It is a mistake for most of the world to believe – based on faulty analysis – that China will surpass the US, or the West in general, in the development of technology and innovations. China will be able to achieve this only when it changes its political and economic structure.
There are two main issues that should concern the executives of the industries of the USA and in general of the West, but also of Japan, South Korea, etc., so that China will not be able to surpass them technologically.
Τhe development of future technology and innovations
The first is the development of future technology and innovations. No Western industry executive cares if China acquires the latest (Western) line of products, copies it, and then markets its own version of the specific products to be copied. Anyway, China has been doing this for decades and will continue to do so.
What should be of interest and protected at all costs as a top secret is the development of technology, which takes place in the countries of the West and Asia that are politically close to the West, and regarding their products that will be produced in the next 20-25 years. That is, the design of products for the next 3-4 generations. It is the development of technology that China is trying to steal in every way.
Simply put, a company is not concerned with copying its technology today, but protecting the innovation and technology of the future. This is the top secret of companies that produce and develop technology.
Production assurance and quality criteria
Second, is production assurance. Since, there is e.g. the ability to produce one car per minute worldwide (one VIN per minute); There are Japanese companies that produce three cars a minute, and, overall, everyone in the West produces the highest quality cars, which are sold all over the world. China does not have the ability to produce such a quality car, in such a fast time. The production line and quality criteria used in the West is the second top secret that must be ensured not to leak to China.
For this reason, Western industries are investing in the automation, digitization and technological transformation of their companies, in order to reduce the risk of the human factor involved in their production line. In short, it is not only the low cost of production, where China is famous as a country with low labor cost, but it is the speed of production with the strictest quality criteria. And in this sector, China has not reached the standards of the West.
But let’s look at some examples:
1. The acquisition of Volvo
The acquisition of Volvo by a Chinese company in 2010, but which did not include the development center of the until then parent company Ford, has begun to show strong problems (Source: https://www.nytimes.com/2020/06/14/world/europe/sweden-china-volvo.html). On the one hand, Volvo wants to keep the research and development center in Sweden, maintaining the original agreement reached, to operate the company independently. On the other hand, the Chinese company, which owns Volvo, wants to fully absorb it and transfer all production within China, with the aim of transferring the development center as well. The coming months are expected to be fraught with friction between the two sides, with the Volvo engineers’ union threatening a mass walkout.
2. Construction of civil aircraft
The Chinese state-owned commercial aircraft manufacturer was established in 2008 and to date has designed and produced just one commercial aircraft which appears to have only partial acceptance within China. In addition, the construction of the plane seems to have gone through great difficulties as it was delayed at least six years, while it still has not received permission to fly. Also, the freeze on trade with China during the previous five years brought even greater challenges to the production of the planes.
More specifically, technologies from General Electric, Honeywell, ABB and other Western companies cannot sell the necessary technology to produce airplanes (Source: https://www.businessinsider.com/comac-c919-chinese-commercial-jet-built-rival-boeing-and-airbus-2022-2). As a result, China today is several years away from the full development and production of Boeing or Airbus commercial airplanes using its own technology.
3. Medical technology
Based on the 2021 World Index of Healthcare Innovation, the top list does not include China, while in the top ten, only Taiwan and Singapore are non-Western countries. The elements used for comparison are quality characteristics, patient choice, the science and technology used, and finally the commercial and financial viability of the technology. Yet another industry where China is unable to keep pace with the West in innovation.
4. Agricultural technology
One would expect that the number one country in agricultural production, China, would have developed innovative solutions in the field of agricultural technology. However, among the leading companies in this field, there is not a single Chinese company to be mentioned (https://www.ventureradar.com/keyword/AgriTech). And in this sector the West has to present the leading innovative companies, mainly from the United States, Switzerland, Germany, Canada and the United Kingdom.
For what reasons will the West always remain the leading power of innovations?
1. Ιt is the liberal economic and business framework of the West
In other words, it is the freedom given to everyone to develop an innovation, an idea, a technological solution or solution development for the purpose of the economic benefits of the same. The next Steve Jobs, the next Henry Ford, has the freedom to develop an idea, an innovation and offer it as he wishes to the world. Whether by creating one’s own business, or through an existing business, or directly offering to the world, this is mainly a result of the systems that have developed in the western world.
It is what the person with an innovative idea wants to achieve whether it is an engineer, a doctor, a scientist, a simple farmer working on his farm, a woman who wanted to improve the life of service personnel. Enjoying the results of one’s innovations, whether material recognition or moral, is what makes the world competitive and seeks to take the next big step for itself and humanity.
On the contrary, creation for the purpose of exploitation of the idea by a higher political authority, as it happens in China, does not work as a catalyst for the creation of innovations. Thus they are limited to simple copying, corporate espionage and, of course, the acquisition of Western companies, with the aim of acquiring a technological base. Even if they acquire such a company, the further development of products and innovations is either very slow, or not at all.
2. The limitless free thinking model that develops in the new generations
The unrestricted thinking that develops in the new generations, in the field of education, from the small elementary classes to the universities. Schools and universities foster the model of free thinking, experimentation, while providing a wealth of information, unlimited literature, and resources for the development of innovative solutions and ideas. In fact, in collaboration with leading companies, which finance university and educational research programs, they bring enormous results in all sectors.
Pupils and students who are given the opportunity early on, to deal with the development of technologies and innovative solutions, are usually absorbed by the companies themselves, with very good salaries and benefits. They are granted permanent residence in the countries, while they are not prevented from jumping from one company to another, as is often the case with companies mainly in the East.
It is a fact that in recent years, especially in the United States, the percentage of foreign students, mainly from China and India, has risen sharply in relation to domestic citizens. They are students who create the next generation of scientists and occupy new positions in companies. In the years that I have met and worked with students, I have come to understand that their main goal is to stay in the United States, the United Kingdom, France, Germany and elsewhere, countries with the most sophisticated companies in all industries, avoiding returning to inflexible , their unfree countries.
Why can’t China make it?
First, the trade war and the East-West divide of recent years do not allow the sale of advanced and specialized technology to China, so simple copying or what is called reverse engineering is not easy either.
Second, as long as China’s business, social and economic framework is determined by the General Secretariat of one party, which is authoritarian, with no freedoms for citizens and entrepreneurs, there will never be an opportunity to create companies to create innovative solutions.
So, China may be the country where companies from the West are housed, it may have low production costs, it may be the country where almost everything is… Made in China, But in the field of innovation and development of new technologies, it is not is on the map.