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UPDATED: February 13, 2012 NO. 4 JANUARY 26, 2012
Innovation Blooms

Auto innovation

Xu Heyi, Chairman of Beijing Automotive Industry Holding Corp.: China's auto industry is switching gears despite sluggish sales in recent months. A brighter future is underway due to relatively low per-capita auto ownership in the country.

But Chinese auto manufacturers still have a lot to do to solidify their market foothold. In terms of market share, domestic brands have been lagging far behind their foreign counterparts.

To get out of this mess, we need to innovate our way out. Creative technologies and business models could sharpen the companies' competitive edge and build customer loyalty. To achieve that, we must learn through international cooperation, joint ventures, or even technology acquisitions.

Self-owned domestic brands and new-energy vehicles will be two major focuses for innovation of China's auto companies. Some firms have made significant breakthroughs in research into electric vehicles and hybrid cars. But still, vigorous efforts are needed to realize commercialization of those pioneering technologies and at the same time boost customer acceptance.

Another reason for concern is that domestic manufacturers of auto parts have weak innovation capabilities. Core technologies of engines and transmission parts are in the hands of foreign giants. That makes it difficult for auto producers to improve product quality and compete in global markets.

The government could play a bigger role in facilitating innovation in the auto industry. Policymakers should enhance inputs in that area and map out a feasible blueprint for long-term development.

Entrepreneurship matters

Sun Taoran, President of Beijing Lakala Services Co. Ltd.: A growing number of Chinese people are starting their own businesses and looking to expand their operations. That is an encouraging development and a needed boon for employment and the broader economy.

China has an improving environment for entrepreneurship as the huge population and a wealth boom create increasing market opportunities. Moreover, the government has spared no effort to provide assistance, including tax reductions.

Of course, not everyone can succeed because entrepreneurship requires great courage and risk awareness. But the most important factors are creative ideas and determination to implement them.

In China, many entrepreneurs tend to copy foreign companies' business models. Those businesses can hardly sustain themselves due to fierce competition and a lack of core competitiveness. For example, group-buying websites are mushrooming across the nation, but very few are able to make ends meet.

Capital shortage is usually the biggest problem for many start-up businesses. It is difficult for small businesses to obtain bank loans or receive venture capital investments or angel investments. From my experience, investors would only favor the most talented entrepreneurs and the most promising sectors.

If a business owner can luckily receive investments, he needs to properly handle his relations with the investor. In exchange for capital injection, the investor would require a board seat and larger say in the corporate operation. But the entrepreneur should not completely follow the investor's suggestions for corporate strategy. Instead, he must have ideas of his own and make decisions that are in the best interest of the company.

Failure is the unfortunate but probable outcome for most start-up businesses. Our society should be more tolerant of failed entrepreneurs. Also, the country needs to offer greater support, such as building a better social safety net, so entrepreneurs do not have to worry about their livelihood even if they fail.

 Email us at: huyue@bjreview.com

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