Tuesday, September 26, 2017

CHINA FROM MADE IN CHINA TO INNOVATED BY CHINA

Chinese economy has changed a lot and its behavioral financial outlook is also changing dramatically. The country set to become the next island for innovation for the global economy. Its economic growth engines are getting changed and one needs to be aware of the same.It might take few more couple of years before the show of innovation attracts the world but the platform is currently under construction. A population itself is a big opportunity for making billions in china and connecting the dots with the untapped market of china. China is shifting from made in china to innovate by china and will create many disruptive business-to-consumer technologies in the coming decade. When china is shifting from export to service then a land of smart phone along with internet will create revolution in the coming decade for service industry.

China is no longer a copy cat market any more. They are now turning into creators of the upcoming technologic booms in the coming decade. Well the proof of the pudding is that around $77bn of venture-capital (VC) investment poured into Chinese firms from 2014 to 2016, up from $12bn between 2011 and 2013. Don’t forget that there are 609 billionaires in China compared with 552 in America. This number speaks of many things where inflow of capital for new startups and innovation is ample and not dependent on any slowdown affecting any part of the global economy. Smartphone and internet has been a boom for the economy and this key area makes china to be more valuable for innovation and startups. China has gone to cash less economy but not to the fullest extent till now. The volume of mobile payments shot up almost fourfold last year, to $8.6trn, compared with just $112bn in America.

Many innovate segments are opening up and which are huge opportunity for the Chinese economy to fill up the gaps and head towards a huge growth. These growths are technologically dependent and don’t require traditional business strategies and other modes. Innovation is at the heart of China’s 13th Five-Year Plan (2016-2020), which sets the aims to become an “innovation nation” by 2020, an international leader in innovation by 2030, and a world powerhouse in scientific and technological innovation by 2050. Chinese manufacturing plants are getting to production enhancement where environment friendly and service based modules are being adopted. This it creates Chinese economy to be more opportunistic for growth and investments in the coming years. In house technology and creation of employment have been one of the key demands for the economy which can be easily achieved through the current changing geometry of the industries in china.

China’s expenditure on research and development accounted for 1.42 percent of GDP in 2006 and the ratio increased to 2.1 percent in 2016. In 2016, China had over 1.1 million patents for inventions, ranking third after the United States and Japan. The latest Global Innovation Index showed China rose three places to 22nd on the list of the world’s most innovative nations in 2017, the only middle-income country to join the top 25 innovative economies.

Cash less and online business opportunities have created Alibaba which is valued around $60 billion.  More Alibaba is on the way across various industries and segments.  China is shifting from made in china to innovation by china. This will save the Chinese economy from any type of futuristic trade restriction by countries like US etc. In house job creation and opportunities to reduce the gap of development within Chinese various states is the key to success. With a consumer market of 1.3 billion people china has immense opportunities at home to grow and create opportunities of its economic growth in the coming decade. The only time it takes is to create and transform the economic gaps within china’s own state.

The speed of innovation in china speaks rest of the story. 
  • Chinese scientists completed all the experiments designed for the world's first quantum satellite a year ahead of schedule, laying the foundation for a hack-proof global quantum communication network.
  • China's supercomputer, Sunway TaihuLight, have been named as the world's fastest computer at both the 2016 and 2017 International Supercomputing Conferences held in Frankfurt, Germany.
  • China have developed a search for alternative clean energy sources by completing a 60-day trial of mining gas hydrates, commonly known as combustible ice, in the South China Sea.
  • China launched its first X-ray space telescope to observe black holes, pulsars and gamma-ray bursts.
  • Well these scientific researchers have nothing to do for many people but it reflects the volume of capital injected within segments and the volume of returns and growth achieved from different sectors in china and how it will contributes over the coming decade to an investor. Big data analytics are being use to revive the weak social aspects within the Chinese economy.


Venture capitalist in china are backing up the innovators who are not from any industry background and willing to start from scratch. This is a big challenge and threat for the global investors as they will be thrown out of the window.  In gamut china is now becoming self reliant economy slowly and gradually. Intellectual property rights have been war fare in china and global companies are not lead alone to grow but through JV. Chinese economy is making a slow but steady sea change in its economic growth engines which will be more clear when the slowdown of the global economy will not affect china more as home grown demand of its services are far more bigger than any recession numbers.  

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