Chinese firms are beefing up research and new product development programs in a bid to gain higher margins from the global market, according to industry experts. As a result, the number of innovative devices coming out of China has risen steadily in recent years and this pace is only likely to accelerate in future, according to Gordon Orr, a director with McKinsey & Co.
In the electronics industry, Chinese firms like Huawei and ZTE are jostling for sales in developing economies and winning contracts away from Western enterprises. In addition to being hobbled by regulations that restrict sales of certain technologies to China, OEMs like Cisco Systems and Ericsson are taking a drubbing at the hands of Chinese competitors in certain parts of the world where cash-strapped governments often opt for cheaper and innovative products and services offered by Asian companies.
The Chinese government is itself pushing enterprises in the country hard to move up the food chain. As economic weakness in Europe and other parts of the world dampens demand for Chinese manufacturing service, the government has intensified efforts to spark growth in value-added services, including in the design and development of innovative products that can help improve the competitiveness of local firms. Observers believe the government is strongly committed to this strategy and will continue to implement policies that will further its achievement.
“Political and economic leaders in China have clear plans and supporting policies that they are sticking to,” said Orr, in a recent report. “You can debate the pace at which actions are being taken, but not really the direction in which the country is traveling.”
