The innovation gap is still widening between Chinese manufacturers and their European and American peers. A most recent survey shows that 90 percent of European and American multinationals have made innovation a part of their strategy and 80 percent of them invest at least 10 percent of their profits into R&D activities. 55 percent of their innovations are the result of their cooperation with universities, research institutes and other enterprises.

But the story is different in Chinese enterprises which do not input much of their resources in R&D. Many small and medium sized ones do not even have any R&D. Statistics shows Chinese businesses hold one thirtieth of patents of that by Japanese and American companies. Many Chinese enterprises rely too much on imports of core technologies and equipment. Imported equipment costs more than 60 percent of China’s input in equipment every year.

Recently, the Time Magazine in America published an article expressed concerns on the transfer of US manufacturing base to China. It also offered a solution: making US enterprises more innovative. The article recalled how innovation helped American manufacturers resist the challenge from Japanese competitors 20 years ago.

Ms. Panchak, editor-in-chief of Industry Week, pointed out that many manufacturers were worried about competition on prices because that was their weakest point. But their worries are caused by their little progress on innovation. Players with a futuristic vision can always find ways to offset price pressure with innovation.

Source: Peoples Daily Online,


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