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Innovation in China?

From a Chinese perspective

Innovation – An overused word?

Innovation has always been a buzzword in the business world. Companies understand the importance of innovating. They dream of achieving a continuum in innovation, yet only a partly few are satisfied with their own company’s progress, to not say the least about achieving it.

As Stefan Lindegaard would say about innovation “I try not to define ‘innovation; as we should tone down our use of the word and term… They (companies) talk too much about innovation. They should get back to the basics”

And that is clearly the case in most companies. Many people and companies for that matter do not clearly understand the word innovation and are just throwing the word around. Companies like to be associated with the word Innovation. It makes them feel more vibrant, more energetic, with a greater connection to the ever-changing world of business. However, talking about innovation, does not make one an innovator.

There are no great ideas, only ideas made great.

Many believe that innovation is all about finding that one great idea, the overnight million dollar idea. Many dream of achieving the level of success romanticise by countless others in the “miraculous” journey of famous unicorns like Uber, Airbnb etc.




The most successful companies do not spring up from just a million-dollar idea that no one thought of before. Google was not the first search engine. Apple was never the first company that sells personal computers. There are many reasons why these companies succeeded and relegating all to a word called “Great Idea” to explain all these success stories are too shallow. Any idea, if pieced together with a proper market segment and polished consistently, can also achieve great things.


At XNode, we believe that Innovation, is not just based on a single great idea, but the continuous process of generation, reviewing, refining and marketing an idea. Everybody sees the “Success” of said companies but not many understand the hours behind the work, the mundane unglamorous job of building up the idea from scratch.


We believe that only when the idea is widely accepted by your target audience, gained traction, scaled, and most importantly getting paid for your product and made it commercially viable could you say that innovation has succeeded. Before that happened, we can call it an idea that is “in progress”


One example is WhatsApp. It is the first to come up with a messaging service through internet-lines when telecommunications messaging and calls were the mainstream idea. The failure of WhatsApp however, is its ability to generate revenue. It, as a messaging application was widely accepted by consumers and have gained sufficient traction, (WhatsApp is used by approximately 1 billion people in 120 countries), yet it does not have a revenue model in which the company can generate profits. (Edit: While we do acknowledge that Facebook has acquired WhatApp and might be engaging in Data-mining, it is not verified and we do not see it as a source of direct revenue to the business.)

China – Copy or Create?

China had always been a country full of innovation and invention; they were the leaders in technology for most of ancient history. We see the invention of gunpowder, paper, and the compass. However, that soon came to a stop. Since then, China has regressed, gone through reforms, changes, opening up to the world and now, they currently are the second largest economy in the world, with 12 000 companies started every single day.

However, Chinese companies are still not as innovating as compared to the west due to the nature of its growth.

The growth of China has inexplicably led to a decline in innovation. For a nation that has been busy copying and catching up to the rest of the world for the past 20 years, it is a paradigm shift in thinking and acumen to change from copying to creating. Even though it has the highest number of STEM (Science, Technology, Engineering, Mathematics) graduates per year compared to any other country in the world, it is still lagging behind in creative thinking

However, that may not be long.

If we were to picture commercialised knowledge as a circle, China as a whole is fast expanding to the limits of that “circle” and in certain industries, China has gone “one-step further” and improved upon the designs and capabilities of its western counterparts. This is especially so most notably in retail technology and mobile-commerce, where China is leading the pack. (KPMG has forecasted China to have $1039.84 billion USD in sales on m-commerce alone)

One oft-used example is WeChat, by Tencent. It started as a mobile messaging application like WhatsApp, but it quickly evolved into a one-stop app that allows users to do anything from messaging, hailing a cab, buying groceries to investing in a fund all without leaving the touch of the screen. It has since become a multi-billion dollar company and its mobile payment and money transfer capabilities have even caught the eye of Facebook whom has started to implement mobile payments technology into its own Messenger App.

The rise of the Red Dragon?

That being said, however, China is still lagging behind in areas of advanced manufacturing, traditionally the hallmark of highly developed and technological countries. A good example is the fields of Aeronautics and Pharmaceuticals, in which both are extremely technical and innovative in nature and China currently is still unable to compete with companies such as Boeing, Rolls Royce.

Regardless, China is fast sprinting towards a goal of being both highly inventive and innovative. “Silicon Valleys” of China has been sprouting up in Shanghai, Shenzhen, and Beijing where we see talents congregate, discuss, research and build up the capabilities to push the boundaries of technology and humanity.

One area of interest is the emerging of a strong industry in the fields of Drone Technology and Artificial Intelligence, both of which are relatively new technologies of the 21st century. DJI International is the market leader with a 70% market share in consumer drones. For a country that used to pride itself as the “World’s Factory”, it is slowly emerging as an eminent innovative superpower.

By the XNode Team, (Nathaniel Oh)

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