cloudalps (hidden peaks)

High Tech Economics – implications from a global perspective.

China – the disruptor’s 2nd phase will impact the West even more..

When Professor Jonathan Christensen talks about “Disruptive Innovation”, anyone caring about the future of the West (i.e. Europe, the Americas) better listen well. While Globalization provided growth for both hemispheres over the last 2 or 3 decades, its disruptive effects were mostly felt by the West. In an interview with Arabic Knowledge@Wharton, Prof. Christensens’ reply to the question if China is a disruptor was: “What will happen is the next waves of disruption will come from countries such as Vietnam and other Southeast Asian countries [..] Wage rates are going up at a very fast rate… [..] this will force China to not just knock off designs from the West. They’ll have to compete on innovation“.

The frightening implication of this unstoppable trend is, of course, that the West is about to lose its predominant position as Innovator & Designer – in the same way, it lost its Manufacturing position in all but the smallest and most high-end niche markets.

A Thomson Reuters report already announced China as the new Gobal Innovation Leader back in October of last year, based on its imminent lead in new Patent Filing for 2011. No further comment necessary..

Add on:
The Reuters report cited above has been put into perspective by the Economist as well as Fortune based on concerns about the average quality of Chinese patents (e.g. utility-based 10 year patents) as well as the robustness of the legal system required to enforce patents. My simplistic view on this is that while these concerns might be justified today, the directional and aspirational change of “China Inc.” cannot be overlooked.

While reaching full compatibility regarding patent quality and relevance will take some more time – like the resolution of other issues perceived by the West – the impact on Western companies starts today. In specific but important niches (e.g. batteries), Chines companies already lead the respective global market.


Filed under: Macroeconomics

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