In our July Inner Circle in Hong Kong, we had a rousing discussion about how and why the Chinese innovate. There were strongly held views on the importance of technological innovation, many holding fast to their belief that the Western world--especially the US--is still way ahead of others.
Finally, Elaine Ann, President and CEO of Kaizor Innovation, cut through the arguments with a fascinating perspective. As Elaine puts it, US companies focus on technological innovation. Tech is king to Americans and we do whatever we can to create more, faster, better products and services based on technological improvements and breakthroughs. In the rest of the West, says Elaine, because labor costs are high, innovation--even non-tech based innovation--is pursued primarily to increase productivity, so that fewer people are needed to perform any one task.
But, continues Elaine, in China it is just the reverse. China has 1.3 billion people, four times the population of the U.S., so what is needed are ways to employ more people rather than to replace human labor. In fact, she says, China doesn't think so much about "innovating" as simply doing what is necessary to solve a problem.
And just looking at the economics, Elaine says the context and problems differ widely between China and the West. In China, the core issue is an excess supply of people and the need to create enough employment for all of them. If you eat in a restaurant in China, you will be surrounded by a large group of waiters and waitresses. Similarly, you will see many employees ready to serve you in a bank branch in China. Compare that to Europe, where in Holland, for example, only a handful of people are on hand to serve bank customers; everything has been automated to reduce labor costs.
Elaine's company helps Western corporations understand the China market to inform new product innovation for sale there. Often, she says, Western companies come to China intending to introduce products that are 8 to 10 times the price of similar products manufactured by local China competitors.
For example, one of Elaine's customers is a Western manufacturer and supplier of highly sophisticated retail security devices, the kinds of things that protect retail entrances from burglary and unwanted entrance. She said some prospective Chinese buyers were put off not so much by the price but rather that they see no need for such a device. As one prospective buyer commented, "Why would I buy this kind of device when I can simply throw 15 people at every door and it will still be cheaper than a tech-based system?"
Elaine also mentioned the Beijing Olympics where four people were placed at every corner of major intersections to monitor pedestrian traffic. And the Beijing Olympics opening ceremony where literally thousands of people performed on stage, and all in perfect synchronization. People around the table speculated that the English would have a markedly different opening ceremony (the Olympics were still a week away when we held the Inner Circle) and it would not be showcasing harmony and precision, but rather a hodge podge of culturally relevant references. That opinion turned out to be prescient.
In fact an attendee at our last Inner Circle here in New York, Lorraine Justice, who has lived and worked for years in Asia before returning to the States where she is now Dean of the Rochester Institute of Technology, wrote a great piece in today's Huff Post comparing the two opening ceremonies. It's humorous and it is oh, so true.
Viva la difference!