USITO Weekly 3/12/2010: Indigenous Innovation Update

Indigenous Innovation Proposals in the 'Twin Conferences'

The annual sessions of China's twin conferences, NPC and CPPCC (wiki), are currently taking place in Beijing. The sessions are supposed to be a venue where the 'people's delegates' can bring various kinds of proposals for senior leadership's attention and possible discussion. Subjects generally cover a wide spectrum of areas including inflation, housing problem, labor issue, among others. In recent years, 'indigenous innovation' remains a hot topic during the sessions with many related proposals, and the local media generally provide substantive coverage about the issue.

A special column is available in www.gov.cn, an official website for the twin conferences. The column provided a commentary on the 'indigenous innovation status' of China's ICT industries, with key messages including: Thanks to the national strategies like the "Mid- to Long-Term Science & Technology Development Plan" and the "Adjustment and Rejuvenation Plan of the Electronic Information Industry", China has made great progress in promoting homegrown IT industries such as CPU, operating systems, application software, IT integration, etc. China needs to continue the efforts in promoting domestic products with more policy efforts like government procurement and rural market stimulation. This will be extremely important in "constructing an innovative country".

The most noteworthy proposal on indigenous innovation should be the one raised by Zhonghan Deng, Chairman of Vimicro, a Chinese IC design company. In his proposal Mr. Deng suggests that it is time to establish “China Indigenous Innovation Law” in order to encourage and protect preferential procurement for national indigenous innovation product, as well as protecting and filing IP. He elaborated his idea to the media that it is very necessary and essential to set up law or regulations in central and local level to ensure preferential procurement for domestic indigenous innovation products. By doing this China will be able to support domestic products in a legitimate way rather than consciously obstruct foreign products, according to him.

USITO Notes: There is a growing amount of articles in the media intended to promote government support of China's indigenous high-tech industries, with "indigenous" defined as companies under Chinese ownership and IP registered and owned in China. Accomplishments of government sponsored technology initiatives have been recently highlighted by media, such as a partnership between a provincial company Menglan Group and China Academy of Sciences (CAS) to establish an "industrialization base" for the Dragon Chip is touted as a great success, simply because the Chip was sold for 1.5 million pieces in government procurement market. Media tend to applaud the accomplishments of China's indigenous technology, regardless of the status amongst its international peers, the Dragon Chip can be the prime example in the IT sector.

Recently, we observed that government procurement was increasingly emphasized by various stakeholders in China, which is supposed to be a tool to grant preference and support to the continued growth of local industries. Specific IT areas in the push for government-sponsored development include 'circuit design, electronic products and accessories, software development, digital content, modern services, and 'informatization', as stated in a directive. Government procurement was expected to be a problem-solving tool, like the staggered western development initiative. Officials call for buying more home-made computers in government agencies, villages, schools.

Mr. Deng's proposal used nationalistic tones to vale subtle criticisms of the government's failure in its implied duty to protect local industry. This view is representative for domestic companies thirsty for selling their products. If "indigenous innovation" becomes a phrase so frequently leveraged by such interest groups, the original goodwills of the government to introduce the terms would no doubt turn in vain. In an interview to media, the Chairman of the CAS joint venture said "Foreign company's control of the Chinese technology market is unacceptable. Starting from the development of China's IT industries, this U.S. company monopoly must be broken in order for China to set upon the path of self-development." By only judging from the speaker's title we can tell this kind of voice must be biased and detrimental.

In contrast foreign ICT industry have been stressing that China's goal for indigenous innovation is best accomplished through further integrating itself into the global innovation environment, instead of "innovating through imitation", as a commentary in China's government newspaper China Daily stated (http://www.chinadaily.com.cn/china/2010-02/23/content_9486090.htm).