9. Chinese innovation
Managing director China Market Research Group, Shanghai
For most of the past four decades, China’s economy has grown solidly with a model based on heavy investment and cheap production. But that model is broken, says Shanghai-based researcher Shaun Rein, and the environment in China is ripe for innovation.
China already has successful innovation stories to tell – digital giants Tencent and Alibaba among them – as the country leads the world in its mobile-first approach to the digital economy.
But for innovation to really take hold and for businesses and entrepreneurs to feel confident enough to invest, Rein says China needs to focus on IP protection, regulation and education.
He cites US sandwich chain Subway as an example of a business where IP protection went wrong. Entrepreneurs copied the idea and established near-identical franchises across China, making millions off a name to which they have no legal or financial right.
Rein says a lack of certainty around regulation and a fear that state-owned enterprises will be given priority have made potential investors wary.
“China’s version of Uber got hit with new regulations because the state-owned taxi fleets didn’t like the killing they were getting in the marketplace,” he says.
Rein says boosting the education offering in China should also be a priority to grow homegrown talent that Chinese companies can recruit to build their businesses.
What they can’t build or create themselves, Rein says they will buy.
“The Chinese will become the bank roller,” he says. “They are buying technology.”