Opening up forces Chinese companies to be more innovative: expert

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06:13

As the US closes its market, China has increased its opening up to foreign competitors, which some argue will only help Chinese companies be more innovative.

“This [the opening up] would create a much healthier competitive dynamic to force domestic companies to become even more innovative, working harder. We are all human, [so we clearly know that] if there is no competition, we’re not gonna to work hard,” said Howard Yu, a professor of strategic management and innovation at IMD in Lausanne, Switzerland.

A big part of the China-US trade dispute is related to technology transfers and intellectual property right (IPR) theft.

According to Yu's research, there is no value proposition that can stay unique over the long run, and no IP can stay protective over the long period of time. “When I’m tracking on how companies can survive and even prosper for centuries, over time, these organizations have to leap and embrace new knowledge.”

CGTN speaks to Howard Yu, a LEGO professor of strategic management and innovation at IMD. /CGTN Screenshot

Yu explained that similarly, if a nation wants to make sure its economy to grow, it has to embrace new knowledge and reinvent new industry. And China is doing well, said Yu citing examples of "embracing green tech, autonomous driving, mobile payment and new banking service.”

Thomson Reuters data showed that in the first half of this year, China’s companies spent only 1.6 billion US dollars on the American assets, 80 percent lower than the same period last year. Meanwhile, Chinese acquisitions of Europeans assets rose by 39 percent in the first six months of 2018.

That change, in his mind, hinted that the US might no longer be “the mainstream of innovation" and the EU and Asia would see more opportunities.

“Obviously, it’s not so good news for the US, particularly in Silicon Valley.... If that type of motion begins to drive, you can see the negative impact into Silicon Valley in terms of innovation, because today’s innovation is building on the network of capital, human expertise, scientists across the world,” Yu warned.