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Indian and Chinese companies at the forefront of innovation

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11.01.2013

There is a widespread view that Indian and Chinese companies compete with the West through lower wages and cheap imitations. However, according to innovation researcher Monica Plechero, that era is over.

In a new study from Lund University, Sweden, she shows that both India and China hold their own in competition, including when it comes to developing new products. She also thinks the West has something to learn from their innovation processes.

In Europe and the USA, the importance of regional clusters is often emphasised for the development of new products and services. In China and India, it is global collaborations rather than regional ones that drive innovation.

“It is still the case that both Indian and Chinese companies imitate others, but they have also become better at developing new complex products”, says Monica Plechero, who has studied Indian and Chinese companies in the automotive, ICT and green biotech industries.

The process has not been exactly the same in both countries. China mainly develops products for the domestic market; international trade comes second. In India, the international market is used as a springboard in product development.
“The Chinese market is larger and more mature than the Indian market”, says Dr Plechero.

In the course of just a few years, the Chinese and Indian share of the world’s research and development centres has increased from 8 to 18 per cent.

Monica Plechero claims that India and China invest more than the West in organisational innovation, i.e. the implementation of a company structure that creates a favourable climate for new inventions.

But what is the West to do then when we can neither compete on low wages or on the best innovation capacity?

“I think we need to become better at utilising others’ knowledge, just as is done in China and India. It is not a bad thing to learn from others’ knowledge. Of course, then you have to specialise and find your own niche. Successful European companies are far too eager to keep their trade secrets to themselves.”

Monica Plechero has completed a PhD at CIRCLE and the Department of Human Geography with a thesis entitled The changing geography of innovation – Chinese and Indian regions and the global flows of innovation.

Monica Plechero can be contacted by email: Monica.Plechero@circle.lu.se, Skype: monicaplechero, or telephone: +39 328 4195507

Helga Ekdahl Heun | Source: Informationsdienst Wissenschaft
Further information: www.vr.se
lup.lub.lu.se/luur/download?func=downloadFile&recordOId=3158091&fileOId=3158105

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