Will China be the great technological innovator of century or a protectionist copycat?

“Made in China” it is something we see in many products we consume. But it is not synonymous with good product, but often creates uncertainty: will it be good quality? This phenomenon is not new: no more than ask anyone who has lived in the age of 50-70 and remember something similar about the “Made in Japan”.

After World War II, Japan focused on being the world’s factory. And his brand was not synonymous with quality, but the opposite: their products were reputed to be copied and bad. However, the standard of living rose in the Japanese country, and began investing huge amounts of money on brands and 70. Japanese manufacturing became synonymous with quality. Sony, Nikon, Canon, Toshiba, Toyota … all create good products, and today nobody thinks engaged in making crude copies.


China
Image Source: Google Image

Therefore, one might think that China can follow the path of Japan now seems that Chinese companies are limited to making copies and shoddy products, but China can be the great technological innovation of the century, like Japan it was from 70 until the housing crisis erupted. However, it could also be that China will take its own course, there are indications that the Government protects its excess industry and does not encourage them to innovate.

Innovation in China is a fact

China is not only cheap and shoddy product. There is more to think that many Western brands products are manufactured there. For example, Apple manufactures all its products in various factories in China through its supplier Foxconn. Steve Jobs said at the time that their products could never be manufactured in the US and not the cost, but because it was impossible to find so many specialized engineers in manufacturing (30,000 needed).

In China it is possible to manufacture quality, as does Apple. For this need, other facilities, much specialized personnel (in each of the work) and factories are as mega cities ready.

And Apple is not the only major manufacturer that manufactures in China. Almost all electronics products we have at home, regardless of brand, are “Made in China”. Those who have a reputation for bad products are those that do not pass adequate quality control (and thus achieve lower costs).

But what about innovation? In China there is also innovation. Companies such as Huawei, ZTE, Alibaba, Baidu or Tecent are clearly innovative, not only nationally, but also globally.

Gone are the days when Huawei had legal problems with Cisco by intellectual property issues. In 2003, Cisco sued Huawei for copying your source for Cisco network equipment in your code, but ultimately withdrew the complaint with the commitment of the Chinese company to modify its products. A few years ago, the content of neutral code analysis report became known, and this makes it very clear that indeed Huawei was copying.

However, Huawei was last year and for the second consecutive year, the company the world’s most patents registered. ZTE was the third. That is synonymous with innovation.

But protectionism State

But the truth is that there is in China a certain economic protectionism. They do not put any hits for foreign companies to make their products there, indeed, promote it. But then it is not so easy to sell such products in the domestic market.

China’s argument is that to sell in any country its laws must be enforced. And the laws of China regarding individual freedom are quite complicated to fit with Western mentality. It is impossible to sell in China, Apple does, but others like Google have more problems (although there are still rumors that want to enter).

The last case was that of Uber, which has failed to enter China – as was his intention – and finally decided to sell the business to local competitor, Didi, and take a minority stake in the combined company. And it is that Uber has tried tojump into the Chinese market without local partners, with the result that, despite the price war (through subsidy), has not been able to lose a lot of money. It is very difficult to do business in China without a local ally and this is not so in the West.

Another example of how difficult it is for Western companies sell their products in China is Netflix. For some time Netflix is available worldwide with few exceptions.These exceptions are due to restrictions the US government in war zones or embargoes: Crimea, Syria and North Korea. In addition to these countries, the list is closed with China, where it is not available.

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That is, Netflix has been able to launch its service in 190 countries around the world, from Western countries to all Africa and the Middle East, for example. But not in China. And in his web they keep saying that they are exploring options to launch its service there.

HBO, incidentally, also fails to release their series in China, and fever Game of Thrones has not arrived officially. Yes, and there is a local copy of dubious quality that approaches the international tug.

Xiaomi is also a prime example of that still lack of innovation in China. The brand has terminals with very professional finishing at a great price. But they are focused on China and do not go out, among other things, that violate international patents. They are terminals that initially clearly copied by Apple, although it is true that now less. In fact, once saturated the local market (and protected because they are there untouchables by international companies) are buying patents to launch, once, to the western adventure.

There are many more examples. Internet companies that are successful in the West there do not succeed, usually by restrictions to free communication of Chinese law. It is a fact that neither Google nor Facebook or Twitter have a presence there. WhatsApp is anecdotal. Of course, there are “copies” Local roughly similar as Baidu, Weibo and WeChat (although in the latter case more than one copy have created very interesting innovations).

The road of protectionism is not official

Officially there is no protectionism in China. Since 1978 began to leave behind a disastrous communist politics that brought famine and millions of deaths, the way China has been economic openness.

The agrarian reforms started by collectivization and openness to foreign investment. The first few years, until the early 80s, consisted of this, and then came a second phase in which many state enterprises were privatized.

For starters, China approved the first patent law in 1984, and one year later and entered Paris Convention for the Protection of Intellectual Property. In 1994, two years after the famous “get rich is glorious” Deng Xiaoping, signed the Patent Cooperation Treaty.

The official opening was, however, when China joined the World Trade Organization in 2001. This marked a before and after, and exports to the rest of the world (mainly US and EU) soared.

Enter the World Trade Organization means that you have to meet standards on patents and that the maximum fixed tariffs are set. In general, countries that are in advanced countries are protectionist and nothing.

The global patent system has many flaws -not have to see that there are companies that live on the cases and denounce other firms, but it is a mechanism to protect research and development. China has national laws and treaties signed regarding these patents makes clear that it is a country open to innovation. And like all countries, uses strategies to benefit without skipping treaties, their local businesses. US does (prevents, for national security issues, Huawei sold there) and generally all countries of the world do. But within limits, and to drive off the official circuit, the WTO has very negative consequences.

Is China propagandist in its protectionist strategy? Why is it so difficult for foreign companies to settle there? Is there anything else besides the culture shock? Hopefully not, because otherwise, without competition, companies cannot be innovative. And without innovation, China will simply remain in being the world’s factory, which is not enough to grow to a certain extent reached economic development country. Maybe that’s why it is running low growth and are having for the first time in decades, economic problems.

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