Corporate Branding : Corporate Social Responsibility
The State of Corporate Responsibility in China
12 Q & A With Canadian Photographer Philippe Roy Branding in China
Letter from the Editor Dear Readers, In a country where the concept of face plays such an integral part in the Chinese business world, it is no surprise that Corporate Social Responsibility (CSR) has begun to play a more visible part in the strategies of companies operating in China. Now that China has become the second largest economy in the world, it has never been more important for a business to maintain a good reputation in the global economy.
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In this issue we hope to give you a better idea of why CSR is something to consider when operating a business. Teresa Tang gives a brief overview of what CSR really is while Rupert Hoogewerf takes a closer look at what Chinese companies are actually doing to be socially responsible. Enjoy!
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The Best of Canadian Education 2011
New Company Members: Oncard
New Individual Members: Zoe Lu
Renewed Company Members: Manulife CCTong Canada Wood CTC YCIS Ivanhoe Cambridge HSBC SP Industry QCS CCBC BNP Paribas
Renewed Individual Members: Grant Oh! Buchwald Raymond Gan Caroline Moziar
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In October this year Hurun Report will release The Best of Canadian Education 2011. The guide is targeted at affluent Chinese parents looking to send their children to secondary schools and undergraduate programmes in Canada. With articles from thought leaders in Canadian education circles, participation from Canada’s top private schools and universities, and contributions from influential alumni, the guide is set to build on the burgeoning interest shown by Chinese parents in Canadian private education. Hurun Report understands that the process of sending children abroad can be dauntingly complex. With The Best of Canadian Education 2011 we aim to guide parents through this complexity and help unlock the doors to the Canada’s best schools.
MEMBER NEWS
Smile China and Shanghai # 9 People’s Hospital with the Support of CN Worldwide Continue Dr. Bethune’s Legacy The Smile China Project and Shanghai #9 People's Hospital announced their commitment to collaborate with the signing of a memorandu of understanding (MoU). With this MoU Smile China and Shanghai # 9 People's Hospital will collaborate and cooperate on developing, standardizing and advancing surgical training of cleft lip and palate techniques in the developing and remote regions of China to ensure greater access for children suffering with a cleft lip and palate.
attended to show their support for the cause. The evening was also marked by an announcement from CN Worldwide who has committed their support to Smile China for the next 3 years. .
Sponsored by CN Worldwide and supported by The Canadian Chamber of Commerce in Shanghai, the evening reception was attended by guests from the Smile China Project, Shanghai # 9 People's Hospital and members of the Canadian community in Shanghai who
Canadian Economy to Continue Growing According to the HSBC Small Business Confidence Monitor Canadian SMEs (small and medium-sized enterprises) reveal a willingness to gradually loosen the purse strings on capital investments, but keep a cautious view on economic outlook and a steady hand on recruitment plans, say respondents to the second wave of a semi-annual HSBC survey of SMEs globally. Nearly all respondents across developed and emerging markets also say that their economic outlook is more positive than it was six months ago. For Canadian SMEs, who represent the vast majority of our country's 2.3 million businesses and form an integral part of the Canadian economy, this increase in confidence and investment intentions is a welcome sign of gradual, but cautious economic recovery in
Canada. Forming a vital part of the Canadian economy, the collective impact of small businesses is significant. The semi-annual HSBC Small Business Confidence Monitor gauges the six-month outlook of SMEs on local economic growth, capital investment plans and recruitment. This is the largest international survey of its kind, covering 6,346 SMEs across 21 markets in North America, Asia, the Middle East, Europe, and Latin America. The results were used to calculate an index ranging from 0 to 200, where 200 represents the highest confidence level, 0 represents the lowest, and 100, neutral.
Source: www.newswire.ca
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Corporate Social Responsibility: An Introduction By Teresa Tang
What is CSR? Corporate Social Responsibility (CSR), also referred to as corporate citizenship, sustainable development, good governance, and so on, has as many definitions as it has names. In the most simple and encompassing manner, it can be regarded as the inclusion of stakeholder (public) interest into the decision-making and conduct of corporations. Stakeholders consist of not only investors and consumers, but also employees, communities, government, special interest groups, and the public sphere as a whole. As CSR is often loosely defined, there is a great variance in the ways in which companies integrate CSR programs into their broader business models. Generally, companies strive to implement their CSR strategy through a set of policies, programs, training, or practices which extend throughout their operations and beyond. If CSR is pursued by corporations as a commitment to be accountable to the economy, society, and environment, then the question remains: why do they wish to do so at their own cost? The fact is, CSR follows the logic that a business which manages the impact of its operations in a way that minimizes damage and maximizes benefits will also stand to gain profit in the long term. Why CSR? Proponents of CSR have named a host of benefits that accompany the sound incorporation of a CSR program into a company’s business model, one of which is risk management. In an increasingly globalized world, branding and image are key concerns for a growing number of multinational corporations. A company’s profitability can be gravely affected by scandals
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and environmental accidents. With the inclusion of a CSR plan that focuses on regulatory oversight, transparency, and sharpened decision-making processes, the risk of potential PR disasters can be reduced. For those concerned with corporate branding, certain CSR initiatives that target brand differentiation by adhering to specific ethical values and practices can help enhance brand image and attract a loyal clientele. The rationale is that consumers have their own ethical expectations that are best fulfilled by a company that shares the same values. This is especially appealing to those who believe in consumer activism -- that by choosing to support corporations that further certain causes, consumers can become “activists” in their own right. Additionally, having a CSR program can also aid various HR activities such as retention, employee motivation, and recruitment. Potential recruits often learn about the employers’ CSR policies before making the decision to join a firm, hence having a coherent CSR program proves to be advantageous. At the same time, through activities such as fundraisers and community volunteering, it can also enhance staff perception of the company. All in all, those who believe in the merits of CSR will agree that the success of a businesses depends on the wellbeing of its stakeholders, and the society and environment in which the business operates. By helping build a more stable socio-political environment, or by engaging in environmental protection, companies are improving the conditions in which their businesses can thrive. Complementarily, better brand image and successful retention and recruitment creates a competitive advantage
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which allows companies to again gain greater profitability over the long term. Criticisms While proponents root for the benefits of CSR, critics stand on the sidelines hoping to topple its growing appeal. CSR critics belong mainly to two schools of opposition: those who argue that profitability is the only relevant goal of business, and those who argue that CSR programs are merely greenwashing campaigns. From the point of view of the first group, a corporation’s sole responsibility is to its shareholders. Beyond respecting the laws and regulations that are in place, a corporation, unlike an individual, is devoid of other responsibilities. By engaging in CSR programs that are both costly and incongruent with profit maximization, the economic efficiency of a corporation is impaired, which in effect harms the interests of the company’s shareholders, staff, and consumers. On the other hand, critics concerned with the interests of society (often anti-corporatists) allude to the idea that, because the end goal of corporations is to gain profit, CSR is no more than a publicity stunt employed by companies in order to distract attention from their operations: they are able to enhance their image while continuing to operate in ways that may be harmful to society and the environment. Both views share the notion that corporations are concerned only with the endless pursuit of profit. As such, they believe that one should rely on the ultimate authority -- the government -- to regulate business activity and to protect the interests of the public. Whether one can put any government up to the task is questionable, however.
and Huawei, which are leaders in the establishment of comprehensive CSR programs. CSR in China has evolved from mere philanthropy to clearly defined strategies and perceptions and better practices. The GoldenBee Development Center for Chinese CSR reports a visible increase in the number of Chinese enterprises that have issued CSR reports in recent years. Following the logic that the development of corporate CSR programs leads to the establishment of the very CSR departments that issue these reports, one can deduce that an increase in the disclosure of CSR information indicates a growth of CSR initiatives in China. Regardless of whether critics are correct to question the sincerity of corporations’ CSR motives, or whether CSR is effective at all in garnering long-term profits, the bottom line remains: CSR is now an expanding practice in China; it is no longer a foreign concept met with skepticism, but an area of infinite possibilities.
Teresa Tang is a project coordinator at the CANCHAM Shanghai and is also pursuing a Master of Arts in Asia Pacific Policy Studies at the University of British Columbia.
CSR in the China Context Since the gaige kaifang economic reforms in the 1980s and the subsequent privatization movement in the 1990s, there has been an exponential growth in the number of Chinese firms. As their trade volumes have increased, so too has the expectation that Chinese firms should be held to higher standards. The result has been an awareness and a growing understanding of CSR, notably among leading corporate giants such as Lenovo, Vanke,
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The State of Corporate Social Responsibility in China By Rupert Hoogewerf
Milton Friedman’s oft quoted observation that the only “social responsibility of business is to increase its profits” is now not simply narrow in its estimation of the impact that businesses can have on their environment, but now also limited in its description of the benefits that corporate social responsibility (CSR) can bring to companies’ balance sheets. In the past six years that I have overseen our company’s ranking of CSR in China I have been encouraged by the growth in the sector. Brands are beginning to realize that a strong CSR programme gives them a competitive edge; CSR is not just about good morals, but about good business. In keeping with this growing awareness, the number of foreign multinationals included in our Hurun Corporate Social Responsibility Top Fifty rose by 50 percent this year to 18. Bayer can be singled out as an excellent example of the trend, having created four chairs in Chinese universities focusing on various fields of CSR and contributed over USD2 million to various charitable projects in China’s deprived regions. But Bayer is by no means alone. The number of companies which publish a CSR report has grown, from 31 last year to 41 this year, with this increase in quantity accompanied by marked improvements in the quality and depth of these reports' methodology and results. CSR is also on the up amongst domestic corporations and, with the growing sophistication of Chinese industry, the virtues of corporate citizenship are increasingly taking hold. A marked trend amongst domestic
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companies has been their responsiveness to acute national need, with domestic corporations dominating local charitable giving. A great deal of the rise in donations this year can be accounted for by the response to the severe drought which afflicted the southwest of China and the earthquake measuring 7.1 on the Richter Scale which hit Qinghai Province. Midea, the Agricultural Bank of China, and Wusteel all made contributions of USD1.5 million or over in support of the Qinghai relief fund, whilst COFCO donated USD740,000. Wusteel also donated USD4 million to the drought relief effort, whilst since the Wenchuan earthquake of 2008, Vanke and Coca-Cola have both made donations of over USD10 million to aid the area’s reconstruction efforts.
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Environmental protection is another area in which the CSR Top Fifty have focused their efforts. Ping An’s ‘Low-Carbon 100’ campaign pinpointed 100 green initiatives for implementation, whilst Coca-Cola’s new bottle design reduced its packaging’s carbon footprint by 35 percent. Amway, Lenovo and Bayer also introduced noteworthy green CSR programs. However, it is clear that China has a long way to go on this front. Last month, the Ministry of Environmental Protection released a report which revealed that the number of industrial accidents that polluted the environment roughly doubled in the first half of 2010. With alarming statistics such as this, it is well that the green movement is attracting greater currency amongst corporate decision makers. The overarching picture presented by this research is markedly positive. The destruction and hardship wrought by natural disaster and the perennial challenges of
environmental protection only serve to underscore the valuable contribution that corporations can and are making to China. An awareness of the business advantages that a sound CSR program can bring is arresting Chinese corporate consciousness and, with this awareness, profitability and responsibility are increasingly being viewed as mutual beneficiaries.
Rupert Hoogewerf is the publisher of the Hurun Report, a monthly magazine best-known for its "China Rich List", a ranking of the wealthiest individuals in China. This October, Hurun Report will release The Best of Canadian Education 2011
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WORDS OF WISDOM
Moving towards a healthie economy and environmen By Bronwen Smith
Q&A with Canadian Photographer Philippe Roy
Since China seems to be the only country faring well during the recent worldwide financial crisis, people have been flocking to cities like Shanghai in hopes of making it big. “It really takes you in,” says Philippe Roy, who came here seven and a half years ago with the intention of staying only one year. Like many foreigners, he came to Shanghai with only his backpack and a dream, he knew nobody here, and started his network from zero. A career in photography is something he used to think was an unattainable dream. Today he is living his Chinese “American Dream.” His impressive resume includes projects for companies such as L’Oreal, Henkel, Phillips, Pratt & Whitney and BASF, just to name a few. He is also the studio director over at the Junction, an agency that represents different photographers specializing in a wide array of photographic styles: from fashion and beauty, still life, cosmetics, lifestyle, to automotive.
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He was kind enough to take time from his busy schedule to answer a few of our questions: Q: You are originally from Montreal, Canada, What brought you to China? A; China always seemed to be really interesting to me, because it was the one country in the whole of Asia that was always shutting their doors to the foreigners. I wanted to get in and see what was hiding behind those gigantic doors. It was also very interesting because somehow it meant that it was this untouched society. A little bit like Indiana Jones. That was my image back then. Q: How did your career develop in China? A: I did a lot of editorial work before. I started with magazines like China Air In-Flight magazine and that’s Shanghai. I was also teaching English at the beginning and trying to balance between the two. Then my photography finally took over and I was quite happy about that. One of the reasons I
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created the agency (the Junction) was because I became extremely frustrated with people immediately going to Beijing when they needed an artist. I wanted them to know that there are some of us in Shanghai. My agency represents both international photographers, as well as local photographers. I try to keep it 50/50. I try to represent foreign photographers based here in Shanghai, as well as Chinese photographers that I personally think are up and coming. I look at a lot of portfolios every day. Q: How is it different, working in China, as opposed to Canada? A: Oh my god. I am so Lucky. At my age, I would still be doing very small clients in Canada. It's a lot harder to get in the door in there, because all the big companies already have their go-to photographers. Here, the client is a lot more willing to experiment, because it is still an emerging market and they are still in the testing phase. If you look at the advertising around Shanghai right now, it’s very much like in the 50’s. There is no kind of play with the mind. But consumers are starting to be more and more demanding, and it’s happening very quickly. Q: What is the hardest part of your job? A: Usually, it’s the logistics of it all. With corporate photography, they might want something really special, like a CEO portrait on a rooftop with a helicopter. I would have to book the helicopter and book the building and time it with the CEO to have them all come together to get this one really awesome shot. I might also have to book a makeup artist and a hair stylist and a set stylist if they need one. I make sure to set up some nice lights to make the image special and make the act pop out. I might be asked to use some really edgy lighting, like super-
hero lights, to make these corporate employees look almost like superheroes at work. Then there is the post-production, where we work with touch-up specialists and graphic designers. A lot can be done to alter the image in the post-production phase. We take care of everything from A to Z. Q: What are your thoughts on Corporate Social Responsibility? A: Some of my clients place a lot of importance on CSR, others not at all. In CSR there is an International placement system, and Pratt & Whitney, for example, are Platinum level, I believe. They have solar panels on their rooftop that recycles water, they have a lake that collects rainfall water, and all their lights have wind and solar panels. Their employees go through training and they do the maximum to prevent accidents within their factories. The working day is eight hours long and employees have to apply for overtime. Their image within the company is as important as their exterior image. BASF is a chemical company, and being a chemical company comes with a stigma. But BASF is working extremely hard to help local farmers. They have developed a new way of planting soy which is extremely efficient. In the same hector of soy plantation, they can now plant eight times the amount of seeds. I think that’s pretty cool. To contact Philippe Roy and learn more about his services: www.thejunctionstudios.com www.philippe-roy.com
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SPECIAL FOCUS
they may indeed admire foreign brands, Chinese consumers still buy Chinese brands, and in large volumes.
Branding in China By Trevor Lai
Over the last two decades, the branding landscape in China has gone through several stages of evolution. From being a virtually non-existent concept for most of the newly established Chinese enterprises in the 80s, focused solely on manufacturing efficiency and developing economies of scale, the idea of brand value gradually materialized by the mid 90s along with an influx of foreign brands and growing consumer affluence. The foreign brands in China have their fair share of challenges in adapting their brand identity and offerings to the domestic market. For every Coca-Cola, there are dozens of foreign brands that have come and gone, or are otherwise leaking cash as they struggle to compete with entrenched local competitors or larger multinationals. This point punctuates a reality which defies the generalization that Chinese consumers are enamoured with foreign brands. While
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Setting aside judgments on how much the local brands may have borrowed from their foreign benchmarks, the fact is that, propelled by the Renminbi spent by Chinese consumers, domestic brands like Li Ning enjoy a market share in China that ranks among those of global giants Nike and Adidas. As a branding and design firm, we have witnessed this phenomenon firsthand amongst our own client roster. When Identica first opened its doors in Shanghai six years ago, we had several large multinational clients and a handful of Chinese clients who ranged widely in sophistication. Today, we are actively sought out by local companies who now boast the financial resources to back their ambitions to elevate their branding and marketing. While clients do not always want to export their brands globally, a growing number recognize the increasing sophistication of consumers at home and rising expectations. What is startling is that many
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many of these large Chinese companies were fledgling enterprises or not even in existence just five years ago. Others have completely transformed outdated business lines into booming ones, sometimes with the help of comprehensive rebranding campaigns. Sinoway Herbs was the name of a local herbal personal care brand that was failing to reach and connect with the younger targeted market segments. Identica renamed the company Inoherb – presenting the brand value of innovation combined with its herbal ingredients – and designed a new brand identity. In addition, we created a complete packaging design system for the brand’s various product lines and graphic standards manual to enable the company to expand their product lines independently. The revamped logo, name and packaging design preserved the core characteristics associated with traditional Chinese herbal medicine but turned them into a powerful differentiator. As of July, Inoherb had reported a gross sales increase of 100 percent for its main product lines since Identica’s rebranding campaign. Even established Chinese companies are developing their branding efforts in more sophisticated ways. Watsons – one of the enterprises owned by Asia’s richest man – is one of the long-established personal care stores in Mainland China. It operates in the cut-throat market for body care products, its private labels were confronted with a set of serious challenges among which were the low visual recognition of their packaging and the perceived low quality. To combat this, the company first partnered with Identica to develop new packaging designs for a few product lines. In 2008, following the success of the campaign, Identica was appointed as the leading packaging design
agency for Watsons in the mainland and also for some of the key products in the Asia regional market. Since then, Identica has worked on more than 50 top best-selling products and developed consistent graphic solutions, allowing Watsons to not only enhance its products’ quality image and establish better associations with the customers, but in some cases achieve increases in sales of 50-90 percent. Many of these products have been new, developed with specific private label branding to combat global competitors such as L’Oreal and Nivea. The rationale behind these efforts has been that Chinese consumers want to enjoy the lower price of Watsons products but expect a more premium product image to match the established foreign brands. In stark contrast to the mature environment of marketing and branding clients in Canada, the speed at which companies in China emerge, expand, and sometimes fall is a wake-up call to any Canadian businesses looking to explore opportunities here. In China, their competitors are no longer just the huge household names and global brands we know and admire – they now include the companies they may well have never heard of, which are already loved by tens of millions of Chinese in the country.
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LIFE BEYOND WORK
Restoring Hope One Smile at a Time The Smile China Project is a Canadian charitable organization founded by renowned facial plastic surgeon, Dr. Joseph K. Wong. The primary objective of the Smile China Project is to provide specialized surgical, medical and health care services to children affected with facial deformities in poor developing areas within the People's Republic of China. The Smile China Project offers to these children hope of a better life. It acts as a bridge to a loving world for these children filled with opportunities to lead a healthy and happy life. The change in the self-esteem and self-confidence of a child who has had a cleft repaired is immeasurable. After years of shame and isolation, these children are transformed - like a beautiful butterfly coming out of its cocoon - into outgoing, ambitious and confident individuals. It may only be a cleft repair, but it restores a child's life. It may only be a smile, but its one filled with hope and dignity.
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LIFE BEYOND WORK
Chef’s Pick Full Name of Dish:
Chef Michael Wendling shares his recipe for Seared “ sushikkinho” foie gras, citric soy sauce, grilled sesame and crispy chorizo By Teresa Tang Chef Michael Wendling is the Chef de cuisine of Le Royal Meridien Shanghai’s Allure restaurant. Hailing from South of France, he specialises in French cuisine working with fresh seasonal produce, contemporary and creative methods. A master student of 3 stars Michelin Chef Georges Blanc, he worked as Executive Sous Chef in the award-winning 3 stars Michelin Restaurant Georges Blanc for 4 years. Prior to this appointment, he was the Executive Sous Chef in 2 stars Michelin gastronomic restaurants in France. His cuisine blends authentic tradition and innovation throughout the seasons, composed of only the finest quality ingredients.
The Recipe
Directions: Preparation of the chorizo 1. Slowly pan fry the chorizo until crispy. Once the chorizo has cooled down, crush it into very thin pieces. Preparation of the sushikkinho 1. Prepare the rice and make 12 pieces of sushi. 2. Season, then sear the foie gras on both sides. Add on a top layer of Beijing duck sauce and sprinkle on the sesame, chorizo, and chives. 3. Use seaweed to attach the foie gras and rice
Serves: 4 Persons Ingredients: 12 slices of foie gras 250 g of cooked Japanese rice 100 g of chorizo (or spicy salami) 30 g of grilled sesame 10 g of sliced chives theduck sauce 60 g of Beijing Seaweed Other favourites by Chef Michael Wendling:
4. Display 3 pieces of sushi on the plate and add a little Beijing duck sauce on the side. What’s the inspiration behind this recipe? The sushikkinho was created for a close friend whose preference for fusion cuisine inspired the use of a combination of Beijing duck sauce, foie gras, and the sushi presentation. What makes this dish so good? “It is made with love” Chef Michael says with a smile. The allure of the dish is derived from its multi-layered texture: the combination of crispy and tender ingredients makes it a pleasure for many senses. That, coupled with the fusion of Chinese flavours, Japanese inspiration, and French ingredients makes it a definite crowd pleaser. Verdict: After tasting the dish, I decided that the “Sushikkinho” is extraordinary. Not only is its appearance enticing and its taste impeccable, its feel—the combination of the tender foie gras and crispy chorizo—is also enjoyable, making it a delightful medley of texture and flavor.
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LIFE BEYOND WORK
The Suit: Dos and Don’ts Sure, a suit will make you look instantly pulled together, but only if it's the right suit, in the right condition, with the right accessories. And that applies to both men and women. Here's what you should and shouldn't do to make a suit look modern: Do invest in a good-quality suit. Don't leave the house in a suit with tattered cuffs, loose threads, stains or frayed edges. Do wear a well-tailored, form-fitting suit. Don't wear a boxy, baggy or too-tight suit. Do look for fashion-forward details like narrow and / or peaked lapels or a bit of sheen. Don't wear outdated pieces like pleated or cuffed pants. Do wear a single-breasted, two-button, fingertip-length jacket. Don't wear a double-breasted jacket, at least for now. And skip the football-player-wide shoulder pads, too.
If You're a Woman: - Do wear a skirt that hits right at or above the knee. - Do wear a high heel with the wider men's style trousers. - Do accessorize with shiny patent shoes and bags, lots of metallics and dramatic Lucite jewelry.
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EVENT ALBUM
Chamber Golf
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Mixer
EVENT ALBUM
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REFLECTIONS
Chinese innovation an oxymoron? Huawei bites back By Jason Inch
passion, and ruthless competition. On January 27 the World Intellectual Property Organization (WIPO) announced its 2008 statistics for patent filings. China moved up in the rankings, to number six globally, nearing tech leaders, such as Korea, and surpassing the UK, Canada and other developed countries. At the same time, a Chinese company tops the ranking of corporate patent-filers for the first time, surpassing patent-mavens Panasonic, Philips and, well, everyone else because that is what it means to be number one. That company, of course, is China’s bellwether Huawei Technologies - fuel to the fire for Huawei’s famed ‘wolf-culture‘ of hard work,
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I thought this news about Huawei was worth posting because it is a significant globally-recognized data point supporting the trend of China’s drive to be more innovative. In Supertrends of Future China, we noted China’s increased spending on R&D through its universities and research institutes (in various public and public-private partnerships), increased domestic patent filings, and relocation of multinational R&D centers to China (especially after new tax credits were introduced in 2007 / 2008’s revamping of corporate tax policy). All of these are indicators of a concerted effort to make China a more technology-intensive
REFLECTIONS
country, with two caveats. First, it should be noted that WIPO patent filings are not an accurate reflection of domestic patent applications or patents granted overall. WIPO’s ranking refers to patents filed under the Patent Cooperation Treaty (PCT), in which a patent must be successfully filed in a signatory country or region before it is accepted under WIPO’s PCT for global protection. The PCT system enables the filing company to protect its intellectual property in 153 Contracting States with a single application, thereby significantly reducing costs and partially solving the problem of establishing and protecting IP in foreign territories. Second, in terms of the individual company patent filings, Huawei coming in first for the first time does not necessarily indicate a broader trend of Chinese companies becoming more innovative. Filing under WIPO’s PCT could merely indicate how aggressively a company intends to defend patents abroad. WIPO’s PCT makes this much easier, as mentioned in the previous paragraph. Furthermore, a precipitous decline in patent filings in 2008 by Philips and Panasonic was more likely the true cause of Huawei’s placing first. With only one other Chinese company - ZTE - in the top 100, China’s strength in patenting versus that of global competitors is still negligible. However, is there any additional evidence concerning patents that supports the contention that China is indeed becoming more innovative? For that, you could look to domestic applications and patents granted by the State Intellectual Property Office
(SIPO). In this regard, China appears to be getting more innovative, with about 317,000 patents granted overall in 2008 (Jan - Nov 2008), up from about 301,000 patents granted in 2007 (Jan - Dec 2007). If you go back further, to 2006, less than 224,000 patents were granted. Globally, China ranks number three in patent-intensiveness, ahead of Germany and Korea (and behind world-leaders US and Japan). All of the above figures, it should be stated, do not speak to the quality of the patents, and I have not provided a breakdown of patents by type (inventions vs. incremental improvements, for example), but an examination of the data on SIPO’s statistics page does show increases in invention and design patent categories that are slower than overall patent growth in China. Therefore one conclusion might be that China’s large number of patents filed owes more to brute force improvements rather than quality innovation. Also, it will take China some time to reach the state of the art, but this is still a good indicator of progression on China’s long march up the global value-chain. Chalk one more up for Huawei’s wolf-culture. At least for now, it is leader of the pack.
Jason Inch is a Shanghai-based consultant and the co-author of Supertrends of Future China. He can be contacted at Jason@chinasupertrends.com or www.chinasupertrends.com
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