The Era of Revolution

The era of revolution is the third chronologically identified innovation performance development phase in China. The era of revolution can be distinguished from the era of evolution in so far as revolution encompasses a capability to initiate innovation that is not based on existing technology platforms.

Regardless of efforts made during the phase of evolution to reduce China’s dependence on western technology platforms and the recognition of an urgent need to resolve the acute challenges in the fields of energy and clean technology for example, China has not yet entered the era of revolution. Although China as a context is rapidly changing, there are still challenges perceived to be connected to Chinese culture, and the way people are managed and educated. These contextual attributes of China reduce individuals’ contribution and willingness to challenge the existing solutions and outperform.

One bottle-neck used to be the Chinese education system. Today many universities in China are however very highly ranked. But because of the local culture, how people and organisations are managed, the people are not used to question the present without fear of losing face. If you fail, there are always new people that can replace you. (Current HR director of MNC)

The data illustrate a strong optimism over the future capabilities of local talent and shed light on how China is about to progress to the next innovation performance phase. Examples include taking advantage of digitalisation, but also emphasise the importance of active technology and innovation scouting, and the establishment and acquisition of R&D centres and technology companies abroad.

We are about to witness huge innovation leaps coming from China, by the Chinese, particularly if they will succeed with the aim of digitalisation and robotics. China has an opportunity to achieve the era of revolution during the next decade or so, but just not yet. They do realise that they still need the innovation seeds, the technology platforms, coming from outside. That’s why they are doing huge amounts of innovation scouting: establishing RD centres and purchasing companies abroad. (Current technology officer of MNC)

The Chinese are also perceived to have other competitive advantages that are difficult to compete against, and which foster progress towards the following phase. Those advantages include economies of scale resulting from enormous internal demand, and moreover, the political will to allocate public funds to deliver such an aim. Nevertheless, the recent economic developments in China have caused some concern over its capability to tackle a potential middle-income trap. The following excerpt sheds light on these concerns, but also on the anticipated strengths of China.

They (Chinese) arejust superior in process innovation and achieving cost efficient ways of doing things. That is their competitive advantage, which comes from the huge volumes, the fact of having financing and the political will, and is thus impossible (for the Western organisations) to compete against. That’s why so many Western companies are leaving the country. But they’d still need to avoid the middle-income trap, if they wish to become a true innovation leader. I believe that digitalisation will help them to avoid such a trap. The only thing that can get in the way is global economics, if the bubble bursts and they won’t have the capital to achieve what they have planned, that is the only thing. (Current Western governmental officer placed in China)

An interesting question is how the different forms of global talent flow might manifest themselves during the era of revolution. The literature currently suggests China will aim for talent self-sufficiency and an advanced level of inborn innovation performance. Recent reports confirm tightening restrictions for foreign companies over certain business segments as well as restrictions for growth, setting up operations, obtaining licences, but more over for foreign talent management. For example European MNCs report increasing difficulties in obtaining visas and work permits for their home country employees needed in China (European Chamber, 2016). The findings of the current research support that supposition, as it reveals an emphasis on the reverse brain drain aspect of the returning Chinese and the utilisation of inborn talent. However, despite diligent attempts to attract and retain returning western-educated Chinese, both returnees and locally educated Chinese may subsequently emigrate permanently due to environmental issues or personal challenges connected to the Chinese culture.

There will be a lot of Chinese talent returning to China, only if they will be able to tackle their environmental issues. However, there are also many of returnees who will re-immigrate because of these cultural issues, those who have learned to work in the west. But one thing that is for sure: China does not lack talent. The Chinese are hardworking and talented, more determined to perform than the Westerners. With this amount of people, the number of highly intelligent individuals is huge. I am sure that in the future we will be fighting for the Chinese talent. (Current R&D officer of MNC)

As a summary, regardless of China’s efforts to benefit from brain gain and reverse brain drain, and to progress innovation performance development, there are still several push factors and intervening obstacles that hinder country’s ability to enter the era of revolution. Much of this is related to issues of trust and national protectionism. However, China is expected to reach that phase within a decade with the aid of its enormous inborn talent pool and by reaping the benefits from the innovation seeds it has been sowing.

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