The West must learn from China’s innovation

The West must acknowledge and learn from China if it hopes to gain a competitive advantage technologically, according to new report from The London School of Economics’ foreign policy think tank, LSE IDEAS.

Authored by Jonathan Liebenau, a Reader in Technology Management at The London School of Economics and member of LSE IDEAS’ China Foresight Forum, the report finds that the West must not continue to ignore the positive features of Chinese high technology business, but rather must learn from them.

According to the report, the emergence from China of technological world leaders is the result of particular domestic factors, such as the implementation of local and national policies to stimulate the country’s high-tech industry.

Such policies include initiatives to repatriate foreign-trained engineers to gain comparative advantage, as well as policies that favour domestic producers through state procurement and financing practices.

Alongside this, the report suggests that factors such experimentation, a willingness to adapt, a focus on comparative advantage, and the mobilisation of scale can account for the success of companies like Huawei.

Actors within the West and West-aligned countries risk overlooking the management and innovation practices that made Chinese national champions so successful in the first place, instead focusing on factors such as the extent of state support, of intellectual property violations or restrictions on foreign involvement in the domestic market.

According to the report, China’s success factors should give pause to both private sector actors and policymakers, as the world still has a lot to learn from Chinese high-tech business.

Jonathan Liebenau, Reader in Technology Management at The London School of Economics and member of LSE IDEAS’ China Foresight Forum said, “Too often, when focusing on China’s drivers of technological success, Western commentary focuses on state support, restrictive investment controls, strong central guidance, and “long-term thinking.”

“Worryingly, this has led to a dangerous narrative around how nations should respond in the face of greater international competition from Chinese companies. The world still has much to learn from Chinese innovators; the current rhetoric, unfortunately, risks foregoing this knowledge.”