First, I think China has never had an industrial revolution, because to be called a "revolution", it must possess a disruptive technology innovation which can influence the world. For example, The industrial revolution in 18th century Britain brings about mechanization with invention of steam engine. The industrial revolution in 19th century United States brings about electrification with invention of electric power technology. Japan's industrial revolution in the 20th century bring about informization with microelectronic technology. However, looking at today's China, we find that although the industrial vigor has gone to the mid and later phase, China's industrialization process is not accompanied with technology innovation breakthrough, instead it brings about extreme resource consumption and environmental destruction.
China's industrialization is actually the aggregation process of manufacturing, with processing and assembly as the main form. Such industrialization mode does not require the support of new technology, but simply the transfer support of conventional technique. Thus, China is now generally considered as the world's manufacturing center and no one believes that China is the center of industrial revolution in the new century. According to Professor Jeremy Rifkin's description in The Third Industrial Revolution, the new industrial revolution should be energy revolution, i.e., how to collect scattered new energy with breakthrough transmission technology.
So I do not entirely agree with Kos that "China is a little bit behind in technological innovation. This evaluation is to give us face and the fact is that there is a large gap between china and other countries.
Lack of innovative capacity is presently the biggest problem in Chinese society, the same is true of Chinese enterprises' technological innovation. On the corporate side, I personally think that the biggest obstacle affecting innovative capacity is that of system and mechanism and it is mainly reflected in:
Firstly, China has not yet formed a sound intellectual property protection system, which affects enterprises' innovative enthusiasm. Technological innovation requires large investment, if invention made out of large investment can be easily imitated, inventor's investment can not be remedied and rewarded in a timely manner. Chinese manufacturing's fad of imitation, fake and fraud is largely due to this. There is international accusation against China in terms of intellectual property rights protection. However it should be noted that China's intellectual property protection system is in the process of improvement.
Secondly, the "bureaucratic oriented" social value system inhibits innovation. Although we advocate respect of knowledge and talent, the fact is for thousands of years, Chinese aspire to becoming officials in their spirits. The national civil servant entrance examination which is highly competitive is the best footnote of this phenomenon. When a senior university professor's social status is lower than the university's lowest administrative official, the country has lost its ability to innovate. In China, the highest reward for outstanding researchers is promotion to becoming officials. In this way, China's talents are attracted to the rank of officials and only the second-rate talents are engaged in research and innovation.
Third, the GDPism which focuses on quick success deprives technological innovation of its "soil". Innovation requires time and patience and the effectiveness may not reveal in three or five years or even longer period. GDP performance assessment requires immediate growth and the technical content of GDP is not within the scope of assessment. The Chinese company with highest price and largest market capitalization is Moutai, while in United States it's Apple (probably not anymore). The former makes wine and does not need any scientific and technological content, the latter is typical high-tech company. This is the difference between China's GDP and U.S. GDP.
Fourthly, China's private enterprises generally lack strength in technological innovation. Seen from the aspect of system, private enterprises naturally have more innovative enthusiasm than state-owned enterprises and should be the main force of China's technological innovation. But China's financial system prefers to serve large enterprises. Private enterprises, due to small scale, are widely discriminated in financial service. Subject to China's imperfect financial system, Chinese private enterprises face financing difficulties, and because they mostly concentrate at the low end of the industry, the competition is intense and earnings are poor and they cannot invest generously in research and development. Modern technological innovation depends on such strength.
As for Baosteel, we know that as a traditional industry, steel industry is faced with development bottleneck and breaking these bottlenecks depends solely on technological innovation. Among China's iron and steel enterprises, Baosteel pays most attention on R&Dinvestment and our R & D investment funding/sales revenue ration is also the highest in the country, reaching 2.1%. We develop a number of advantage products with independent intellectual property rights with our own efforts. But compared with excellent global illustrious iron and steel enterprises such as those in Japan and South Korea, the gap is still obvious and the reason is those several factors which I have mentioned above.
