This is just the beginning

When China stops copying Western tech giants is when they should start worrying

July 27, 2014
July 27, 2014

Why do some of China’s biggest tech companies engage in the sincerest form of flattery? This week Lei Jun, the chief executive of Xiaomi—recently rebranded internationally as Mi—stood on stage in a black T-shirt and jeans and announced a new smartphone with a notable resemblance to the iPhone in front of a slide that said “one more thing…”

Yes, the same “one more thing…” slide that Steve Jobs made famous…

Mi thinks “sweeping sensationalist statements” of it copying Apple are off the mark. “We are not the only ones who have adopted the Steve Jobs presentation style,” Mi international vice-president Hugo Barra said. “The whole world has done that.”

But Mi isn’t the only Chinese company to be imitating its Western peers. Lenovo has just unveiled a prototype of a rival to Google Glass, in which the chief innovation appears to be an ungainly-looking neck-mounted battery pack. And Baidu, China’s biggest search engine, is working on a driverless car—though it’s too early to tell how closely its designs match those of Google, which has been developing one for years.

Despite having moved up the manufacturing value chain, from supplying basic parts, to high-tech components, to selling the final products straight to the public, Chinese brands are still not widely known for innovating. “In novel-product innovation, China is very weak,” Dan Breznitz, the co-author of a book about Chinese innovation, told the New York Times. “The political economic institutions and system in China make it so entrepreneurs can’t make profit by developing novel innovation. But this same system makes process and second-generation innovation very profitable and successful.”

But that is not to say they don’t innovate at all. A rapidly-modernizing country with more than a billion people is a great laboratory for new ideas. For non-Chinese users, for instance, WeChat is a chat messaging service much like its competitors, but the version available in China is also a blogging platform, a mobile wallet, a news reader and more; indeed, it’s called Weixin in China to distinguish it from WeChat abroad.

China’s near neighbor, South Korea, set the precedent for Chinese tech companies’ evolution. “In a region of fast growth, since the 1960s Korea has increased its per-capita-GDP more quickly than any of its neighbors,” the consultancy firm McKinsey notes. That’s also the period during which the country started to move from manufacturing high-end components for Western gadget makers to competing with them.

The liquid crystals in flat-screen TVs, for instance, were invented in Germany and pioneered in Japan, but “the Koreans came along and copied it and improved on it,” one scientist recounted to the New Yorker. “I don’t think people appreciate how really difficult it all was.” LG and Samsung bet billions on the new technology; now it’s an area in which the country’s companies innovate and dominate.  LG makes TVs and phones and also the high-resolution Retina display in iPhones. Samsung sells critical components to Apple, including the Retina displays for iPads, but also competes with it directly and successfully in high-end smartphones. (The two have had a long-running legal battle over patents.)

It would be foolish to bet that Chinese firms can’t do what the Koreans did. Some of the country’s brands have gone global: Lenovo is the world’s biggest PC maker because it bought IBM’s PC business and is now trying to get its low-end server business, too. Foxconn, the major supplier to Apple, is opening a chain of wellness resorts. And outside of tech, the Taiwanese shoemaker, Stella International, which manufactures for Prada and LVMH as well as Clarks, Rockport and Timberland, is expanding its own-brand business in Paris.

A truly innovative Chinese tech company is only a matter of time. But until then, do they have to be so blatant about copying?

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