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Homegrown Innovation Helps China Shine
Homegrown Innovation Helps China Shine
UPDATED: July 26, 2010 NO. 30 JULY 29, 2010
Homegrown and Inventive
All indigenous innovation-related efforts are aimed at cultivating markets for both domestic and overseas products


MADE BY CHINA: An indigenously developed gasoline-powered train engine of the CFTEC series rolls off the production line at Hunan Changfeng Motors Co. Ltd. on January 16, 2009. As the fruit of integrated innovation, the CFTEC series was developed from acquired technologies from U.S. automaker Ford (ZHAO ZHONGZHI) 

This is what countries across the globe are doing now. While the United States invests mainly in emerging industries—because it has no real advantages in traditional manufacturing—China's indigenous innovation strategy covers both emerging industries and the transformation of traditional ones. That's why we emphasize integration, acquisition and assimilation of overseas technologies as well as technological reinventions.

What benefits will the campaign bring to China's ongoing industrial structure optimization?

China wanted to adjust its industrial structure because at present investment growth is mainly the pulling power largely contributing to its industrial growth. Faced with insufficient technological innovations and relying on foreign technologies, Chinese companies have had to increase investments in labor, resources and capital, and expand their production capacities to maintain growth.

We have to establish a national system for indigenous innovation in order to facilitate structure optimization and make it easier to adjust to changes in domestic demand and the development of emerging industries. To change the export-driven growth model, Chinese companies should target domestic customers instead of overseas markets. The Central Government must also cultivate an independent technological innovation system for the manufacturing sector. Independent carmakers like Geely and Chery, for instance, can decide which models to make, but FAW Group Corp. Ltd. and Dongfeng Automobile Co. Ltd. engaged in joint-venture operations have no similar say in model selection.

Acquiring foreign technologies is another reason to build the national innovation system. While the gap between Chinese technologies and overseas technologies has narrowed, more and more foreign investors are inclined to establish wholly foreign-owned enterprises instead of joint ventures to prevent technology from "leaking." These foreign investors will soon form a firewall between foreign businesses and China's national industries. Under these circumstances, China could face a technological deficit.

Without indigenous innovations, there would be no way out of the predicament, especially for military industries and state-of-the-art technologies of emerging industries which developed countries restrict technology exports to China.

Does offering priority to indigenous innovation products equate to decreases in imports of foreign products?

It will not necessarily mean decreases of similar imported products, because the country still has to import products and technologies that local researchers and engineers cannot develop themselves.

The government's move doesn't completely exclude foreign products. If China-made products succeed in winning market recognition, they will help expand the market for similar products produced overseas, as is the case with electric cars. If the market potential of electric vehicles is unleashed thanks to the government's support for R&D efforts in China, international brands of electronic vehicles will also have the chance to secure market shares.

Actually, all these indigenous innovation-related efforts are aimed at cultivating markets for both domestic and overseas products.

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