As head of innovation for the Shanghai-based XNode powered by HighTechXL, Luuk Eliëns has devoted the past two years to helping to build scalable tech companies in China. Speaking at the recent Beyond Tech HighTechXL showcase at the High Tech Campus Eindhoven, Eliëns told the audience: “China is the new frontier of innovation. Not next week, not tomorrow, but today”. Explaining that Eindhoven is generating technology that China would like to make use of, he argued that this innovative Dutch city is in a prime position to collaborate with the Asian giant from a position of strength – provided that it takes smart precautions to protect its technology.
“We need to be smart, and not naïve, by creating win-win solutions. The two core lessons that I have, from my experience over the past two years, are, firstly, to make sure you keep your IP and technology in Europe and that you do a licensing deal with your Chinese counterpart. Secondly, find a good local partner to help you go to market.”
Indeed, following the uproar and debate related to industrial espionage at the Dutch tech company ASML, there is growing resolve to approach such collaboration in a smart fashion.
Making the case for the growth opportunity in China, and why he believes it is the foremost technological powerhouse globally, Eliëns pointed to the scale of resources to which China has access, the range of innovation development models that exist simultaneously in China, the role of the Chinese government in strategically pushing innovation forward, and the rapid rate of adoption of new technology by the Chinese consumer.
A new university each week
Knowledge resources in China are growing at a staggering pace, driving the capacity for innovation. “In China, a new university is opened every single week. And the sheer pool of resources and talent is paying off; China is producing twice the number of patents as the US, and ten times as many as in Europe.”
These resources are being applied in a way which is becoming far more interesting and complex than the “copy and paste” approach that had been typical in the past. Eliëns described the emerging models of technological innovation as ranging from “copy and integrate” (e.g. incorporating many more functionalities than the original technology), and “integrate and design” (e.g. incorporating completely new experiences), to application research (e.g. the developments in facial recognition).
“China is moving from ‘copy and paste’, towards fundamental research, and is going there very, very fast.”
Using high-speed train technology as an example, he showed that, until 2005, China didn’t even feature in a global ranking of the length of train networks by country. Today, it has 25.000 kms of high-speed rail network. It started by importing the underlying power-train technology, from Germany and the US. It improved this technology over time to the extent that it is now exporting this technology all over the world. “So, what started as copy and paste, has become copy and improve. That’s innovation in China.”
Strategic push from government
The role of government in pushing forward innovation in China is pivotal. Eliëns described the approach as “extremely strategic and much more open than we [as outsiders] think”. The government’s ambition to become the top artificial intelligence (AI) player in the world by 2030 has prompted it to target local tech giants. Baidu (in the area of autonomous driving), Alibaba (smart cities), Tencent (healthcare), iFlyTek (voice intelligence) “are all heavily subsidised and incentivised to develop this raw R&D technology for AI, with one important precondition: that the technology developed needs to be accessible to different partners and startups in China. So, the technology that is developing needs to be open source… That is how strategic the government is”.
The picture of China as an innovation powerhouse is completed with his view that the consumer is willing to adopt innovation at a rapid rate. To a large extent, this is owing to the emerging nature of the economy, which means that China is leapfrogging directly to the latest technologies. For instance, mobile payments technology has quickly been adopted across industries and across demographic groups, as consumers transition from cash, and bypass the now-outdated banking and payments technologies entrenched in more-developed economies.
“Whether you like it or not, China is the new powerhouse of innovation. We need to face the facts. If we don’t, we will miss the boat.”