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China's Entrepreneurship & Innovation: Will It Find Great Wall Opening

Filed in archive Innovation on June 20, 2006

China's Entrepreneurship & Innovation: Will It Find Great Wall Opening
Dan Harris, of Harris & Moure, the Seattle based international law firm which specializes in helping small and medium sized companies get it right in China, responded to The Washington Post's Edward Cody's recent article on Chinese innovation. Harris, along with Cody, maintains that China lacks the inherent creative drive and that there are fundamental cultural obstacles. Here are those views shared by Harris from his blog.

Harris wrote: "I would add China's lack of IP protection, particularly for patents, as a less entrenched, but still important, additional obstacle slowing China's evolution to becoming an innovation economy.

China's lack of innovation is pervasive in business to the point that it impacts nearly all Western companies that do business in or with China. I am constantly hearing complaints of China's lack of innovation from Westerners doing business in China. Though these complaints rarely include the word "innovation," I am told the following:
1. Companies in China are not capable of doing anything beyond exactly what we tell them to do.
2. We are not getting any help from our Chinese manufacturers in blending our production techniques with their factory. We have to do all of this ourselves.
3. We partnered with this company because they had substantial experience selling similar products within China. And yet, they have not made even one suggestion (good or bad) as to how we can make our product better suited for the Chinese market. We ended up having to learn about the market entirely on our own and we suggested the changes.
4. My Chinese employees are unwilling to do anything beyond what I specifically tell them to do. I feel like they do not even try to fill in the blanks in the instructions I give them."

CVN's response counters these claims. Do that many Silicon Valley VCs have it wrong? On the pure venture capital side do we discount the investments made by Warburg Pincus, Walden International, Sequoia, Carlyle, 3i, New Enterprise Associates, hsbc, and Vertex. And what have we witnessed from IDG China VC fund? Have they found innovation in those companies they chose to invest in? There are many new VCs, including this blogger, that see tech companies moving up the food chain.

Have we not already observed the advent of "incubators" in China's science parks? Sure, previously, there were real bottlenecks caused by financing difficulties faced by SMEs. But that is the past. Now the Ministry of Science and Technology is providing relative free reign to the rise of venture capital and to the funding of more innovative tech companies. Innovation in China, I expect to see even more new developments before the year- end.

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