‘China must change gear to sustain growth’

Following three decades of unprecedented economic success, China’s growth requires a ‘shifting of gears’, in the view of Bill Fischer, Professor of Technology Management at Swiss business school IMD. China’s real advantage in the global economy has been low-wage manufacturing labour, says Fischer. “It has not been innovation. It has not been services. It has been single-focused on the advantages of making existing products cheaper – full stop!” In his view, its growth has been powered not by doing things – anything – differently but by doing existing things less expensively, and that takes cheap labour. He questions whether there has been a Chinese enterprise that has created a noteworthy new product innovation, such as Xerox’s PARC personal computer, Kodak’s digital camera, Boeing’s 747, Philips’ CD or Sony’s walkman. Or an internet offering as noteworthy as Amazon or Facebook. And while he believes China is awash with creativity, he says it’s not organisational innovation. “What sets the eBays and Amazons and Apples apart is that they are all examples of “organisational” innovation. The iPod, iPhone and iPad experiences could not have been designed by one person; it needed a team, and a diverse team at that. Same is true behind most of the big innovations of recent times. “This is China’s time to address the innovation issue so that its prior successes represent the “end of the beginning” – a period of time when China will move from being the factory of the world into a world-class innovator,” says Fischer. “If this does not happen, then we are likely looking at the “beginning of the end” of China’s distinctive competitive advantage and a movement into a time when China is just another lowwage producer, bigger than most, but no longer either the biggest or the lowest priced.” Fischer will direct IMD’s Mastering Innovation Globally programme in Hong Kong from October 25-27.