Playing a trump card in global business

Future perfect

All the experts agree that China will be a major global innovation hub in the future. Many feel the country's ability to spur creativity and attract talent will be the core issue that it will need to tackle if it wants to be the global innovation hub.

George Yip, co-director of the Shanghai-based CEIBS Centre on China Innovation, says that in the next couple of years, China can indeed become a global innovation hub. "But, in China, people always talk about being the No 1, so it is still a long way off," Yip says, adding that it depends on individual industries.

"In the next decade, China will be one of the top innovation hubs for labor and engineering intensive sectors, such as telephones, in which China has already done a lot of work."

In the automobile industry, China is still far behind. It will be 20 years before it can reach the peak. For aerospace, it could take as long as 30 years, Yip says. China has lower per capita income than the US and Japan, but even countries such as Japan have become global innovation leaders only in certain categories.

Chen Xiangli, president of GE Technology Center in China, agrees, saying it will be difficult for China to overtake the US in innovation in the foreseeable future, as the latter is still an attractive destination for most top-quality talent. His R&D team in China has made significant progress since the center was set up in Shanghai in 2000, he says.

"For the first five years, our focus was to learn how to localize the products developed by GE's R&D labs in other parts of the world. Then over the next five years, we started to develop products for Chinese customers. Over the past two to three years we've been developing products for China as well as the rest of the world.

"For some products, more than 80 percent of our research outcome is now sold to countries outside China," Chen says, adding that the trend signifies the growing capability of Chinese innovators.

But he still believes talent is the key challenge for China because R&D has a long history in the US, thereby creating a huge pool of experienced professionals. "The majority of our R&D team in China has work experience of less than five years, but in the US you can find a lot of people with 20 to 30 years of experience."

But that is not the end of the story for China, Chen says. China's real opportunity in innovation lies in the middle-end products, which do not require the most complicated science skills but are still in high demand not only in China but also in other emerging as well as developed economies, he says.

Shen Jingting and Wang Wen contributed to this story.