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January 17, 2014

What does China’s innovation economy mean for Canada?

Over the past year I’ve written a couple of posts about China’s evolving role in the global innovation economy. For example, in October, upon returning from a research trip to Guangzhou, China, I wrote that the country’s efforts to develop globally competitive competencies in the life sciences were quickly bearing fruit. And in April I wrote about the country’s nascent ICT sector and their capture of significant market share both domestically and abroad.

Across this work I certainly don’t dismiss the still massive challenges the country faces as it relates to patent and credential quality, as well as the larger question of how dynamic this economy can be given ongoing restrictions in political and public spaces. However given the path the country has taken since Deng Xiaoping’s release in the late 1970s, I’m prone to thinking that they may just be able to continue this path of upward development, including in the creation of innovative, and globally competitive firms.

Seconding this opinion (and we’re certainly not alone) is a report in yesterday’s Wall Street Journal. In it, they report on the “Rise of China’s Innovation Machine” and the development of a globally competitive tech sector. It’s behind their paywall but here’s a snippet:

“China has long been the factory floor that churns out popular gadgets for companies world-wide, but the country’s own technology products were rarely viewed as leading edge. Now, that is beginning to change. Increasingly, China’s own technology companies are challenging market leaders and setting trends in telecommunications, mobile devices and online services.”


Now, for every positive article on China’s evolving innovation system, there are ones like this one (also in the WSJ) that highlights the ongoing, and potentially growing problems, the country faces. As Ken Miller writes,

“China still has trouble retaining its best and brightest talents onshore. A white paper published in October by the official Chinese Academy of Social Sciences noted a growing number of Chinese scientists who had returned to China from the West are now leaving again.The reasons are complex (the white paper cites pay differences and desire to reunite with family members who stayed in the West), but a big factor is the political environment. Beijing seems to expect that creative professionals will be able to thrive in an environment where they can’t network on Facebook or voice freewheeling opinions on any topic, business or political, under the sun. But leaders should be worried about whether those professionals will even want to live in such a place, let alone be able to create productive new products and businesses there.”


Ultimately, and from a non-objectively selfish Canadian perspective, there are two large opportunities here.

First, as China’s environmental issues grow in prominence and play a major role in depressing the country’s short and long-term economic growth, Canadian firms that deal in environmental remediation should be knocking at every door across China, and the Federal government should be helping them find more doors. Second, and this thought is far less developed, is there potential for collaboration between Canadian and Chinese tech firms that would allow both sides to prosper? Can Canada, notably Western Canada for logistical reasons, position itself as the headquarters for R&D for Chinese firms? What are the service sectors, notably professional and commercial services,  that Canada excels at that can feed into this growing Chinese innovation economy? These are the types of questions we need to ask ourselves as the global economy evolves and as the locus for innovation and high-value production shifts.




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