Archive for Asia
Chinese Auto Innovation Rolling Westward
Posted by: | CommentsThe impact of innovation in China is often not obvious to the West, even when many gadgets like the iPhone draw upon innovations from China and Taiwan that make many Western products possible. Not many Chinese brands have spread outside the borders of China, leading some observers to question the significance of Chinese innovation in full-fledged products and not just components or manufacturing methods. China is just beginning to learn how to develop brands that will succeed in the West. The apparent dearth of brand-based innovation from China should change in the coming decade. Some of the front-runners might be found in the automotive industry.
The Chinese automobile brand, Chery, is already rolling westward. A friend of mine spotted it on-sale in Kiev, Russia, and sent me these photos (photos courtesy of Martin Daffner). Chery, now one of China’s leading exporters, began exports in 2001 to Syria and now sells its cars in the European nations of Russia, Ukraine, Belarus, Serbia, Macedonia, Turkey and Italy (per Wikipedia) and as of 2012 will be marketing also in Australia, Singapore, and South Africa. Chery’s strategy is to expand in developing countries first and then enter more developed countries.
As Chinese brands move to the West, we will increasingly see Chinese companies getting their IP stolen unless they take proactive steps early to protect it. It’s already happening in the realm of trademarks, as Li Yongbo reports in the China Daily article, “More Chinese brands victims of IPR violations.”
Related stories:
- Auto Innovation—China Style (Businessweek)
Invisible Innovation: The Blindness of the West to China’s Innovation Story
Posted by: | CommentsMaybe China is just too far from the smug innovation circles of the West. Maybe language and cultural barriers make the events unfolding in China too inaccessible to Western media. Maybe decades of concern about IP theft from Chinese companies has closed the eyes of the West to present realities. Whatever the reason, the West today seems generally blind to the innovation powerhouse that China is becoming. Witness, for example, the highly publicized list from Reuters-Thompson of the top 100 global innovators, based on “patent activity.” With China having become one of the world’s true hotbeds of patent activity, not to mention economic impact with innovation in many fields, one might expect Chinese institutions to be well represented on the list. Incredibly, the list has ZERO Chinese entities on. None from Mainland China, none from Taiwan, and none from anywhere else in Asia except for a heavy dose of Japanese companies (27) and 4 from South Korea. Tiny Switzerland makes the list 3 times, and its minute neighbor, Liechtenstein, makes the list with Hilti Corporation. But zero from China and Taiwan? The list is related to “patent activity,” but its compilers wisely recognize that patent volume alone is a poor metric for innovation. Instead, they have created other metrics based on patent data:
The Thomson Reuters 2011 Top 100 Global Innovators are companies that invent on a significant scale; are working on developments which are acknowledged as innovative by patent offices across the world, and by their peers; and, whose inventions are so important that they seek global protection for them.
Sounds fair. So sure, the manufacturing and supply chain innovation that has been a big part of China’s economic rise are not expected to make a showing on this list. That kind of innovation doesn’t show up in terms of granted US and European patents. And the tendency for many Chinese companies to mostly file patents in China doesn’t help them with the methodology Thompson Reuters has, which looks for measures of international impact and international patents. But did they miss all the international activity of some Chinese companies? For example, a couple of days before this list of innovators came out, I posted this on LinkedIn and Twitter (@jefflindsay):
Two Chinese companies, ZTE and Huawei Tech., are among the top 5 international (PCT) patent applicants. Lots of IP here! http://is.gd/t2tUb4
OK, so Thompson Reuters doesn’t follow me, but these companies should have shown up strongly in their patent searches. These are innovative companies with products marketed internationally, having strong economic impact, and loads of patents. Being in the top 5 for international filings wasn’t good enough to even place in the top 100 for Thompson Reuters. Huh? OK, it turns out the ZTE’s surge in patent filings is recent and their numbers prior to 2010 were probably too low to make the cut for this study–that’s fair. But Huawei had 445 US patents from 2005 to 2010, a number in greater than some other companies on the list. For 2011, by the way, Huawei isn’t just in the top 5 so far–they are Number One, the world’s leader in international patent filings (see the Nov. 2011 article in the Vancouver Sun). Think they’ll be on the next list of leaders in patent activity Thompson Reuters publishes? Perhaps, who knows?
How about the Liechtenstein firm that’s in the Top 100, Hilti AG. Heard of them? They have good products for the construction and building maintenance industries such as hammer drills and other tools. They have 20,000 employees, including 2,500 in the US, and market products and file patents internationally. For the 2005-2010 time frame of the Thompson Reuters study, Hilti had 327 patents. Not bad. Well below Huawei’s score, but still respectable.
Now let’s consider a little company that was not on the list: Foxconn. Heard of them? They have over 1 million employees and are the world’s largest producer of electronic components, including circuit boards. They are the ones who actually make Apple’s products such as the iPhone and iPad. This Taiwanese/Chinese firm (China considers Taiwan to be part of China, and much of Foxconn’s work is in China) is arguably the real powerhouse behind the success of Apple and several other companies on the Thompson Reuters list. Foxconn builds Apple’s products, and not just as a mindless executor, but as an innovative partner.
Ah, but what about real technological innovation expressed in patents? Surely Foxconn is just about cheap labor and low cost manufacturing, right? A quick search of Foxconn patents granted in the US from 2005 to 2010 shows they have over 700 patents. Some are design patents, but the vast majority are technological. Foxconn apparently is conducting serious R&D and spending millions on patents to find new ways to make leading edge high-tech products better, safer, faster, and cooler (both in terms of heat management and the “wow” factor). I have the privilege of interacting with some Foxconn people and from what I’ve seen and heard I can say that they have a world-class IP program to support innovation, and I feel that they are way ahead of many Western companies in these areas. Foxconn innovation and Foxconn IP may be the real key to Apple’s success. Foxconn innovation is abundantly expressed in patents, not just trade secrets and know how, with an estate twice as big as Hilti’s over 2005-2010 and an economic impact on the global market far in excess of Hilti. But Foxconn doesn’t make the list. How do none of these Chinese companies break into Thompson Reuters’ Top 100? Did they miss the 2010 story, “China Poised to Become Global Innovation Leader,” based on patent activity? That must be from another source they don’t follow.
Nov. 24, 2011 Update: My search on Foxconn patents needs to be updated. Yes, Foxconn has an impressive 700+ US patents for the 2005-2010 period, more than some companies in the TR list. But my search was deficient, failing to consider that many Foxconn patents might have been filed under the real name of the company that owns Foxconn, Hon Hai Precision Industry Co., Ltd. So I expanded my search term to be “Hon Hai Precision” or Foxconn. Now, instead of 700 patents, we’re looking at a massive estate of 5,872 US patents (perhaps a couple dozen more when typographical errors are considered). This estate now dwarfs MOST of the companies on the list such as Brother Industries (2873, searching for Brother Ind* or Brother Kogyo), BASF (2771, searching for BASF or Bayerische Akt*) Goodyear (1152), ABB (948), Airbus (926), Avaya (<600), Arkema (205), Cheil (116), etc. Oh, and what about innovation giant Apple Compute? A search for simply "Apple" (which might include some smaller companies unrelated to Apple Computer) returns 1809 issued US patents from 2005 to 2010, less than 1/3 of the US patent activity of the invisible innovator that makes Apple what it is.
Let’s return to Huawei for a moment. There should be little doubt about the innovation prowess of Huawei, even though they tend to be far more secretive and do much less P.R. than Apple. But this telecom company is big (with over 100,000 employees, they connect 1/3 of the world’s cell phones) and highly innovative. Read, for example, BBC’s story, “Innovation in China: Huawei – the secretive tech giant.” Maybe the Thompson Reuters methodology docks them for being on the young side. Over half of their 445 US patents from 2005 to 2010 came in 2010–but they still clearly outpace Hilti and others over the 5-year span of the study. So what gives? I suspect that the youthfulness of the estate means there has been less time for others to cite Huawei patents, and that may be part of the problem since patent citations are part of the methodology. But to miss Huawei completely?
Thompson Reuters will surely argue that their methodology was developed and implemented fairly, even blindly (a fair term), but someone should have immediately seen that something was wrong if top international filers and innovators like Huawei, and Foxconn didn’t make the list. But when it comes to innovation, innovation in China tends to be largely invisible to Americans, who are stuck in the old paradigm of US being the innovation leader and China just being a copier. That kind of blindness will catch the West by surprise in the very near future when US companies find themselves facing numerous patent barriers from the Chinese companies that will own much of the most valuable IP. China is creating and will create much of the most important global innovation for the future. Innovation needs to ramp up in the West in order to not be left completely behind.
Dec. 8 Update: Chinese computer giant Lenovo, the world’s 2nd largest producers of personal computers, may also deserve to be on the list.
Related stories:
- IAM Blog: “The US, Japan and France dominate new listing of the world’s most innovative companies“
- Nielsen.com: “Nielsen China Forum: Dispelling the Myths of Innovation in China“
- China Law Blog: “Innovation In China. It’s Happening, But Not How You Think“
- Tech Crunch: “Thomson Reuters Names ‘Top 100 Global Innovators’“
The Bogus IP Registration Scam: Becoming a Global Phenomenon, Beware!
Posted by: | CommentsThe good folks at the China Law Blog recently discussed a common scam that occurs in China. Actually, this is a scam that is shaking down small and large companies and lone inventors all over the globe. I’ve warned against it in the US for a long time and was intrigued to see it is going full-bore here in China.
When you file or obtain trademark registrations or patents, scammers are likely to send you an invoice asking for some large sum of money in return for being “registered” in their international database of patents or trademarks. In the Chinese version of the scam, you may received a bound volume of Chinese law with an enormous invoice. Failure to pay, they will tell you in annoying repeat calls, could result in all sorts of problems. Don’t pay. Don’t waste your time with them.
In US and European versions of the scam, the invoices sometimes come from Serbia or Croatia. But they can come from anywhere. If it’s from the government where you registered or filed your IP, throw it away. Unfortunately, enough businesses and gullible inventors just routinely pay invoices without asking tough questions that the scam is successful, thus causing it to spread. Don’t be fooled. When your innovation results in being ripped off, you’re on your way to innovation fatigue. Steer clear.
Chinnovation: Lessons for the West from China
Posted by: | CommentsYinglan Tan’s new book, Chinnovation: How Chinese Innovators Are Changing the World, offers many lessons for the West. Tan explores several dozen case studies of entrepreneurs from small and large companies with roots in China. Some of the lessons counter popular Western perceptions about business in China and others point to broadly applicable lessons in entrepreneurship. The book is well written with key takeaway points highlighted throughout.
A common theme is that Chinese innovators are finding success in spite of highly limited initial resources by taking risks intelligently but aggressively, pushing for cash flow early in the process, and growing rapidly with the help of a healthy network and quick learning. Opportunities are being found in numerous spaces, both low and high tech and with novel or basic business models. Contrary to some stereotypes, integrity matters a great deal in the rising Chinese economy, with respect for others playing an important role in how business is done.
Tan offers much useful advice to Western entrepreneurs to help us find success more rapidly, Chinese-style. For example, he wanrs against the “focusing effect” in which entrepreneurs get too focused on one aspect of an event or business. Falling in love with a project, as often happens to engineers, can lead to losing sight of the larger mission, he warns. Ultimately, he urges entrepreneurs to consider taking a “good enough” approach rather than striving for perfection. “Many products can be built much more quickly and cheaply in China bu settling for good technology plus a bunch of hacks–human editing, partnerships, and outsourciing–instead of trying to create a perfect technology from scratch.” (p. 76)
Chinese companies are also gaining a competitive edge by being able to retain and attract top talent. It’s not just through good salaries, but also through many factors that build trust and loyalty. For example, Wayne Dai, CEO of Verisilicon Holdings, explains that they pay attention to the corporate cafeteria to make sure there is outstanding food. “The first thing I look at in a Shanghai company is the quality of the cafeteria. Without a good lunch, there is no productivity. Two vendors compete in our cafeteria.” They also offer stock options to many in the company. The receptionist, for example, has stock options.. Such steps build loyalty and increase productivity of employees.
The rise of entrepreneurship in China is now being followed with the rise of strong IP rights. There is much progress to be made, but companies are learning that IP matters and that failure to respect the IP of others can result in painful surprises. China is now on the path to surpassing the United States in terms of patent applications. It is a myth that China’s competitiveness just comes from being a source of low cost labor. They are leading the world in R&D in many high tech fields and are becoming the intellectual powerhouse of the planet, not just the source of labor. Between low cost resources, high tech IP, and a Wild West spirit of entrepreneurial adventure, the innovation potential of China cannot be overestimated. The West has many lessons to learn if it is to remain competitive in the global economy.
Trust and Sound IP Systems: An Essential Component for a Nation’s Innovation Success
Posted by: | CommentsFor years, China has been making progress in creating laws and systems that enable protection of intellectual property. Respect for IP rights is essential in creating a culture where innovation and collaborative partnerships can succeed. If individuals and companies lose trust in a government’s ability to respect such rights, the incentives to innovate are reduced (though incentives to copy may be high). Now China threatens to erode some of the trust they have been building with this week’s announcement that they are considering forcing foreign makers of electric cars and hybrids to transfer their technology to China. From today’s Wall Street Journal, we have the story “China Spooks Auto Makers.” Here is an excerpt:
China’s government is considering plans that could force foreign auto makers to hand over cutting-edge electric-vehicle technology to Chinese companies in exchange for access to the nation’s huge market, international auto executives say.
China’s Ministry of Industry and Information Technology is preparing a 10-year plan aimed at turning China into “the world’s leader” in developing and producing battery-powered cars and hybrids, according to executives at four foreign car companies who are familiar with the ministry’s proposal.
The draft suggests that the government could compel foreign auto makers that want to produce electric vehicles in China to share critical technologies by requiring the companies to enter joint ventures in which they are limited to a minority stake, the executives say.
The plan is “tantamount to China strong-arming foreign auto makers to give up battery, electric-motor, and control technology in exchange for market access,” says a senior executive at one foreign car maker.
I understand the importance that China places on electric vehicles for the future and I can understand the desire to encourage technology transfer instead of exploitation, but when the rules change midstream and companies are forced to turn over intellectual property if they wish to do business in that market, the word “spook” is appropriate. Not only will some automakers be scared away, but it sends a broader signal that IP rights may be disrespected when the economic incentives are strong. This action may result in short term gains for China, but in the long run many prospective business partners will be more reticent to share and collaborate, and innovators within China may consider the threat of lost IP rights and take their best concepts elsewhere.
The unintended consequences of China’s attempt to accelerate its prominence in electric vehicles may be a larger setback in innovation capabilities overall by signaling disrespect for IP rights.
Related problems occur throughout the business world. In many corporations, for example, corporate decisions aimed at achieving a short-term gain can lose the trust of prospective innovators and result in an empty innovation pipeline that could have been full and healthy had a culture of innovation been more carefully nourished.
Finding Synergy Between Function and Form: An Example from Toppan Printing
Posted by: | CommentsDesign matters in innovation. Sometimes good designers and engineers working together can find ways to combine functional and decorative elements for elegant success. Sometimes two elements can be combined into one when synergy between two formerly distinct features or products can be found. Today we bring an example from Japan to illustrate this.
Toppan Printing in Japan has developed a smart label that combines holographic security with RFID technology. Holographic labels, of course, are primarily for anti-counterfeiting but also add decorative features. RFID is a utilitarian tool for adding information to packaging and products for improved tracking. Toppan has combined them here. The cool thing is that the metallic antenna needed for transmitting and receiving radio signals–normally a metallized spiral or other shape that tends to be unattractive–has become part of the aluminum metal of the metallic holographic label. This combination of two technologies with a single element uniting both in an attractive, appealing way is a good example of simplification through unification and finding synergy between technologies.
Toppan calls it the RFID Crystagram. An example of the RFID Crystagram is shown on the left below, and the act of electronically scanning the Crystagram is shown on the right.
I’ve condensed my lengthy presentation on the innovation parallels between Singapore and Wisconsin, now resulting in a 17-minute Pixetel presentation freshly recorded. This can be used instead of the longer video recording of my Singapore presentation at Biopolis for Innovation and Enterprise Week 2009.
Smartphones and Agriculture
Posted by: | CommentsOne of the interesting trends in emerging nations is the rapid spread of mobile phones without first moving to landlines. Millions of people who don’t have landlines and may not have the infrastructure for them are able to benefit from cell phones. As cell phones increasingly become smart, offering a variety of apps and services, their smartphones can change the way people work and live. That includes the way they farm, including they way they apply pesticides, apply water, manage the soil, and harvest crops. Look to agriculture and the related fields of water and soil management for added value in coming years.
Lindsay Corporation (no relation, unfortunately, though I did profit as an investor in the past–NYSE:LNN) recently announced a new cell phone application to help farmers track and control their automated irrigation systems such as the Zimmatic® system. Here’s an excerpt:
Lindsay Corporation, maker of Zimmatic® irrigation systems, announces the introduction of FieldNET Mobile—pivot control for smartphones. The new feature allows growers to fully control and monitor their irrigation pivots anywhere through the convenience of smartphones.
“FieldNET Mobile provides a labor-saving innovation with the convenience of web-enabled phones,” says Reece Andrews, GrowSmart™ product manager at Lindsay. “With full control and monitoring from anywhere, growers are more efficient with their time and always know the status of their irrigation systems.”
FieldNET Mobile’s graphical interface supports most industry-leading smartphones, including the iPhone®, Droid® and BlackBerry®, according to Andrews.
FieldNET is an award-winning web-based irrigation management system. With the addition of FieldNET Mobile, growers can view the current status of all their pivots in one list, receive system alerts, arrange pivots by predefined groups, view water usage reports and receive a history of pivot runtimes.
Innovators are already considering many other smartphone-enabled opportunities for improving the way we farm and manage water around the world. It’s too early to discuss some details, but I look forward to seeing what we can do to further improve the quality of life through better agriculture practices enabled by the power of smartphones. Stay tuned!
What do you see as future applications of smartphones in agriculture?
Related reading:
In late 2009, I was invited to speak at Singapore’s Innovation and Enterprise Week 2009, an event held at Biopolis and sponsored by A*STAR, the world-class research organization of the Singaporean government, in collaboration with Exploit Technologies, the tech transfer arm of A*STAR. While I enjoyed the opportunity to discuss our book, the important thing to me was the opportunity to learn more about that amazing country and their bold approach to promoting innovation and technology. In my presentation for the large crowd at Innovation and Enterprise Week, I discussed the fascinating parallels between the Singapore experiment and the evolving experiment in innovation in my state of Wisconsin, where the Wisconsin Institutes for Discovery represent a brilliant approach to combining the best of public and private innovation.
Below are three video segments from my presentation. A couple of friends in Singapore took the video. There are a few gaps in sound and so forth, but I hope you can understand it. Don’t miss my lame magic trick in segment 3. They seemed to like it–proof again of the great courtesy that one finds in Singapore. In all seriousness, I think there are important lessons about innovation that can be gleaned by inspecting both the Singaporean system and the Wisconsin Institutes for Discovery, which include the Morgridge Institute for private sector research and the public Wisconsin Institute for Discovery. Madison and Singapore are on opposite sides of the world, but on the same side of the innovation spectrum, at the leading edge.
Update: On April 24, I posted a newly recorded and shortened Pixetell presentation covering the basic information I shared in Singapore, without the magic or other excursions.
I am deeply grateful to the many people who kindly shared their time to help me prepare for the presentation, including Sangtae Kim, John Wiley, Charles Hoslett, Carl Gulbrandsen and Janet Kelly from the Wisconsin side (Wisconsin Institutes for Discovery and WARF), plus Boon Swan Foo, Seito Wei Peng, and Sze Tiam Lin at Exploit Technologies in Singapore.
Part 1:
Part 2:
Part 3:
Disruptive Innovation: Music to My Ears, Especially When Flexible Speakers Are Used
Posted by: | CommentsOne of my favorite inventors from my days at Kimberly-Clark, Fung-jou Chen, recently visited Taiwan and shared with me the news of an exciting innovation hailing from that innovation-rich island. Thin films have been used to create flexible speakers that can deliver reasonable sound quality from an inexpensive, flexible sheet. The sound quality is worse than conventional speakers, but offers new dimensions of convenience, ease of use and installation, small volume requirements, and low cost–a classic formula for disruptive innovation. When this becomes fully commercialized, there will be opportunities to add sound to places and ennvironments where it was too costly or difficult before. The ability for many objects and surfaces to become more interesting, useful, and interactive may increase and enable a variety of new business models to be considered. Disruptive innovations of this kind can be the raw materials for further waves of innovation. Stay tuned!
Further information is available at Fast Company. The technology was developed by ITRI, the Industrial Technology Research Institute, Taiwan’s largest and one of the world’s leading high-tech research and development institutions. See their press release on the breakthrough FleXpeaker, which was given a prestigious award by the Wall Street Journal for this development. Below is a Youtube video showing a FleXpeaker in action.