Chinnovation E-Book

Yinglan Tan

• Herausgeber: John Wiley & Sons
• Kategorie: Fachliteratur
• Sprache: Englisch

Seitenzahl: 488

Veröffentlichungsjahr: 2011

Beschreibung

It is widely-believed that China's entrepreneur class has grown and their businesses are succeeding primarily due to their knowledge of the domestic market, quick adaptation to market changes, and their resourcefulness. But innovation? Forget about it.

Well, not quite.

Drawing on a wealth of on-the-ground stories and thorough research, Chinnovation: How Chinese Innovators Are Changing the World shows how Chinese companies of every stripe have dispelled this myth and overcome the barriers to successful, profitable innovation.

• How did Neil Shen, co-founder of CTRIP Capital China, see the opportunity for a Chinese travel site? 
• How did Ray Zhang, CEO of Ehi, scale up one of the most innovative hybrid car-rental companies in China? 
• How did Zhang Tao, CEO of Dianping, start a ZAGAT-inspired user-review site for restaurants and establish a continuous process of innovation?

Yinglan Tan has spent more than five years learning the secrets of Chinese innovators, a fast-growing subculture playing key roles in China's transformative transition from "Made in China" to "Innovated in China." Learn:

• What is the path that an innovative Chinese private-owned enterprise take?  
• How blue-chip innovators remix business models successfully in China?
• What are the capabilities that these innovative companies acquire? 
• How they harness the necessary resources and navigate around legal restrictions?
• How do they attract, train and retain talent? 
• How do these companies experiment with innovative approaches and also manage the risk of innovation? 
• What are the lessons learnt and how would these entrepreneurial innovators advise others who are embarking on the same journey?

China's rapid economic growth has made it a crucial market but multinational corporations are now competing with China's own homegrown businesses. Chinnovation: How Chinese Innovators Are Changing The World uncovers the common threads amongst Chinese entrepreneurs as they reach into a wider world.

Leseprobe

Contents

Cover

Advanced Praise for Chinnovation: How Chinese Innovators Are Changing the World

Title Page

Copyright

Acknowledgments

Introduction

Chapter 1: Welcome to the World of Chinnovation

Why This Book?

The Innovator's Playbook

Voices of Experience

Basic Overview of Terms and Concepts: Innovation 101

(Ch)innovation

So What Is Chinnovation

Chapter 2: The Star Innovators' Call to Adventure: Starting Up: How Star Entrepreneurial Innovators Smell Blood and Meet Market

How the Top Entrepreneurial Innovators Started Out

Sensing Initial Traction

Choosing Your Birthplace Wisely

In Branding Your Company, Brevity Is Best

Rapid Follow-Up

Problems = Opportunities

Turn Threats into Opportunities

Platform as the Winner

Traits of Entrepreneurial Innovators

Chapter 3: Star Innovators Recognize Scope Innovation

Looking Inside and Outside for Disruptive Innovation

Reaching Critical Mass Playing Catch-Up Behind Peers

Disciplined Effort on Developing In-House Expertise

Innovation Begins with an Eye Toward the Future

Test and Then Focus

Adaptation to Changes

Taking a Step Back

Pathway to a Disruptive Innovation

Service Innovation: Building the Future

Occam's Razor—Simplicity: Will Customers Like It?

Produce That First Product Quickly

Innovation Requires Grit

Chapter 4: Star Innovators Choose the Right People for the Right Jobs

How Do You Expand in China When You Cannot Find and Keep Top People?

Talent-Centered Strategy for Sustainable Growth

Education for Life

Zhejiang as the Cradle of Entrepreneurship

Wenzhou's Collective Model of Entrepreneurship

Manage Differently in the East and West

Magnet for Talent

People Over Product

Build a Complementary Team

Winning the Hearts and Minds of Staff

Transition to Product-Based Innovation

Chapter 5: Star Innovators Learn from Mistakes and Make Calculated Bets on Cross-Disciplinary Innovation

Partner Across Industries for Cross-Disciplinary Innovation

Positioning in the Industry and Main Competitors

Building a Community Takes More Than Money

Be Contrarian

Construct Barriers of Entry Differently in China

What Matters Is Not Innovation but Useful Innovation

Selective Innovation

For Critical Mass, Go Where the Market Is

Hungry Dragon, Thirsty Tiger

Kaizen in China

Cash Flow Is the Lifeblood of Innovation

Keeping Track of Risks

Branding in China

Competing as Underdogs

Governments Are Starting Up Innovation

Chapter 6: Star Innovators Spread Their Wings: Innovations in Scaling

From Asia to Global

Background to Business Failures

Foreign Expansion and Lack of Trust

Cross-Border Experience

Regional Expansion—Replicate Models

Financial Innovation

Venture Capital in Scaling: The Future of Innovation in China

The Right VC for the Right Company

Is There a Chinese Paradigm Factor?

The Evolution of Venture Capital in China

Unique Venture Capital Characteristics in China

Business Model Decides the Funding Progress

Investment Correlated to Development

Valuation of an Early-Stage Project

Money Is Not a Panacea

Chapter 7: Star Innovators Become Industrial Evolutionists: Maximizing the Returns of Innovation

Out-Innovating the Multinationals

Melting Pot for Innovation

Learning from Inflections in History

The Core Values of a New Economy Company

Government-Supported Innovation to Build Globally Competitive Companies

Chapter 8: Conclusion

The Star Innovators' Call to Adventure

Star Innovators Recognize Scope Innovation

Star Innovators Choose the Right People for the Right Jobs

Star Innovators Learn from Mistakes and Make Calculated Bets on Cross-Disciplinary Innovation

Star Innovators Spread Their Wings

Star Innovators Become Industrial Evolutionists

Bios of Interviewees

Index

Advanced Praise for Chinnovation: How Chinese Innovators Are Changing the World

Yinglan Tan' book could not be more timely. China' success as a factory for the world and the fundamental transformation it has had on global industries and markets, while impressive, is yesterday' story. Yinglan introduces us to the individuals and firms who are driving tomorrow' story of China' emergence as a locus of innovation that will have major implications for consumers, firms, and economies around the world.

Steven WhiteAssociate Professor, School of Economics and Management Tsinghua University

Informative and entertaining! Brimming with brilliant analysis and actionable insights. How do Chinese entrepreneurs survive in China? They innovate like crazy, in ways that will amaze most Westerners. Hear their authentic voices as they describe the real struggles underlying monster successes like Alibaba and Tencent. This book is a wake-up call, a must-read for anyone fascinated with China!

Wu Po ChiAdjunct Professor, School of Business and Management Hong Kong University of Science and Technology

Since Schumpeter, much has been written on Innovation Economics. Given the growing role of China in the global economy, professionals worldwide, as well as entrepreneurs in China, should read Chinnovation. Based on many real-life cases, this first systematic study of innovation in China offers a broad view, often in lively detail.

You XingChief China Representative Paris Region Economic Development Agency

Convergent incomes and divergent growth between East and West is the economic story of our times. China leads this charge and is re-establishing itself as a center for global technology and innovation. I love the way Chinnovation draws on the war stories of Chinese entrepreneurs and investors to dispel the myths and proffer practical advice to the next generation of high growth multinationals.

Daniel HeafDirector of Digital, BBC Worldwide

A great book to shed light on what kind of innovation thrives in China and what makes it work. I highly recommend this book to entrepreneurs who wish to capture Chinese markets. Yinglan Tan has done a remarkable job in analyzing the reasons behind the successes and failures of these new Chinese companies. All are invaluable lessons for the newcomers.

Jennifer PanManaging Director, ChinaSense, Inc.

Chinnovation is definitely an exciting read. It shows readers how China' economic growth has been fuelled by hard working and innovative entrepreneurs, and not just because of government-led policies. Chinnovation proves that the transition from “Made in China” to “Innovated in China” is indeed a reality.

Ikkei MatsudaPresident and CEO, Hokkaido Venture Capital, Inc.

Yinglan Tan offers a fresh and unconventional look at innovation and entrepreneurship in the world' second largest economy. Chinnovation is an insightful project that removes the myths and secrecy to present the true picture of Chinese entrepreneurs and how innovation is driving the country in the 21st century. A must read for all interested in innovation, entrepreneurship, and China.

Irina AnghelSecretary General South Eastern Europe Private Equity and Venture Capital Association

As the crucial innovation battleground for high growth businesses of the future, China is both alluring and intimidating, with rapidly changing market conditions and regulatory landscape, intense competition, and unique rules of engagement. Against this backdrop, Chinnovation provides a refreshing, modern Art of War treatise on the Tao of creating successful innovation in China.

Ku Kay MokPartner, Gobi Partners

The book brings to life the most intelligent and promising young entrepreneurs in China, demonstrate how local entrepreneurs can succeed with local insights and local executions to address local needs. Yinglan Tan presents a whole new angle to look at innovation in China and how China and the world might benefit from these “chinnovations” and “chinnovators”.

Zhao HanxiDirector, CITIC Capital

As China progresses through another rapid evolution and transformation of its industries, we see a rapidly growing field of Chinese entrepreneurs that can propel China to possibly top the global tables in creativity and innovation. Chinnovation reveals to readers the truth behind these Chinese start-ups and their journey through innovation. This is a must-read for would-be entrepreneurs and seasoned business leaders alike.

Patrick LeeExecutive Chairman, Sing Lun Holdings Limited

Yinglan Tan takes us on a journey through extraordinary stories of entrepreneurship in China. An easy read, it is sure to make you feel like you have lived and breathed the air of opportunity that China represents today, far beyond the statistics seen in popular press and analyst briefings. You get the unique privilege of getting into the minds of the entrepreneurs, seeing their rapid ingenuous actions and you find yourself celebrating their stupendous results. A must read!

Rajen MakhijaniManagement Consultant, Heidrick and Struggles Award Nominated Bollywood Screenwriter

Copyright © John Wiley & Sons (Asia) Pte. Ltd.

Published in 2011 by John Wiley & Sons (Asia) Pte. Ltd.

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ISBN 978-0-470-82796-3 (Hardcover)

ISBN 978-0-470-82798-7 (e-PDF)

ISBN 978-0-470-82797-0 (e-Mobi)

ISBN 978-0-470-82799-4 (e-Pub)

Acknowledgments

This book leaves me heavily indebted to a remarkable group of people: Nick Melchior, my trusty editor, who saw a book where none existed and rolled up his sleeves to make it happen. Fiona Wong, my production editor, who provided valuable editorial guidance. Hilary Powers who has (once again) blown me away with her Midas touch with words. Professor Philip Anderson, my mentor and long-time friend, who had the audacity to send me to China and shepherded me into the world of entrepreneurship and venture capital. Minister of State for Trade and Industry and Manpower (Singapore), Lee Yi Shyan, whose many penetrating observations about China provided invaluable insights. My advisors at Harvard, Professor Richard Zeckhauser and Professor Josh Lerner, who were always there with kind, generous, and insightful support. My ex-colleagues at 3i who provided practical advice. They deserve the credit for much of what is right about the book, but can't be blamed for its shortcomings. I am forever theirs.

I wish to thank my lovely, precious, and beautiful wife, Belle, for her dedication and support in making sure I finally finished this work. She continues to stand by me through thick and thin, even though I give her countless reasons to give up on me. I am much indebted to my parents-in-law, who raised Belle in an atmosphere of love and caring. I also thank many others: my two children, Beth and Lanson, for being the joy in my life; the many innovators, entrepreneurs, venture capitalists, and other business associates who have given me much more than I can ever return; my dear family, especially my mother and father, who undoubtedly had to innovate constantly in the unenviable venture of bringing me into the world and raising me; and my students and friendly associates, Daryl, Benjamin, and Mike Lee, who worked tirelessly to translate my incoherent gibberish into English.

I thank you one and all from the bottom of my heart.

Introduction

Innovation is the core of our national development strategy.

President Hu Jintao, 2007

Innovation in China—mystery or mastery? It is widely believed that China's entrepreneur class has grown and that their businesses are succeeding primarily due to their knowledge of the domestic market, their quick adaptation to market changes, and their resourcefulness. Since 1999, Chinese founders have led more than 46 Chinese firms to IPOs on NASDAQ. From this unprecedented number of start-ups to a rising class of billion-dollar giants going global, high-tech companies in China have a dramatically intensifying need for leadership.

A new era is under way for global high-technology innovation and entrepreneurship, marked by the rise of China. During the past several decades, Beijing, Shanghai, Shenzhen, and other cities have developed as centers in key information communications technology industries. More recently, from Beijing to the Pearl River Delta, markets for new products are expanding, competencies in new technologies are growing, and a new generation of high-technology regions is emerging. All these signs point toward China as a rising powerhouse, accelerating the shift of locus for the global high-technology arena across the Pacific.

From high-profile young executives taking companies public to mainland entrepreneurs who are redefining the norms of daily activity, Chinnovation traces the humble beginnings of entrepreneurial innovation and the backstories of some now well-established consumer goods firms from Mao Zedong's Cultural Revolution through the self-made Internet era to the Middle Kingdom's rapid growth.

The ascent of Asia has introduced new avenues for entrepreneurship, especially in China. Innovation has been a hot topic for many Asian governments; however, little has been written about innovation in China. Suppose you were at a cocktail party and wanted to explain in 30 seconds: Is there innovation in China? What are examples of innovation in Chinese companies? What is the path that an innovative Chinese private-owned enterprise is likely to take? What are the experiences and capabilities that these innovative companies acquire? How do these companies experiment with innovative approaches and also manage the risk of innovation? What are the lessons learned and how would these entrepreneurial innovators advise others who are embarking on the same journey?

Most people climb on the innovation bandwagon without really defining its meaning. There are many ways to define innovation. Does it have to be a first? Does it have to be profitable? Does it have to be a technology or can a business model or process qualify? To me, it is either doing the same things in a new way (process) or doing new things (creating a product or service).

Does China have the right environment for innovation? One way to assess this might be the trinity of financial capital, human capital, and intellectual capital or more simply, money, people, and idea. In the Silicon Valley metaphor, an entrepreneur with a bright idea meets a venture capitalist—a VC—who finances that idea. In Hollywood, someone with a good script is bankrolled by a well-funded director. It turns out that Chinese firms innovate a lot—but in response to the dictates of their environment. They tend much more toward process innovation. What is the Chinese way of innovating in general and why does this produce an outcome where 99 percent of firms only innovate in terms of process while 1 percent pioneer genuinely new technology?

The book also has lessons for Chinese managers, especially those who want to learn from the best on how to innovate and embark on the journey. What is the future, and how can you learn from others who are further down that path?

The book also has implications for foreign firms. China's rapid economic growth has made it a vital market. Yet those corporations face their toughest competition not from other multinationals but from China's own homegrown businesses, which turn out to be more nimble and innovative than their foreign counterparts.

Chinnovation uncovers the common threads with frameworks and probing questions as Chinese innovation and entrepreneurship expand the country's reach in the world. This is not a book on current best practices; rather, it distills the truth from the myth, drawing from the journeys of innovative Chinese companies.

Innovation in China is a topic understood by few. Even fewer are those Chinese entrepreneurs who have innovated successfully and profitably. You hear about the successes, but what is the real story behind them? How do these entrepreneurs innovate on their ideas and turn them into commercially viable ventures? What is the expertise required to translate ideas into world-class companies? What are the most important changes to the people and processes required to be successful in China?

A well-known Silicon Valley venture capitalist once told me: “Chinese people aren't entrepreneurial! They don't create things. They're just good at ripping them off.” After my interviews with a variety of entrepreneurs, I realized that the reverse is true. These start-up founders are as scrappy and willing to take risks as their peers anywhere, at times even surpassing the people who flocked to Silicon Valley in the late 1990s.

No longer satisfied with China's role as the world's factory, Chinese government leaders have declared that “homegrown innovation”(自主创新) is the watchword for the future. They are sounding an urgent call to reduce dependence on foreign technology and build China into an “innovation-driven economy.” As President Hu Jintao said, homegrown innovation is the “core of national competitiveness”—the path to sustainable economic prosperity and global leadership.1

Many believe innovation is the way out of the economic crisis for the “Made in China” brand.2 One of China's leading producers of slippers used to export 90 percent of its annual output to the United States. In 2008, the company's exports fell about 20 percent from a year earlier. Its counterstrategy? The company put efforts into developing its domestic market, moving up the value chain and building its own brand, and the situation improved significantly.

“The world's factory” is no longer the default setting for development. This book's main thesis is that China will soon become the world's innovator, moving beyond being the world's factory and ultimately becoming the world's leader.

Innovation in China is among the most discussed topics in international business today, and possibly the least understood. This book provides a primer on what some of China's best innovative business leaders have in common and showcases examples for China in its transition from “Made in China” to “Innovated in China.”

Drawing on a wealth of on-the-ground stories and thorough research, Chinnovation shows how Chinese companies of every stripe have overcome the barriers to successful, profitable innovation:

How did Neil Shen, co-founder of Ctrip.com (and currently managing partner of Sequoia Capital China), first see the opportunity for a travel site for China, which eventually became NASDAQ-listed Ctrip?How did Richard Chang, founder of SMIC (Semiconductor Manufacturing International Cooperation), manage risk and diversify his company's product line to catch up with its competitors?How did Ray Zhang, CEO of eHi, scale one of the most innovative hybrid car-rental companies in China?How did Zhang Tao, CEO of Dianping, start a Zagat-inspired user-review site for restaurants and establish a continuous process of innovation?

Chinnovation is essential reading for practitioners, investors, and entrepreneurs interested in China. It could also prove useful to students of China who want a better understanding of what goes on in Chinese innovation and the lessons learned in the journey of these leaders.

Notes

1. Marguerite Hancock Gong and George Krompacky, “The Rise of China: Changing Patterns of Global Innovation and Entrepreneurship,” Walter H. Shorenstein Asia-Pacific Research Center, January 1, 2007; available online: http://aparc.stanford.edu/news/the_rise_of_china_changing_patterns_of_global_innovation_and_entrepreneurship_20070101/; access date: September 20, 2010.

2. Xinhua, Innovation, Key for “Made in China” to Out of Crisis, CCTV, September 10, 2009; available online: http://english.cctv.com/20091009/102935.shtml; access date: September 20, 2010.

Chapter 1

Welcome to the World of Chinnovation

What does anybody here know of China? Even those Europeans who have been in that Empire are almost as ignorant of it as the rest of us. Everything is covered by a veil, through which a glimpse of what is within may occasionally be caught, a glimpse just sufficient to set the imagination to work and more likely to mislead than inform.

—Lord Macaulay, c. 1790

To begin, it's useful to present a short history of China's growth enterprise and how innovation first sprouted, covering the second half of the 20th century. How have the innovators left their mark and changed the nature of industry? This book distills the blueprint for innovation.

Imagine that this is 2030: a world where China is a working democracy with a $4 trillion economy. Ubiquitous, unseen nanodevices record everything you say and do. Flying delivery drones with powerful wireless communication have replaced the car as king of the road. If you do need to drive yourself somewhere, you SMS your coordinates and receive a list of the nearest rental car options with various models and color selections. Your chosen car is delivered to you by a GPS-powered robot and you unlock the car via fingerprint recognition. And if you're observed violating the rules of the road, say by parking in the wrong place, the ticket shows up in your e-mail in-box complete with payment options.

Professional knowledge becomes obsolete almost as quickly as it's acquired. Instead, you have downloadable modules on your nano-implants. You'll do everything you do today from your online semantic desktop. Your calendar will hook to all your activities, so it can keep up with you automatically and work with others' calendars to help you coordinate your schedule. You can use any cellphone to log in and access all your contacts and finances. Sounds impossible?