We have all seen it before, whether it is mobile phones on sale in a market in Cambodia, or soft drinks in the Middle East. Chinese brand blatantly imitates product of a better-known competitor then undercuts price to gain sales volume. On face value, it’s a breach of copyright – but what does it say more deeply? For many, it represents a key inhibitor of future Chinese growth and it’s a concern for many brands, both big and small, from China and abroad. It’s a problem of creativity.

 

The truth is, for over 5,000 years now, China has had a very strong creative culture and a very strong creative history. Yet, despite this fact, in recent years modern China has not been renowned for creativity. Instead, the last 30 years have seen China perform the role of global manufacturing hub, with little need to be creative or to innovative. However, that time is clearly coming to an end.

 

Many sectors of Chinese industry are approaching the technology frontier, inter-sector transfers of labour are diminishing, and the contribution of capital as a growth driver is declining. The Government is rapidly recognised these facts and creativity and innovation are increasingly buzz words.

 

However, Government spending is not the sole answer to China’s creativity crisis. The reality is that while government and state institutions are currently responsible for the majority of research and development, any number of economic models will prove that this does not necessarily result in innovation that meets the true needs of the economy. While recent years have shown a rise in the number of scientific patents and published papers, only a small quantity have commercial relevance – and an even smaller number have or will translate into new products or exports. Furthermore, without adequate legal protection, innovators have even less incentive to create.

 

International experience says that most applied research and innovation is derived from large private sector firms, where innovation can be made central to competition strategy and where responses to market demand and government incentives are most dynamic. At the other end of the size spectrum, SMEs are also an important source of innovation, and while local governments and state-owned enterprises are increasingly providing a source of venture capital and private equity, this remains an area of significant growth potential.

 

But to take a further step back, the solution can also start with the education system.

 

In order to foster creativity, the process must start from youth. In 2010, Premier Wen Jiabao stated that: “Students don’t only need knowledge; they have to learn how to act, to use their brains.”

Wen said “We must encourage students to think independently, freely express themselves, get them to believe in themselves, protect and stimulate their imagination and creativity.”

 

Taking this a step further, he then went on to quote Einstein in saying that “imagination is more important than knowledge.”

 

In the Chinese language, the character for “study” – “学” or ”學” – can also be used as the character for “copy” and in the Chinese education system these two elements go hand in hand. Many foreign sources will link this to the fact that the Chinese education system places excessive emphasis on rote learning rather than creativity. But it’s not a discussion confined to foreigners. Following poorer than expected results at the Intel International Science and Engineering Fair, the Chinese newspaper People’s Daily noted that these students had received schooling that arguably placed too much emphasis on rote, detail, and following procedures, and too little emphasis on the process of discovery.

 

There are a variety of reasons for this, ranging from language, to culture, to the school examination system. When growing up, Chinese children spend years studying through rote, the complex Chinese character system, arguably ingraining this as a method of study. Then for entrance to University in China, students must sit for the National Higher Education Entrance Examination – the “Gaokao” (高考) – the sole determinant of which university a student can attend and which is commonly criticised because students focus on further rote study on a small array of subjects.

 

Whether the blame lies with a schooling system that fails to produce required levels of creativity, a legal system that fails to protect innovation, or an innovation framework which invests too much responsibility in governmental organisations, what is clear is that Chinese brands – or “Brand China” – are yet to make a global impact.

 

Figures form China’s Ministry of Commerce, note that in January 2012, China’s overseas investment totaled nearly US$4.4 billion, an increase of 60 percent on the same figure last year. But, despite this increase in overseas investment, not one mainland Chinese company made the consultancy Interbrand’s annual list of the world’s Top 100 brands.

 

For China to make this step up into the Top 100, to progress from global manufacturing centre to a global creativity centre, efforts must come from the public and private sector. Worldwide Chief Creative Officer at international advertising agency DDB, Amir Kassaei, commented earlier in the year, “we have to make sure that we educate the young talent in our industry… that being creative is not about copying something else, but by innovating in their own Chinese way.” And this “Chinese way” is what will inevitably lead to Chinese brands that can make an impact on the global stage.

 

With every passing year, we are moving a step closer to this goal. Chinese sportswear brand, Li Ning, failed in its first foray into the US market when it dived directly into street-level competition with Adidas and Nike, but has now moved towards a more e-commerce based platform where it can better communicate its brand values. Lenovo has also made ground using domestic market revenue to acquire foreign tech brands and then target youth consumers (generally regarded as aged 18-34) more receptive to cost-competitive products.

 

Of course, in China the process always starts at the top. Increased effectiveness of basic research and development of high-tech industries are both goals of the Government’s 12th Five Year Plan. This will result in higher numbers of university graduates with skills in research, design, production, information and communication technology (ICT), and gradually marketing.

 

With a wealth of small, innovation-orientated companies, the pay-off for Australian business is potentially significant. The pay-offs for China are even more so. Increased creativity in China can result in not just the rise of “Brand China” but also solutions to deeper issues, such as a sustaining rapid growth while coping with the looming challenge of resource scarcities, climate change, and environmental degradation. It’s a cultural revolution of a very different sort and it is taking place right now. ■

 

*Geoff Tink has been lived, worked and travelled China for over seven years. Originally from Sydney, he previously worked with the Australia China Business Council and now manages marketing events and communications for international brands in China. He speaks

mandarin fluently and can be found on weibo at @T_丁先生.