18 September 2010 Last updated at 00:04 GMT

Xiao Wunan, Executive Vice-Chairman of APECF attends “The 2nd Chinese Enterprises Indigenous Innovation Summit Forum” and delivers an important speech

On September 17, 2010, “2010 China TOP100 Enterprises Indigenous Innovation” Ranking Publication Release and 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 People of Enterprises Indigenous Innovation 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, Executive Vice Chairman of APECF affirmed and praised first that the organizers prioritize the topic of indigenous innovation, and then further elaborated on how to realize indigenous innovation. The following are remarks by Mr. Xiao at the forum:

"Today China impresses the whole world by its rising power. The aggregate amount of the economy and development rate is amazing. But there are two major underlying problems: first, the development model is not sustainable, which requires economic restructuring as frequently mentioned by President Hu Jintao and Premier Wen Jiabao; 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. From some data and images, we know that China has attached great importance to innovation not only today, but also since 1950’s. Six decades of national independence and three decades of reform and opening up has made the whole world feel the power of China. But its power mainly comes from the vast expanse of land, large population and the large number of products produced by the machines operating day and night without the contribution of time, technology, ideas and creativity. To some extent, innovation is closely related to value and culture. Without a good solution to the problems concerning these two levels, 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 chosen 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 practical interest?"

I have my years of observations on four topics to share with you today:

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. Do you know what the gist of Chinese culture is? Speaking of Japanese, Indian, British and Italian cultures, it is easy to grasp their gist with a single sentence. But Chinese culture cannot even be clearly explained in ten minutes. Premier Wen Jiabao once mentioned an ancient Chinese saying "Don’t do onto others what you do not want others do onto you." This may be a code of conduct for our nation; the frequently quoted “harmony between man and nature" is at best a philosophical idea proposed by Confucius, but it cannot constitute a complete Chinese cultural system.

the British Empire exported British culture into the colonized states through invasion; today the US is also exporting the much “coveted" American dream through expansionism. In essence, they have resorted to the cultural strategy. China boasts the much acclaimed brilliant culture, however, could we tell what is the unyielding spiritual pillar and hotbed of Chinese culture other than some fragmental cultural pieces such as food, tea, porcelain. Frankly speaking, we cannot. To some extent, this is a defect in 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 of it is the lack of a sound cultural system.

Today, to ensure the innovation of enterprise, at first, it is necessary to set up a cultural innovation system, namely building the country's soft power. Indigenous innovation also reflects and motivates the soft power building of a country. Just now I was chatting with some mayors, and we all agreed that the iPad is the most popular electronic product nowadays. I happened to visit Apple headquarter in Silicon Valley last month, and found that the entire production area for Apple is called the "idea" section and that the "Apple" road is "The Thinker’s Road" while "Apple’s R & D area is called "The Thinker’s Home". “Apple" does not market its products, because there is no need to focus on marketing, just like iPhone 4 which is so popular among consumers that the product is often out of stock.

However, our domestic enterprises are only keen on manufacturing, marketing and product promotion, while foreign enterprises focus on ideas. Take Silicon Valley for example, be it Apple, Cisco, or other world-renowned multinationals, they do not have to be large in 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 Internet of Things (IOT) companies for example, they are probing into the thought of Laozi (an Chinese thinker and philosopher). They believe that philosophy is the source of technological innovation. In fact, since James Watt invented steam engine, 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 the Chinese character input method which we are proud of.

2. Entrepreneurs should explore 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 most important to promote China's soft power building, but which main body holds the key for innovation? Enterprise, since it is the main body of technological, social, and more important, cultural innovation. We have studied several areas influencing human culture: for example, in the field of Buddhism, it was the enterprise that Fo Guang Shan Monastery in Taiwan. Most of us here today are experts in management. In the field of philosophy, we know that Drucker School of Management is one of the world's most famous management schools. Named after a Master of management, this school originated from a Japanese enterprise and has influenced several generations. Nowadays, many of the drivers and pushing hands that influence human culture and historical development have their origins to enterprise. So I strongly appeal to the entrepreneurs present here that do not set your sight only on technological innovation, but also to explore the social and cultural innovation, which are the prerequisite 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 it, 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 have to 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, namely, the construction of the national soft power. 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 China has two very hot topics: 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 the relatively 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. Just a few years after, we came up with our slogan and wouldn’t we feel embarrassed? From the Expo LOGO, do you know what we want to show to the people of the world? Despite spending so much money, we have not shown the real image of our country to the world, not a decent theme or a creative design, which reflects our lack of creativity. It is a winding road from "Made in China" to "Created in China", but we Chinese people cannot avoid that and have to make a choice. As such, we are very grateful to the organizers for hosting this very meaningful event in 2010, letting a lot of people use a new perspective to consider building a new future of China and its people. Thank you!