I N N O V A T I O NEdward S. SteinfeldTroels BeltoftInnovationLessons FromChinaForeign businesspeople complain that China doesn’t play fair.But anybody involved in international business should treatChina not only as a place to sell but also as a place to learn.Research FeatureJune 17, 2014Reprint #55415
PLEASE NOTE THAT GRAY AREAS REFLECT ARTWORK THAT HAS BEEN INTENTIONALLY REMOVED. THE SUBSTANTIVE CONTENT OF THE ARTICLE APPEARS AS ORIGINALLY PUBLISHED.SUMMER 2014 MIT SLOAN MANAGEMENT REVIEW49DESPITE CHINA’Slong and established demand for high-technology products, many leading global companies have become increasingly wary about operating in the Chinese market. They see unfair competitive practices, discriminatory regulation and intellectual property theft — all ostensibly condoned by the government — as part and parcel of the Chinese experience.1Foreign businesspeople today routinely complain that in exchange for market access, they are required to transfer technology to favored Chinese competitors. And once such entities have the technology, they — in collusion with the government — will endeavor to seize market share not just in China but also in other markets. We don’t deny that some of these claims are valid. After all, the Chinese government openly acknowledges its desire to establish companies that are market leaders and to do so, at least in part, through technology transfer. However, we see a different side of China, one that requires for-eign companies to remain actively engaged. Our research describes unique forms of China-based technology innovation, mastery of which is becoming increasingly indispensi-ble for any company aiming to succeed in the global market. (See “About the Research,” p. 51.) Anybody involved in international business needs to treat China not just as a place to sell, but also as a place to learn. In our view, compa-nies need to lean in rather than pull back.Innovation “China Style”China today may not yet be the place to go for path-breaking R&D or radical new invention. But it’s becoming the best place to go if you want to learn how to make ideas commercially viable. Such knowledge — whether it involves product B U S I N E S S I N C H I N A : N E W P R O D U C T D E V E L O P M E N TInnovation Lessons From ChinaForeign businesspeople complain that China doesn’t play fair. But anybody involved in international business should treat China not only as a place to sell but also as a place to learn. BY EDWARD S. STEINFELD AND TROELS BELTOFTTHE LEADING QUESTIONWhat can international businesses learn from Chinese com-panies about introducing new products?FINDINGSNew ideas can be a relatively small part of the innova-tion equation.
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