Engage China with guarded openness
A policeman patrols on the renovated Bund against the skyline of Lujiazui Financial District in Shanghai, China. (Getty Images)
September 19th, 2011
08:00 AM ET

Engage China with guarded openness

Editor's Note: John Kao, dubbed "Mr. Creativity" by The Economist, is the chairman for the institute of large-scale innovation and author of Innovation Nation. You can follow John on TwitterFacebook and at www.johnkao.com. This post is the final of six pieces by John about his recent trip to China. 

By John Kao - Special to CNN

Over the past week, I have posted five pieces on the state of innovation in China.  First, in “China as an Innovation Nation,” I provided a portrait of China’s innovation drive, describing its scale and success model.   Next, in “Why is innovation so important to China?” I laid out the historical context for the centrality of innovation in China’s national strategy  (After all, this is the country that invented the compass, gunpowder and printing.) The third piece, “Chinese innovation – paper tiger or king of the hill?” attempted to go beyond the “black or white” rhetoric that characterizes much of the current debate on how real and significant China’s innovation drive is in order to shape the conversation about how others need to respond to it. Given the importance of the entrepreneur in driving the innovation process, I wrote “In search of the Chinese entrepreneur,” with profiles of Aigo’s Feng Jun and Sundia’s Xiochuan Wang and added a discussion of Chinese entrepreneurship as an innovation asset or bottleneck.   The last piece, "Innovation war or innovation peace?" looked at the potential for both conflict and cooperation in the U.S.-China innovation relationship..

In this, the sixth part in the series, "Guarded Openness as a China Strategy; a View from Shanghai’s Bund," I engage with hundreds of your comments from over the week.

Many readers voiced skepticism about the validity of Chinese innovation in a state-controlled society – words like “lie,” and “façade,” being some of the more polite terms of art.  The commenter Truth remarked, “When I see a Chinese Jimi Hendrix or Beatles or Spielberg or Jobs or Edison or Gates or etc, I’ll believe.”  In fact, some wondered whether I had been paid by China to write these pieces (I wasn’t) or whether I had consumed too much Chinese liquor before sitting down to write (I hadn’t).  One person even questioned my loyalty as an American.

What do I think? Right now China is climbing up the initial rungs of the innovation value chain by making big bets on education, funding of science and technology and creating an ocean of intellectual property.  Does it have the world’s most sophisticated innovation system and narrative today? No.  Are there significant differences in value system with the United States?  Absolutely.  Do readers have a right to be skeptical?  Yes.  Personally I am skeptical – or at least cast a critical eye – on any government innovation agenda, including our own.  But I also know that dismissive and emotional language often covers up an underlying anxiety and is not helpful in terms of creating greater understanding.  And there is undeniable substance to China’s rise in the innovation ranks.

Others predicted a bright future for China. The commenter Many argued that “when the dragon is fully awaking and flexing its muscles, you’d better be on the right side of China.”  One reader commented that we would all have to learn to speak Chinese.

My feeling on this is that China is neither the pygmy that some think nor a 20-foot tall giant.  The future is bright for China, but the potholes along the path are huge.  Meanwhile, our citizens will learn Chinese (and Spanish, and German, etc)

A number of comments bemoaned the parallel narrative of an American innovation, and therefore economic decline. “Devil evil vile” said, “sing, dance, play with ball (football, baseball, basketball), play xbox ps3 ... etc.  20 years later, what do you call a country full of singers, dancers and ballplayers?  A 3rd world country.”  To me, it is hard to look at how the U.S. is doing with regard to the pillars of innovation performance (education, finance, immigration policy, infrastructure replenishment, stewardship and strategy, etc.) without being concerned.  The organic growth that we have enjoyed for so many decades with the success of the “American Idea” must now give way to a more considered and strategic approach if we are to continue to compete effectively and lead.  It is tempting when one is not doing well to blame others, and China presents a tempting target.  With regard to our innovation performance, alas, we have no one to blame but ourselves.

This notion of paradox – of contradictions not simply reconciled – is key to our deeper understanding of China.  Can the creativity that comes from an entrepreneur on fire with a mold-breaking idea be reconciled with the notion of state control and top down policy?  It will have to be if China comes to enjoy the kind of entrepreneurship that leads to breakthrough innovation.  Can self-interest be tempered by the need for good citizenship in a global community?  It must if China is to take its place in the new geography of innovation, which is inherently about collaboration and trust.  Can a “fast follower,” “me too” approach to innovation evolve into the ability to produce game changers?  The jury is out, but China is intent on mastering all aspects of the innovation cycle.  These are the tensions that will shape the future history of Chinese innovation – and the world’s relationship to it.

And these tensions are emblematic of the contradictions that shape today’s China.  A posture of what national security types call “guarded openness” is therefore appropriate.  In other words, be open to sharing information and to collaboration, but exercise prudence and the kind of reasonable caution that comes with clarity about one’s self interest.

I experienced some of these contradictions myself first hand as I took a morning walk along Nanjing Road, the Firth Avenue of Shanghai during the last day of our visit.  I stopped to admire the sweeping city/river vista of the Bund with all the promise that it seemed to hold about China’s future.

A distinguished-looking, likeable, and well dressed old man came up to me with a shy smile and struck up a conversation.  He told me he was an artist and proceeded to make a paper cutting for me.  To my dismay, he then asked for a “red one,” 100 yuan or approximately $15, then scurried away when a policeman stepped forward to find out what was going on.  Kindly grandpa was a scam artist.

This in a nutshell captured the tensions of China for me; the lofty and the crass, the aspirational and the self-dealing, coexisting in the same social frame.  On the same day, one can meet with leaders who are as competent, ethical and up to speed as exist in any country, and then go shopping across town in a mall specializing in counterfeit goods with racks of knockoff iPhones, DVD’s of first run Hollywood films, mountains of pirated software sitting side by side with fake Dolce and Gabbana t-shirts and handbags.

In order to get our minds around these contradictions we need to accept that China is here to stay and that dealing with China is an inevitability.  It has been said, “If you don’t have a China strategy, you don’t have a strategy.”  The key therefore lies in engagement.  As an example, Microsoft, mindful of its piracy challenge, nonetheless allowed owners of counterfeit software to purchase legal upgrades, opened research centers in China and maintained a high level of engagement with a long-term view. This has been the posture of other companies and governments seeking to do business in China.  We should neither embrace nor bash, but rather seek to understand in a spirit of “guarded openness.” In other words, carry an open wallet, but only have 100 yuan peeking out.

It seems fitting to close out our series with a sign I spotted in Shanghai on a busy construction site.   It reads: “renovation in progress – apologize for any inconvenience caused.” Are we being apologized to or are we being asked to apologize as China “renovates” its way to the 21st century?  The answer it would seem is more than a bit of both.

The views expressed in this article are solely those of John Kao.

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Topics: China • Innovation • United States

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soundoff (15 Responses)
  1. jeff

    Since it took power in 1949, the cruel CCP has murdered tens of millions of its own people and is now in the process of the attempted genocide of millions of innocent Falun Gong. Americans seem to have forgotten its thousands of sons and fathers who died fighting Communism in Korea and Vietnam.
    The CCP uses torture, child slavery, organ harvesting and murder to maintain its paranoid control of its people.
    Why is America and the World trading with this monster? Corporate greed.
    This is just my understanding, thank you.

    September 19, 2011 at 11:27 am | Reply
    • freedom to think and speak openly without retrobution

      agree totally

      September 20, 2011 at 6:51 am | Reply
      • Emmanuel

        part of an olreavl critique of self-oriented approaches to innovation, we first considered open innovation at Procter and Gamble back in 2006.

        February 10, 2012 at 11:33 pm |
      • Sara

        Piyush GaryaliSuch buutaifel colors. You always get the best out of your shots 21 February, 2010, 2:08 pm

        February 11, 2012 at 9:35 pm |
  2. j. von hettlingen

    John Kao's articles on China's economic development were very interesting. Why is Kao so apologetic towards China? Just because a few – probably American – posters in the past expressed their envy, fear and ill will? I'm afraid we have these kind of people everywhere. The American economic power has had its day. Now it's China's turn to rise in power! Who knows whiich comes next? Every dog has its day, yet I doubt if it would be the European Union! We are too fragmented!

    September 19, 2011 at 11:34 am | Reply
  3. mark

    I am not fully in agreement with your comment “We should neither embrace nor bash, but rather seek to understand in a spirit of “guarded openness.” In other words, carry an open wallet, but only have 100 yuan peeking out.”

    My largest obstacle is that while investing into China, there is no guarantee our investments are secure. Investments come in many form in process, people, financial, and property. Each of these investments seems to be either limited in scoped by the government or unprotected by the government. Why should we allow the thief of American investment or limit our ability to be successful?

    Perhaps your comment was met that we invest in China only to take advantage of their investments. I am do not agree with this philosophy either. It may be too simplistic but it is best for China to support and enforces with a vengeance the international copyright and patent laws. This will go a long way in gaining trust in Chinese society and open large doors of shared information.

    September 19, 2011 at 11:59 am | Reply
  4. c21p

    Too much of reader feedbacks were concentrated on the argument of the status quo – the intellectual property infringments from China. However, we in the West need to know this is a double-edged sword. All humans are equipped with equal intelligence. Once developed, foreign economies will be just as capable in innovation as the U.S. I believe it is generally believed that China, along with a number of other nations, is on her way to be rapidly developed. If we are not changing, further down the road it will be nations like China, India, and Brazil that are accusing us of stealing their technologies. Let's not have a false sense of been forever number one at the same time failing to do more to understand the others.

    September 19, 2011 at 1:17 pm | Reply
  5. TigerLily1945

    INNOVATION my ars.......... Mr John Kao, please explain to me what happens to both the American and Ei=uropean business men who go over to China to have their products made for a profit and then suddenly are out of business because China has copied the priduct and is now selling it back to the countries at a price they can noit compete with... where in your embrace do you see the future of the rest of the world competing with China.. they are theives and will soon pick the pockets of everyone who does business with them............. the world community can not compete with China's 1.3 billion people since the products are counterfiieted and the poeple who invented the product get nothing in return but a few years and then nothing... Explain it to me so that I understand it...........

    September 20, 2011 at 9:49 am | Reply
  6. hope 2012

    TigerLily1945, I guess you have never been to China yourself by making these super bias comments...

    September 20, 2011 at 6:53 pm | Reply
    • Mike Houston

      One doesn't need to go out and catch a skunk (visit a skunk) to know
      and be aware that skunks STINK. So it is with "knowing" about China.

      September 21, 2011 at 2:25 pm | Reply
      • Maersk

        One doesn't need to take a look at your syphilistic kwok and knows it stinks.

        September 21, 2011 at 2:40 pm |
      • Pauline

        Interesting lknniig innovation with values. I think of innovation flowing from market needs. (Of course market needs, in this day and age, generally flow from values. My son is involved as a scientist in creating fuel and fuel systems that are more efficient and reduce the amount of petroleum required – others are involved in creating fuel by less eco-degrading means. Quite frankly, the company he works for has to make money and thus want to market lucrative patents. Nevertheless their sources of funding are from large non-profit,ethical foundations. Just some thoughts.

        February 10, 2012 at 1:20 pm |

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