Five characteristics of true innovation

Industrial zones that have driven China's economic rise are being urged to be more creative

China's national high-tech parks are born out of a major policy and institutional innovation called the Torch program, which the Chinese government introduced in 1988.

Zhongguancun Science Park in Beijing was the first one to be established and helped new technology enterprises like Founder, Lenovo and Baidu to flourish, arising from university spin-offs. The South China industrial powerhouse of Shenzen, with facilities such as Shenzhen High-Tech Industrial Park, is another successful example. First conceived in the mid-1980s, it has become home to some of China's most successful high-tech companies, including Tencent, ZTE, TP-Link and Huawei. These developments are often compared with Silicon Valley in the United States.

More than 100 high-tech parks have sprung up nationally, and the parks have become the main driver of China's rapid high-tech industrial development. These parks have also become home to thousands of high-tech small and medium-sized enterprises and multinational firms, and provide educational, training and leisure services, contributing significantly to the country's industrialization and urbanization.

Many parks have become new cities in their own right. For instance, the Suzhou High-tech Zone is one of the most important clusters for high-end electronic information manufacturing in China. To cope with the needs of the city's development, this high-tech park was commissioned to manage the villages and towns nearby. That extends its area to 223 square kilometers with the aim of integrating both city and rural areas and providing not only infrastructure for the high-tech companies but creating favorable cultural and ecological living conditions.

High-tech parks become a significant part of a city's economy, and the engine for a city's development. For instance, Zhangjiang High-Tech Park was established in July 1992. It is in the Pudong New Area of Shanghai with a total area of 25 square kilometers. The park is made up of the Technical Innovation Zone, the High-Tech Industry Zone, the Scientific Research and Education Zone and the Residential Zone.

Twenty-seven years after the first science park was established, China's economy has undergone dramatic transformation. After decades of double-digit GDP growth, it has become the world's No 2 in terms of GDP. However, China's phenomenal growth has relied primarily on cheap labor and cost advantages and an export-led market.

The innovation capabilities of most Chinese firms are still lagging behind their counterparts in the West. There are only a handful of Chinese high-tech enterprises in the Fortune Global 500, including Huawei and Lenovo. Much of the high-tech field is still dominated by Western firms such as Apple, IBM, Microsoft, Amazon, Google and Facebook, to name just a few.

Despite the recent rise of the new breed of Chinese e-commerce and Internet firms such as Baidu, Alibaba, and Tencent, their influence on the global stage is limited due to weak international presence and lack of innovative capabilities to create truly novel products and services to meet future customer needs.

Innovative companies on the global stage have to be market oriented to understand and influence customers. The high-tech parks, being the product of top-down government incentives, have not been as successful as the bottom-up approach of Silicon Valley in creating companies with both scientific acumen and in-depth consumer insights. The enterprises in Chinese high-tech parks tend to innovate to respond to local and current customers' needs. Local government is an important stakeholder in the parks, and so plays a critical role in shaping the type of companies and innovations the parks attract and support.

The renewed call by the Chinese government to develop the country's innovative capabilities at the cutting edge of science, technology and industry on the global scene indicates a shift from a national and local focus to an international focus, and from incremental innovation to radical innovation.

What implications does this new policy direction have for the national science parks? Can these science parks transform themselves from being a driver of industrialization and urbanization to an engine of sustainable growth through science and technology advancement? This new task requires the parks to provide an environment where companies are developing products and services that are not only made in China but also created in China. The following five characteristics summarize the essence of the truly innovative companies that the country needs:

1. Global attractiveness through overseas investment;

2. Competitive advantage through dominant position;

3. Ability to respond to and influence fast-changing consumer demand;

4. Ability to create entry barriers through new technologies;

5. Ability to increase profitability through powerful brands.

The author is a professor of marketing and innovation with Warwick Business School. The views do not necessarily reflect those of China Daily.