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China's Next Strategic Advantage: From Imitation to Innovation
A book for everyone who does business with China or in China. The history-making development of the Chinese economy has entered a new phase. China is moving aggressively from a strategy of imitation to one of innovation. Driven both by domestic needs and by global ambition, China is establishing itself at the forefront of technological innovation. Western businesses need to prepare for a tidal wave of innovation from China that is about to hit Western markets, and Chinese businesses need to understand the critical importance of innovation in their future. Experts George Yip and Bruce McKern explain this epic transformation and propose strategies for both Western and Chinese companies. This book is for everyone who does business with China or in China, or is interested in the development of the world's fastest-growing economy. Western CEOs can learn from Chinese companies and can create an effective innovation process in China, for China and the world. Chinese CEOs can benefit from understanding the strategies of their peers as they strive to enter foreign markets. And all Western businesses should prepare for disruption from their new competitors. Yip and McKern provide case studies of successful firms, outline ten ways in which the managerial and innovative capabilities of these firms differ from those of Western firms, and describe how multinationals doing business in China can become part of the Chinese ecosystem of new knowledge and technology. Yip and McKern argue that these innovation capabilities will be the basis for creating world-class products and services to meet the challenges of a new era of global competition.
290 pages, Hardcover
Published January 1, 2016
23 people are currently reading
133 people want to read
About the author
George S. Yip
23 books7 followersA research specialist in global strategy and marketing and Professor of Management and Co-Director, Centre on China Innovation, at China Europe International Business School, based in both London and Shanghai.
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Displaying 1 - 9 of 9 reviews
January 27, 2018
Good message, but goes over and over around the same points. The whole book can fit in a single chapter or article.
July 18, 2017
Outstanding book. Highly recommended.
June 13, 2024
If you’re a non-Chinese company looking to operate a business in China, this would be the book to read.
January 23, 2018
This book argues, almost convincingly, that China is going to succeed in building a more innovative economy that can compete in and dominate global markets, as directed in the Communist Party of China’s two most recent five-year plans. For now, the Chinese are shifting from buying material to buying the tools they will need to compete with Multi-National Corporations (MNCs) in global markets. Or as the authors put it: “Chinese companies are buying the market access, the brands, the technology, and the human expertise that will allow them to mount a formidable innovation challenge to the incumbent companies of the developed countries… China’s government is fully committed to helping Chinese companies to become insiders in foreign markets.” The foundation of their case is outbound Foreign Direct Investment, but in the year since the book was published this argument has aged rapidly: Chinese outbound FDI has fallen. The imposition of severe capital controls has proven the CCP is only “fully committed” to domestic control, and is suspicious of globalization (indeed, many Chinese regrets their accession to the WTO). This does not mean Chinese innovation is doomed to fail, and their analysis of specific acquisitions convincingly demonstrates that Chinese firms are implementing CCP policy with purchases of especially European manufacturing and services. It simply means the CCP has other priorities too.
The authors then examine whether Chinese firms will actually develop the ability to compete on the global stage, by engaging in “radical innovation” and reverse innovating (i.e. exporting innovations for the Chinese market to other markets). Everyone agrees they are not there yet, especially the Chinese. The authors contend that “because [Chinese firms] are learning the basic skills that radical innovation requires, Chinese companies will soon develop the capability to be radical innovators when opportunities arise.” Its case is less than convincing. There are only a handful of examples of Chinese radical or reverse innovation given, and radical innovation would be rampant in China is it resulted from the accumulation of basic skills, which China runs surpluses of and indeed exports to more innovative economies. The book’s case is most compelling when the argue that the Chinese market itself will become more innovative: sophisticated demand will arise, internal diversity encourages a range of innovation, fierce internal competition produces superior products, China has unique needs shared in common with the third world, due to growth it is a low-risk market to innovate, and above all it is or will soon be the world’s biggest market for most goods. But the puzzle is that these factors don’t drive radical innovation already, isn’t it?
By my lights, it’s entirely possible that Chinese innovation will be very hard to export. Chinese consumers have increasingly independent, non-Western taste. Despite the short life cycles of most Chinese products, some of the business leaders quoted in the book argue they remain fundamentally conservative and suspicious of radically innovative changes. And most importantly, the market incentives may not be there. As the authors admit: “Although it is controversial to say this, for China uniqueness in innovation is not as important as opportunism.”
I enjoyed this book and learned a lot from it. But it makes its argument about the need for Western firms to engage with China to innovate in China with a “call to action” for CEOs that it simply can’t support. The more interesting (and more academic) question is probably why China’s domestic value added is still so low, and why Chinese markets don’t create more reverse innovation.
The authors then examine whether Chinese firms will actually develop the ability to compete on the global stage, by engaging in “radical innovation” and reverse innovating (i.e. exporting innovations for the Chinese market to other markets). Everyone agrees they are not there yet, especially the Chinese. The authors contend that “because [Chinese firms] are learning the basic skills that radical innovation requires, Chinese companies will soon develop the capability to be radical innovators when opportunities arise.” Its case is less than convincing. There are only a handful of examples of Chinese radical or reverse innovation given, and radical innovation would be rampant in China is it resulted from the accumulation of basic skills, which China runs surpluses of and indeed exports to more innovative economies. The book’s case is most compelling when the argue that the Chinese market itself will become more innovative: sophisticated demand will arise, internal diversity encourages a range of innovation, fierce internal competition produces superior products, China has unique needs shared in common with the third world, due to growth it is a low-risk market to innovate, and above all it is or will soon be the world’s biggest market for most goods. But the puzzle is that these factors don’t drive radical innovation already, isn’t it?
By my lights, it’s entirely possible that Chinese innovation will be very hard to export. Chinese consumers have increasingly independent, non-Western taste. Despite the short life cycles of most Chinese products, some of the business leaders quoted in the book argue they remain fundamentally conservative and suspicious of radically innovative changes. And most importantly, the market incentives may not be there. As the authors admit: “Although it is controversial to say this, for China uniqueness in innovation is not as important as opportunism.”
I enjoyed this book and learned a lot from it. But it makes its argument about the need for Western firms to engage with China to innovate in China with a “call to action” for CEOs that it simply can’t support. The more interesting (and more academic) question is probably why China’s domestic value added is still so low, and why Chinese markets don’t create more reverse innovation.
November 15, 2024
Is China’s strategic advantage sustainable?
In this wide-ranging, well-researched book published in 2016, the authors advise Western senior executives to understand the oncoming tidal wave of innovation (“new and significantly improved products (goods or services), or processes, new marketing methods, or new organizational methods in business practices, workplace organization or external relations”) coming from China. This has all been brought about by the Chinese government’s grand strategy of creating an indigenous innovation ecosystem. The authors recommend that the only way to counter this advancing Chinese strategic advantage is to create carefully planned innovations in China, both for China and for the rest of the world.
Here is the book’s table of contents:
Acknowledgments ix
1. China's Drive for Innovation 1
2. How Chinese Companies Innovate 41
3. What Is Different About Chinese Innovation? 75
4. Multinational Corporations' Innovation in China (with Dominique Jolly) 101
5. How Multinational Corporations Can Organize for Innovation in China 129
6. Open Innovation in China (with Yongqin Zeng) 167
7. Protecting Intellectual Property in China: Legal Provisions and Strategic
Recommendations (with Maja Schmitt} 205
8. Lessons in Leadership and Strategy from China (with Lin Xu and Vi Ta Chng) 221
Notes 255
Selected Bibliography 273
About the Authors 281
Index 285
4WIW, "open innovation" is a concept that the book frequently refers to but, IMHO, does not define very well. Other sources (Chesbrough and Bogers) define it as "a distributed innovation process based on purposively managed knowledge flows across organizational boundaries, using pecuniary and non-pecuniary mechanisms in line with the organization's business model."
Advice on the contentious issue of protecting international patents is addressed. Whether or not it has actually worked over the years is another matter. But the book does give those companies considering manufacturing and selling in China a good introduction to the issues they may face. This, of course, may all change with the tariffs proposed by the Trump administration starting in January 2025. The question becomes whether or not China’s strategic advantage is still sustainable without major modifications.
Those interested in the topic of “strategic advantage” in general may want to consider the following book on winning strategies used throughout history by 87 master strategists Strategic Advantage: How to Win in War, Business, and Life
In this wide-ranging, well-researched book published in 2016, the authors advise Western senior executives to understand the oncoming tidal wave of innovation (“new and significantly improved products (goods or services), or processes, new marketing methods, or new organizational methods in business practices, workplace organization or external relations”) coming from China. This has all been brought about by the Chinese government’s grand strategy of creating an indigenous innovation ecosystem. The authors recommend that the only way to counter this advancing Chinese strategic advantage is to create carefully planned innovations in China, both for China and for the rest of the world.
Here is the book’s table of contents:
Acknowledgments ix
1. China's Drive for Innovation 1
2. How Chinese Companies Innovate 41
3. What Is Different About Chinese Innovation? 75
4. Multinational Corporations' Innovation in China (with Dominique Jolly) 101
5. How Multinational Corporations Can Organize for Innovation in China 129
6. Open Innovation in China (with Yongqin Zeng) 167
7. Protecting Intellectual Property in China: Legal Provisions and Strategic
Recommendations (with Maja Schmitt} 205
8. Lessons in Leadership and Strategy from China (with Lin Xu and Vi Ta Chng) 221
Notes 255
Selected Bibliography 273
About the Authors 281
Index 285
4WIW, "open innovation" is a concept that the book frequently refers to but, IMHO, does not define very well. Other sources (Chesbrough and Bogers) define it as "a distributed innovation process based on purposively managed knowledge flows across organizational boundaries, using pecuniary and non-pecuniary mechanisms in line with the organization's business model."
Advice on the contentious issue of protecting international patents is addressed. Whether or not it has actually worked over the years is another matter. But the book does give those companies considering manufacturing and selling in China a good introduction to the issues they may face. This, of course, may all change with the tariffs proposed by the Trump administration starting in January 2025. The question becomes whether or not China’s strategic advantage is still sustainable without major modifications.
Those interested in the topic of “strategic advantage” in general may want to consider the following book on winning strategies used throughout history by 87 master strategists Strategic Advantage: How to Win in War, Business, and Life
August 26, 2023
China's Next Strategic Advantage: From imitation to Innovation by George Yip and Bruce McKern is one of those books that sees declining value as time moves on from its initial publication date. This book would have been a useful academic, business relevant primer for navigating the world of Chinese economic development and western investment within the country in the 2010s, but many of its points come across as incomplete or partially inaccurate now that we're entering into a new phase - one not just for the development of China, but of China's status as the main locus of international investment. This makes it a book in dire need of an updated revision, or else it will probably find itself fading away into the background. It nevertheless does much to demystify the country, challenge assumptions about Chinese innovation, and tackle many of the issues that foreign firms face in China. It is still useful for anyone who uncritically believes that China only got to where it is because it stole and imitated, as the country has been moving away from that model for quite a long time. The most significant disadvantage other firms face is an inability to innovate and make mistakes on short time tables, failing to keep a pace with the Red Queen problem.
Might be worth a read if you're a wonk.
Might be worth a read if you're a wonk.
September 29, 2016
This is a book about how to craft a firm strategy in China with a focus on innovation. The authors are two experienced business school academics with experience teaching and conducting research in China. The style of the book is that of high end trade book, such as what would be expected from the Harvard Business School Press (although the press in this case is MIT). The punchline or "takeaway" of the book is fairly clear - Chinese firms are improving their capabilities rapidly especially in the area of innovation and are moving from a traditional stance of imitation to one of innovation that is increasingly similar to the innovative activities of major western firms. Western firms, if they wish to succeed in China and globally need to recognize this and up their game accordingly. The authors present their arguments, supplemented by their reflections on particular firms (presumably consulting clients), and their analysis of surveys of innovative behaviors among major multinational and Chinese firms.
Got that?? ....and all in 300 pages. The book was OK but I had lots of issues with it - many of which are present to some degree in this whole genre.
To see what the issues are likely to be, ask yourself a few questions.
First, what is innovation, just in general? It can include whole new technologies (wind turbines; micro health devices). It can include new product types or subcategories (consumer beverages; variants on major household appliances). It can include new ways to organize or rationalize production and lower costs. It can include new ways to market and distribute products. It can include new ways of organizing businesses or of linking with other firms and agencies in joint ventures. Which of these meanings are on offer here? Good question, but at various points all of them are -- and they are not mutually exclusive but can be complementary, so combinations of innovations are very likely. This strikes me as a bit of a broad agenda, since any one of those meaning of innovation has whole groups of articles and books involved in studying what managers and firms do.
A second question is what does it mean to conduct innovative business in China. What do we need to know about the Chinese context in order to innovate there? It turns out that one needs to know a lot about China. Start with 1.5+ billion people with thousands of years of history and lots of national and cultural varieties. Then there is the economy that has been growing in recent years as fast as any major economy has ever grown -- which means what one knows about business in China will quickly be rendered obsolete. Then there is the language and the fact that many more Chinese are learning english than english speakers are learning Chinese - which is hard.
A third question is what part of Chinese business is being studied. Heavy industry? HIgh technology? Biotechnology and medical devices? Consumer goods? Clothing and apparel? Automobiles? Telecommunications? Financial services? The answer is all of them, no particular focus on a particular industry or market - either product or geographical.
With all of these issues, what you end up with is the typical business trade book, which offers a reduced set of general stories about technology and business strategy, with an accompanying set of what someone might call "Chinese Characteristics". There is a "four C" frame for understanding firms' approaches to Chinese technology strategy (customers, culture, cash, capabilities), as well as a set of lists of the different drivers that firms need to employ to succeed in China. What stories? Well, a reader of the Harvard Business Review, California Management Review, or other academic and consulting firm variants will provide the stories - and I suspect earlier versions of these arguments in earlier forms. This is the only way a book like this could be produced, because to spell out all of the assumptions about business practices, strategic approaches, firm economics, and the like would make the book much longer -- or as some wags tell me - too long, DNR (did not read).
As these books go, it is OK. The book provides a snapshot of how some major firms do business in China up through 2015. The punchline is that doing business in China is very hard and that firms need to think through everything they do and hire the best people to do them. In competing in China, firms will have to innovate in most everything they do, in order to survive the competition. Chinese firms are getting very good at innovation and are building scale to reduce costs, which will soon make them globally competitive and a threat to western firms in their home markets.
I have to say that I am not surprised by the arguments or the conclusions and recommendations, but I should not be too picky. Some corporate manager who read this book and was contemplating doing business in China would certainly want to hire someone who could advise them on how to get started and who to contact about what. I suspect that the authors would be glad to meet with such a corporate manager and would provide whatever help they could.
This book is better than many. The authors appear to have consulted with lots of executives and that makes the story a credible read. They also talk about their survey work, but I am less persuaded by that, although it is good that they tried to collect data.
Got that?? ....and all in 300 pages. The book was OK but I had lots of issues with it - many of which are present to some degree in this whole genre.
To see what the issues are likely to be, ask yourself a few questions.
First, what is innovation, just in general? It can include whole new technologies (wind turbines; micro health devices). It can include new product types or subcategories (consumer beverages; variants on major household appliances). It can include new ways to organize or rationalize production and lower costs. It can include new ways to market and distribute products. It can include new ways of organizing businesses or of linking with other firms and agencies in joint ventures. Which of these meanings are on offer here? Good question, but at various points all of them are -- and they are not mutually exclusive but can be complementary, so combinations of innovations are very likely. This strikes me as a bit of a broad agenda, since any one of those meaning of innovation has whole groups of articles and books involved in studying what managers and firms do.
A second question is what does it mean to conduct innovative business in China. What do we need to know about the Chinese context in order to innovate there? It turns out that one needs to know a lot about China. Start with 1.5+ billion people with thousands of years of history and lots of national and cultural varieties. Then there is the economy that has been growing in recent years as fast as any major economy has ever grown -- which means what one knows about business in China will quickly be rendered obsolete. Then there is the language and the fact that many more Chinese are learning english than english speakers are learning Chinese - which is hard.
A third question is what part of Chinese business is being studied. Heavy industry? HIgh technology? Biotechnology and medical devices? Consumer goods? Clothing and apparel? Automobiles? Telecommunications? Financial services? The answer is all of them, no particular focus on a particular industry or market - either product or geographical.
With all of these issues, what you end up with is the typical business trade book, which offers a reduced set of general stories about technology and business strategy, with an accompanying set of what someone might call "Chinese Characteristics". There is a "four C" frame for understanding firms' approaches to Chinese technology strategy (customers, culture, cash, capabilities), as well as a set of lists of the different drivers that firms need to employ to succeed in China. What stories? Well, a reader of the Harvard Business Review, California Management Review, or other academic and consulting firm variants will provide the stories - and I suspect earlier versions of these arguments in earlier forms. This is the only way a book like this could be produced, because to spell out all of the assumptions about business practices, strategic approaches, firm economics, and the like would make the book much longer -- or as some wags tell me - too long, DNR (did not read).
As these books go, it is OK. The book provides a snapshot of how some major firms do business in China up through 2015. The punchline is that doing business in China is very hard and that firms need to think through everything they do and hire the best people to do them. In competing in China, firms will have to innovate in most everything they do, in order to survive the competition. Chinese firms are getting very good at innovation and are building scale to reduce costs, which will soon make them globally competitive and a threat to western firms in their home markets.
I have to say that I am not surprised by the arguments or the conclusions and recommendations, but I should not be too picky. Some corporate manager who read this book and was contemplating doing business in China would certainly want to hire someone who could advise them on how to get started and who to contact about what. I suspect that the authors would be glad to meet with such a corporate manager and would provide whatever help they could.
This book is better than many. The authors appear to have consulted with lots of executives and that makes the story a credible read. They also talk about their survey work, but I am less persuaded by that, although it is good that they tried to collect data.
September 22, 2019
Te ayuda a entender cómo evolucionó China y cómo llega tiene muchas empresas y centros de R&D en su territorio
May 18, 2024
did not agree with all ideas, but great to have the book still, some useful information as well.
Displaying 1 - 9 of 9 reviews