Table Of ContentAfter its glorious past of innovation second to none, China lost the race of the
Industrial Revolution and had to pay dearly with the “century of humiliation”.
The lesson has been learned. One of the key factors of China’s swift economic
development over the last 30 years is the leadership’s obsession with science,
technology and education; Deng Xiaoping considered technology the main
factor in production. Besides, China knows that to escape the “middle income
trap” it has to move towards a knowledge economy.
Flying against conventional wisdom, Yingying Zhang and Yu Zhou show that
it is innovation, along with low cost, that underpins China’s economic develop-
ment. They define the sources and strategic focus of Chinese innovation, and
emphasize the relevance of cultural factors.
The speed of China’s catch-up in science and technology will determine the
pace of its economic growth, its penetration of international markets and its
transformation into a true great power.
— Eugenio Bregolat, Former Ambassador of Spain
to China and author of “The Second Revolution in China”
The thesis of this book is that China’s economic success is based on innova-
tion rather than inexpensive labor. Expectations that China’s economic rise will
stall due to rising labor costs thus may be misplaced. An incremental innova-
tion dynamic identified by the authors, spread widely through industries at
different levels of technology, suggests that China’s economy can sustain higher
wages – but can it take global leadership in innovation? Rather than relying on
technology transfer for access to advanced technology, can China produce more
fundamental forms of innovation that derive from university-industry govern-
ment (triple helix) interactions based on an open Civil Society?
— Henry Etzkowitz, President of the Triple Helix
Association (THA), Visiting Professor at London
University and Edinburgh University, UK
Manufacturing development in China is based on three advantages: low-cost
human resources, cheap raw material availability and direct support from govern-
ment. However, if we deny the considerable innovative capacity of enterprises
in China and accept that innovation is the key factor for economic growth in
a region/country, it is a true paradox that a country with weak innovation thus
far has a rapidly increasing GDP rate. This volume, basic on a broad definition of
innovation and an affirmation of China’s innovation capability, seeks to explain
the source of that innovation capacity as the result of the government’s imple-
mentation of innovation strategy over recent decades. It squares up the human-
istic factors such as strategy, culture and social network, highlighting China’s
specific characteristics in innovation.
— Chunyan Zhou, Editor for Journal of
Knowledge-based Innovation in China (2011–2013)
Palgrave Studies in Chinese Management
Series Editors: Yingying Zhang, CUNEF Madrid, Spain, and Anne S. Tsui, Arizona
State University, USA
This book series is a showcase for in-depth research into Chinese management
providing systematic knowledge on the fast growing Chinese economy and
enterprises from management perspectives. Research efforts such as this are
already forging ahead and have led to the creation of a scholarly community: the
International Association for Chinese Management Research (IACMR). The series
will draw on the research and knowledge being created by this international
community, seeking to address an audience of academics and practitioners inter-
ested in Chinese management.
The series provides a platform for Chinese management researchers to exchange
ideas and research, enabling collaboration between management researchers in
and outside of China. The aim of the series is to push forward the development
of management research in and about China.
Palgrave Studies in Chinese Management aims to not only to provide information
on doing business in China, but also to create systematic knowledge on Chinese
management, both on the Chinese management of theory and on Chinese
theory of management. It covers reflective thoughts, theoretical contribution
and empirical evidence and is a definitive reference point for systematic know-
ledge on Chinese management.
Titles include:
Li Yuan
TRADITIONAL CHINESE THINKING ON HRM PRACTICES
Heritage and Transformation in China
Eugenio Bregolat
THE SECOND CHINESE REVOLUTION
Yingying Zhang and Yu Zhou
THE SOURCE OF INNOVATION IN CHINA
Highly Innovative Systems
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The Source of Innovation
in China
Highly Innovative Systems
Yingying Zhang
CUNEF Madrid, Spain
and
Yu Zhou
Renmin University of China, China
© Yingying Zhang and Yu Zhou 2015
Individual case studies © Contributors 2015
Prologue © Richard Freeman 2015
Softcover reprint of the hardcover 1st edition 2015 978-1-137-33505-0
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First published 2014 by
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ISBN 978-1-349-46286-5 ISBN 978-1-137-33506-7 (eBook)
DOI 10.1057/9781137335067
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Library of Congress Cataloging-in-Publication Data
The source of innovation in China : highly innovative systems/authored by
YingYing Zhang, CUNEF Madrid, Spain, Yu Zhou, Renmin University of China,
China.
pages cm. — (Palgrave Studies in Chinese Management)
1. Technological innovations – China – History – 21st century. 2. Creative
ability in business – China – History – 21st century. 3. Corporate culture –
China – History – 21st century. I. Zhang, YingYing.
HC430.T4S68 2014
303.48930951—dc23 2014022921
To Jaume Filella, who made me aware of my
ambition in knowledge
— Yingying
To Caroline and Amy, my super innovators in life
— Yu
Contents
List of Figures ix
List of Tables x
Preface xi
Acknowledgments xiii
Prologue xiv
Richard Freeman
Notes on Contributors xxi
1 The Rise of China: Innovation or Cost Leader 1
2 Chinese Innovation in Product, Process and
Strategy: The E nd of L ow C ost E ra? 1 5
Appendix 2.1 From National Innovation Policy to
Innovation System Construction: The Case of Beijing
Changping District 38
Daniel Lemus and Hemin Song
Appendix 2.2 Huawei Technologies: A Lion in the
Intensely Competitive ICT Sector? 54
Yingying Zhang and Sylvia Rohlfer
Appendix 2.3 Haidilao: Innovating Business Model by
Stressing Corporate Values 70
Yajun Wu and Xiaoxi Chang
3 Chinese Culture and Value: Enhancing or Impeding
Innovation? 77
Appendix 3.1 Cultural Neglect at the Jing Jiang Hotel 103
Stephen Grainger
Appendix 3.2 Haier’s Innovation 116
Hemin Song and Xiaoxi Chang
Appendix 3.3 Hisense: Innovation for Life 123
Mu Tian and Maria Paz Salmador Sánchez
vii
viii Contents
4 Network-based Innovation in China: Typology along
with Economic Evolution 135
Appendix 4.1 Dual Drives on Innovation Network:
Innovation of Datang Telecom Technology 153
Sylvia Rohlfer and Wenwen Zhao
Appendix 4.2 Success of Alibaba Based on Its Corporate
Culture 167
Wenwen Zhao and Verónica Rosendo-Rios
5 People-centric Innovation: Strategic HR Management
and Innovation 179
Appendix 5.1 Lenovo: Create a New Legend 212
Mu Tian and Sylvia Rohlfer
Appendix 5.2 ENN’s Technologic Innovation and Its
Indispensable Driving Force – HRM 226
Wenwen Zhao and Adoración Álvaro-Moya
6 Innovation Challenges When Multinationalizing:
The Source of Innovation 235
Appendix 6.1 Training Student Mindfulness
Inspiration and Creativity 249
Libo Song
Index 255
List of Figures
1.1 I ntegrative framework of highly innovative
systems in China 6
A2.2.1 Huawei’s financial highlights, 2008–2012 56
A2.2.2 Huawei technologies timeline, 1987–2012 58
3.1 E volution of cultural studies in organizational theory 81
A3.3.1 Hisense’s financial highlights, 2011–2013 125
A4.1.1 Three-step model 1 60
A4.1.2 The trend of the telecom industry 165
5.1 I ndividual-organizational knowledge conversion
for innovation 1 89
5.2 P eople-centric model to enhance organizational
innovation capability 206
A5.1.1 Lenovo’s financial highlights, 2008–2012 213
A5.1.2 G lobal market share held by leading PC vendors
from 1st quarter 2009 to 4th quarter 2013 215
A5.1.3 Lenovo technologies timeline, 1984–2014 216
A5.1.4 “ House Model” of Lenovo group’s strategic human
resources 2 19
A5.1.5 The five Ps 2 20
A5.1.6 HR values 222
A5.1.7 HR competencies 2 23
A5.2.1 CCEP model 2 30
6.1 I nnovation challenges when Chinese enterprises
multinationalize 238
A6.1.1 Development trends 2 50
A6.1.2 S cheme of Eastern Tai chi potential inspiration and
creativity structure 251
A6.1.3 Scheme of Eastern mindfulness Tai chi structure 252
A6.1.4 F low chart of encouraging student mindfulness and
creativity 2 53
ix
List of Tables
I.1 Levels, World rank, and trends in S&E resources
and innovation, China xv
1.1 The organization of our theoretical and empirical
argumentation 10
2.1 Valid patent registrations in China by Chinese and
international enterprises, 2006–2011 27
2.2 Top 20 PCT applications at World Intellectual Property
Organization (WIPO) 28
3.1 Contrasting effects of Chinese culture on innovation 9 3
3.2 Dynamic Chinese culture in enhancing innovation
capability 97
3.3 Evolution of culture in a new Chinese business context 99
5.1 Comparative Chinese and Western HRM evolutionary paths 180
5.2 Summary of creativity dimensions 183
x
