Why isn’t China even bigger?

I recently retired as UK senior partner of BDO after 23 years as a partner with the firm. Last year, I took up a position as visiting professor at Xiamen University, China. My wife is Chinese and I decided to spend three months exploring business opportunities in the region and trying to learn some Mandarin.

I’m blogging about my experiences in China for Real Business – catch up on part one, two, three, four, five, six, seven, eight and nine of my journey so far.

Blog 29

News that China is now a major producer of low-end shipbuilding is a good prompt to ask whether the country will find it possible to move up the value chain in this sector. 

I think it unlikely to happen soon. A key factor holding back China’s ambitions in high-end manufacturing and technology is its education system. Students learn, but are not encouraged to be creative, to ask questions, or challenge orthodoxies. 

This approach may suit a regime which does not want its citizens to be free-thinkers in politics, but it will not encourage creativity in arts, science – or even in commerce.

Blog 30

The lack of creativity in its workforce means that China’s success story is based largely on plagiarism. 

The brilliance of the Chinese ability to copy is seen in many “knock-off products” sold in markets all around the country (and the world); the lack of respect for intellectual property rights also means that good ideas are quickly copied and taken to market by others. 

As a low-cost producer this has made industry here a fearsome global competitor. However, cost-advantage is being eroded and an inability to move up the value chain could strangle China’s future export growth.

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