Paul Ebertz, vice-president and global HTS-aerospace leader at Honeywell Aerospace, says his company has identified China as a key growth market and intends to double the current Chinese R&D workforce of 350 over the next few years.
"Commercial aviation growth in Asia-Pacific is still on the upswing and our decision to house the APAC headquarters in Shanghai clearly underlines the importance of China in Honeywell's overall technical innovation and growth strategy," Ebertz says.
Despite the big market, Arding Hsu, the head of corporate technology with Siemens China, says the biggest asset for developing innovation in China and the main driving force for China's future role as a global innovation hub is the country's diverse needs and its people's willingness to try out new things.
"There is no country in the world that has as many diversified demands as China," he says. "As long as we can understand the needs of Chinese customers, there are better chances for us to become game changers."
Hsu cites his company's WLAN-based moving block technology as an example. The technology, which was developed in China based on the needs of transferring huge numbers of passengers through the subway network in China's megacities, has successfully reduced train interval times from 3 minutes to as short as 80 seconds in real-time operations.
Siemens is not the only company to have discovered that made-for-China products can be sold in other countries as well. According to Booz & Co's report in 2012, which surveyed 100 Chinese and multinational companies in China, the importance of China for companies as a regional and even global hub for innovation is clear.
Nearly 40 percent of the multinational companies and 50 percent of Chinese companies surveyed already develop products in China for markets outside the country. This trend is set to intensify, with the survey finding that, by 2022, more than 60 percent of all multinational companies and local companies expect to conduct R&D in China for global markets.
Future perfect
All the experts agree that China will be a major global innovation hub in the future. Many feel the country's ability to spur creativity and attract talent will be the core issue that it will need to tackle if it wants to be the global innovation hub.
George Yip, co-director of the Shanghai-based CEIBS Centre on China Innovation, says that in the next couple of years, China can indeed become a global innovation hub. "But, in China, people always talk about being the No 1, so it is still a long way off," Yip says, adding that it depends on individual industries.
"In the next decade, China will be one of the top innovation hubs for labor and engineering intensive sectors, such as telephones, in which China has already done a lot of work."
In the automobile industry, China is still far behind. It will be 20 years before it can reach the peak. For aerospace, it could take as long as 30 years, Yip says. China has lower per capita income than the US and Japan, but even countries such as Japan have become global innovation leaders only in certain categories.
Chen Xiangli, president of GE Technology Center in China, agrees, saying it will be difficult for China to overtake the US in innovation in the foreseeable future, as the latter is still an attractive destination for most top-quality talent. His R&D team in China has made significant progress since the center was set up in Shanghai in 2000, he says.
"For the first five years, our focus was to learn how to localize the products developed by GE's R&D labs in other parts of the world. Then over the next five years, we started to develop products for Chinese customers. Over the past two to three years we've been developing products for China as well as the rest of the world.
"For some products, more than 80 percent of our research outcome is now sold to countries outside China," Chen says, adding that the trend signifies the growing capability of Chinese innovators.
In pictures: history of China's auto industry
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