Date: 17 Sept. 2010

Xiao Wunan: Indigenous Innovation and National Soft Power Building

On September 17, 2010, “2010 China TOP100 Enterprises Indigenous Innovation Ranking” Release also the Second Summit Forum of Enterprises Indigenous Innovation” was held in Huizhou City.  Present at the forum were Lu Zhongyuan, Deputy Director of the State Council Development Research Center,Xiao Wunan, Executive Vice Chairman of APECF, leaders and scholars, as well as representatives from the "Top Ten Enterprises Indigenous Innovators in China". They made wonderful speeches and had discussions on how to create an internationally competitive and innovative enterprise, establish and develop new strategic alliances for industrial technological innovation. Xiao Wunan first affirmed and praised the importance attached by the organizers to indigenous innovation, and then further elaborated on how to achieve indigenous innovation. The following are remarks by Mr. Xiao at the forum:

“Today China impresses the whole world by its rising power, the amazing aggregate amount of the economy and development rate. But there are two major underlying problems: first, the development model is not sustainable. Therefore, as has been mentioned by President Hu Jintao and Premier Wen Jiabao, economic restructuring is imperative at the moment; second, the enterprises lack core competitiveness. When it comes to the evaluation of Chinese enterprises, the word “copycat” jumps first into our mind nowadays. In my opinion, indigenous innovation has been upheld for years. We have some data and images of the past five decades showing that China has attached great importance to innovation ever since. Six decades of national independence and three decades of reform and opening up have made the whole world amazed at its vastness, namely, the vast expanse of land, vast population and the vast number of products produced by the machines operating day and night without any innovative contribution to technology, ideas and creativity. To some extent, innovation is value-based and culture-based. Without accommodation to value and culture, technological innovation would be impossible. I remember a few years ago, a book called "Witness" was published. Right in the beginning of the book, the author said: "For thousands of years in China, we have prioritized Confucianism over Buddhism and Taoism, because both Buddhism and Taoism are unable to bring tangible benefits to China.” So can we achieve indigenous innovation of the enterprise based on the foundation of interest?”

I would like to share with you some of my observations on the following four topics:

1. The relations between technological innovation and national soft power building. 
We shall think on two levels: first, innovation is based on the establishment of our own cultural system and national identity. Here I have a question for you: Do you know the gist of Chinese culture? Whenever one mentions Japanese, Indian, British and Italian cultures, it is easy to put their gist into a single sentence. But even if one is given ten minutes, he is unable to boil the rich Chinese culture down to a ten minutes’ discourse. One may frequently hear an ancient Chinese saying quoted by Premier Wen Jiabao that "Don’t do onto others what you do not want others do onto you." This may be a code of conduct for Chinese; the frequently quoted “harmony between man and nature" is at best a philosophical idea. Obviously, these two simple quotations cannot represent a complete Chinese cultural system. In history, the British Empire imported British culture into the colonized states through invasion; today the US is also exporting the much "coveted" American dream through the expansion. In essence, they have resorted to the cultural strategy. Although China boasts the much acclaimed brilliant culture, almost no Chinese can could tell what is the unyielding spiritual pillar and bedrock of Chinese culture other than some fragmental cultural pieces such as food, tea, porcelain. This is the defect of Chinese culture. Since the Song Dynasty in ancient China, China has always been ranked No. 1 in terms of total economic output or prosperity, but it has failed to be a pioneer in modern technology or contemporary economics. The root cause was the lack of a sound cultural system. Today, to ensure the innovation of enterprise, it is first necessary to set up a cultural innovation system, namely building the country's soft power. Indigenous innovation also reflects and motivates the soft power of a country. Just now I was chatting with some mayors, and we all agreed that iPad was the most popular electronic product. I happened to visit Apple headquarter in Silicon Valley last month, and found that the entire production area for Apple was called the "idea" section and that the "Apple road "- "The Thinker’s Road" while "Apple’s R & D area”-"The Thinker’s Home". “Apple" does not market its products, because there is no need to do so, just like the popular iPhone 4. However, things are so different in China, our domestic enterprises are only keen on production, manufacturing, marketing and product promotion, while foreign enterprises focus on ideas. Take Silicon Valley for example, the world-renowned multinationals there such as Apple, Cisco, etc usually do not have very large scale. Rather, more importance is attached to the development of cultural atmosphere. Jim Boettcher, founder of Focus Ventures (a venture capital fund with outstanding performance in Silicon Valley), once said to me: First, the success of Silicon Valley lies in their cultural innovation, without which scientists would not be concentrated on research and technological innovation. Take IOT companies for example, they are probing into the thought of Laozi, an ancient Chinese thinker and philosopher. They believe that philosophy is the source of technological innovation. In fact, since James Watt invented steam engine, the technological innovations of many enterprises have been social progress drivers. The indigenous innovation of enterprises is a benchmark for national soft power, as evidenced by the light bulbs invented by Thomas Edison, Microsoft’s Windows technology, and our self-proud Chinese character input method.

2. Entrepreneurs should explore the cultural innovation from the perspective of sociology
We all know that China's local culture is closely related to Taoism and Confucianism. Since the introduction of Buddhism, it has integrated these two cultures into its unique rainbow culture characterized by pluralistic integration, evolving into harmony in a philosophical sense. Today we are upholding a harmonious society. “Harmonious” here is well worth our study, which has revealed the nature of the universe, and clearly illustrated the relationship between man and nature and the need for balance. Just now I said that cultural innovation was the most important contributor to China's soft power, but which main body holds the key for innovation? Enterprise, since it is the main body of technological, social, and cultural innovation. We have studied several fields influencing human culture: for example, in the field of Buddhism, it was the enterprise that built Fo Guang Shan Monastery in Taiwan. In the field of philosophy, most of us here today are experts in entrepreneurial management. We know that Drucker School of Management is one of the world's most famous management schools. Originating from a Japanese enterprise, it has educated several generations of management masters. Nowadays, many of the drivers and the pushing hands that affect human culture and historical development could trace their origins in the enterprise. So I strongly appeal to the entrepreneurs present here that do not set your sight only on technological innovation, but also on the social and cultural innovation, which are the foundation of all sort of innovations. 

3. Indigenous innovation of the enterprise calls for the legal and institutional protection
Indigenous innovation of the enterprise with scientific and technological innovation as the core components requires legal and institutional protection, without which innovation would become difficult. We know that the U.S. has enacted the “Foreign and Corrupt Practices Act”. In the eyes of many Chinese, such a practice is silly because it is mainly used to sanction U.S. companies that gain markets overseas through bribery. However, Americans argue that unlike the short-sighted Chinese practice, they set their sights on long-term interests. If an enterprise is left to obtain the short-term economic interest by improper means, its internal development momentum will be stalled. Disciplined by this law, U.S. companies will go through continuous innovation, R&D and scientific exploration. Of course, the indigenous innovation of enterprises also needs the support of the soft environment at the legal and institutional levels. This is a big topic, also an arduous task that calls for our time and efforts. We have to make such efforts sooner or later.

4.  The most important aspect for an enterprise is not to donate money but to focus on building innovation-oriented country. 
Currently there are two very hot topics in China: 1. corporate social responsibility, which means donating money. In a few days, Warren Buffett will come to China, probably to persuade Chinese enterprises to donate money to society. But I think the enterprises’ top priority is not to donate money, but to build an innovation-oriented country. Compared with contributing weak forces from the general public, enterprises are the mainstay of society. This is the primary responsibility of Chinese enterprises in 2010. Second, the national image building, at the moment, the government is spending so much money on the Shanghai World Expo in order to present the most glorious side of China to the world. Shanghai Expo's slogan is “Better City, Better Life".  Do you know the slogan of the Japan World Expo? “Love the earth!” which is about caring for human existence. So don’t we feel embarrassed about our slogan after so many years? From the Expo LOGO, do you know what we want to show to the people of the world? Unfortunately, after spending so much money, we have not shown our real country image to the whole world with a decent song or a creative design, which sufficiently shows our lack of creativity. After all, it is a winding road from "Made in China" to "Created in China", but we Chinese people cannot make continuous efforts to bridge this gap. So we are very grateful to the organizers for hosting this very meaningful forum in 2010, which has made many people consider how to build a new China from a new perspective. Thank you!