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China Innovates

6 September 2020

Prof Yipeng Liu gave a talk in July 2020 based on his academic research highlighting some of the ways in which China could increase enterprise and innovation. The startpoint is not that China lags behind in this area (“China in 2019 surpassed the US as the top source of international patent applications filed with WIPO” said the World Intellectual Property Organization on 7 April 2020) but the “middle income trap” headwind, which may slow things.

The mid income trap is an economic development situation when a country attains a certain income level but gets stuck at that level and is deemed a “Middle Income Country” (MIC). The World Bank has defined mid income as GNI per capita between $1,000 and $12,000. 75% of the world’s population and 62% of the world’s poor live in MICs and they represent about one third of global GDP and are major engines of global growth. The question of how to break out of the mid income trap arises for China, but the answer, according to Prof Yipeng Liu, in a talk xxx is indigenous innovation, innovation which is readily within China’s grasp.

The talk centres on projects in Suzhou and Wuxi, two second-tier cities in China less than 100km west of downtown Shanghai on the east bank of the Lake Tai, China’s third largest inland lake. They both faced options when first developing their university capability: to establish a university or research institute and to attract overseas talent and returnees. More on those later.

FDI and international JVs are one of the principal drivers of China’s economic growth and a study of over 300 companies (“Recombination for innovation: performance outcomes from international partnerships in China” published on 25 September 2017 in R&D Management by Simon Collinson and Yipeng Liu) showed that reciprocal and long-term relationships are the keys to generating superior innovation performance. The other contributor is talent, and in particular, talent mobility, and it contributes to building a innovation and entrepreneurship ecosystem. This is already happening in China. Professor Liu co-edited “Entrepreneurship and Talent Management from a Global Perspective Global Returnees” with Huiyao Wang which shows the benefits of knowledge transfer and spill-over. China launched a number of policy initiatives to attract talent from around the world and research such as Prof Liu’s “How culture influences the way entrepreneurs deal with uncertainty in inter-organizational relationships: The case of returnee versus local entrepreneurs in China” by Prof Liu and Tamar Almor published in February 2016, and the Research Handbook of International Talent Management edited by Yipeng Liu, has shown that returnee entrepreneurs contribute significantly and accelerate high tech industries.

Liu sees the “Triple Helix” of universities, businesses and Government working together to drive innovation and entrepreneurship, as being central. He cites examples centred on the University of Haifa, Harvard University, the University of Cambridge, Stanford University, the University of California, Berkeley, Tel Aviv University and the Max Planck Institute of Biochemistry. He has explored this concept in his paper University capability as a micro-foundation for the Triple Helix model: The case of Chinawith Qihai Huang, published August-September 2018. In this, he notes that the Triple Helix has been applied in China’s largest cities, and can be used now to develop the second-tier Chinese cities.

He also cites the nation-wide talent programmes designed to encourage mobility of those with the top skills: from the 2008 Thousand Talents Program and the 2010 Thousand Young Talents Program, to the 2011 Thousand Foreign Experts Program, the 2011 Special Talent Zone and the 2012 Ten Thousand Talent Plan, noting that authorities in China made a distinct choice to recognise that while FDI was a flow of capital, a flow of talent was a distinct phenomenon and required support in its own right.

Back to Suzhou and Wuxi, in Suzhou, the Government played the part of an “active designer” in the process where the Government in Wuxi was a “responsive changer”. In Suzhou, they built a university and focused on FDI while in Wuxi, they focused on returnees and attracting talent.

Prof Liu was speaking at the “China Global Innovation Superpower” event hosted on 16 July 2020 by Aimava Ltd and the video can be seen at Guanlidao and Aimava.

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