China Innovations and Cultural Barriers

Author: Joy Huang

During a recent visit to GlaxoSmithKline’s 400-person strong R&D center in Shanghai, the VP of R&D operations proudly showed us their slogan “Discovered in China”. In Chinese, the slogan was even more impressive since “Discovered” in Chinese pronounces the same as “Made” but writes completely differently.   It’s one of those very clever slogans that give you the “Ah-Ha” moment. Another visit to a Shanghai Creative Industry Park led us to a huge show room with endless displays of their design work. A giant sign in Chinese calligraphy prominently showed off the company’s slogan, “Created in China”.

 

All around China, the spirit of innovation is gaining momentum and becoming the next big trend. The central government has put in its Five-Year-Plan (2011-2016) a priority to transform China from manufacturing-led to innovation-led. The goals are clear and ambitious, from “Made in China” to “Designed in China”.   And so far China has made significant progress in this regard. According to WIPO’s (World Intellectual Property Organization) recent report:

  • In 2011, China patent filings increased 33.4% from previous year, making it the fourth top country of patent filing after U.S., Japan and Germany.
  • Chinese company ZTE Corporations ranked first in total applications in 2011. Another Chinese company, Huawei Technologies Co., ranked third.
  • China ranks 29th by the Global Innovation Index and is the only developing country among the top 30 innovators

Of course, despite the progress, China has a long way to go to become a truly innovative nation. Upon closer look, patent filings from China have been dominated by incremental process improvements rather than break-through fundamental inventions.  Government policy and incentives aside, the Chinese are clearly aware that there are many other barriers along the way to achieve this goal. One of the top concerns is how the traditional Chinese culture can hold back innovative initiatives.

 

Collaboration Culture

Innovations tend to be born with collaborations among different groups and people working closely together.   Such an environment stimulates idea generations and productive teamwork. In most Chinese organizations, there tends to be a culture of territory building and silo’s. Each work group has a clearly defined role, and it is not usually encouraged that one steps out of this role and take initiatives outside of it.

Teamwork has a very different meaning in China. Teamwork generally flourishes inside individual work groups where each person treats it as a “family” - this is the most effective and common management style in China. Everyone is expected to help out however he can, but only to his teammates.   Between work groups, competition can be fierce and politics often take priority over business objectives. It is not uncommon for one division head to plan for a “secret trophy project” without letting another related division know.  Such management style limits the potential of a collaborative environment, and narrows the vision and imagination of each group.

 

Understand Customer Needs

Successful innovations are more than just a hunch of a good idea. It generally does not go far if not further validated by thorough research and analysis of the customer needs.   China has, in the last thirty years, primarily thrived on manufacturing - led business models. To meet customers’ needs, business priorities were placed on quality assurance, production efficiency, supply chain and the like. Little attention has been paid to understand who the end users of the products are and what they want.  For example, market research is usually one of the least developed and under budgeted area inside most Chinese organizations.  

In addition, the Chinese has traditionally always relied more on intuition to make decisions rather than analytics. One of the great cultural influences, Daoism (The “Way”), believes that nature has its “way”, is constantly changing, and that everything has two opposite sides co-existing.   By contrast, around the same time when Daoism was created, the Greeks invented logic that greatly influenced western civilization’s emphasis on analytical thinking.

 

Taking Risks

Risk taking is no doubt an essential ingredient of innovation. This means questioning the status quo and not being afraid to be embarrassed or even humiliated for novel ideas. The Chinese culture, on the other hand, generally rewards obedience and gives a hard time to those who cause embarrassments to a family or organization. Business management style tends to be risk-averse. If a concept has not been tested, it makes people nervous.

Finally, what have worked in the west do not automatically work with China. For example, in China, individuals generally shun from being recognized in a public way for their achievement. They prefer to be praised as a team and keep individual profiles low-key.   And some western companies have been very successful adapting their models from rewarding individuals to rewarding teams by setting up “innovation team” projects.

 

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