serious advantage to big market-cap companies saying, “It’s the same technology, but when you put it in China, it’s worth more.”

The user base is vast and the facts speak for themselves: with a population of 1.35 billion, there are currently around 642 million Internet users in China, which is only 45 percent of the population. It also has the largest smartphone market in the world – with around 630 million connections (GSMA Intelligence, Q2 2014).

The numbers are certainly staggering, but sometimes distract from the other story: how advanced and dynamic the consumer market is. China’s market has moved much more aggressively into mobile than the U.S. and Europe. This was highlighted in Google’s Consumer Barometer, released last month, which showed that Asia was the only continent to have gone “mobile first”, where Smartphone adoption has overtaken computer adoption.

Secondly, critics point out that a high proportion of China’s market-leading companies are based on ideas copied from their Western counterparts - Baidu vs. Google, Renren vs. Facebook, Weibo vs. Twitter, Xiaomi vs. Apple, WhatsApp vs. WeChat, etc. - and they, therefore, challenge the concept of China as an innovator.  



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