Economic development and Innovation: Focusing on Open Innovation Policy in China
China’s innovation and technological development system has experienced significant changes since the country commenced on its market reforms journey (Ouyang & Fu, 2012). The innovation and development structure has altered from a mission-oriented system embattled at primary industrial sectors to a more developed and technologically evolved set of regional innovation systems. (Ouyang & Fu, 2012). The Chinese government has recently adopted a collaborative and open policy to support businesses in china to overcome challenges that might impair the businesses’ ability to meaningfully contribute to the growth of its economy (Fu & Xiong, 2011). In this case, open innovation entails the concept of freely revealing inventions, findings, discoveries, as well as knowledge (von Hippel & von Krogh, 2003). The government’s role in an open innovation strategy is stimulating the efficient and free flow of innovations in the domestic market. Most of the open innovation policies being developed in China are focusing on promoting indigenous innovation. In its goal to stimulate open and indigenous innovation, the Chinese government has been paying extensive attention to aspects such as science and technology, industrial and macroeconomics policies that have implications on indigenous innovation. This paper offers a detailed discussion of policies towards open, indigenous innovation networks, with illustrations drawn from the Liangjiang industrial park.
Open Innovation in China: A Case Study of the Liangjiang New Area
The indigenous innovation model in china is derived from two policy documents (Fang, 2007; Wang & Liu, 2007). These include the “Decision on Implementing the Outline of the Scientific and Technological Plan and Enhancing the Independent Innovation Capacity” and the “plan for vitalizing trade through science and technology.” Under these policies, innovation is considered as significant and based on the introduction, digestion, and the absorption of ideologies. External research, as well as development paths, should be integrated. The discussion will be guided by the framework offered by Fu & Xiong (2010). Fun & Xiong (2011) conceptualized the open innovation policy in China as consisting of three primary policy clusters. These clusters are policies towards open inbound innovation, policies towards outbound open innovation policy, and policies towards open innovation networks. The policies on building open innovation networks are the focus of this paper. The development of the Liangjiang New Area appears to have been informed by the growth pole theory (Darwent, 1969). Growth pole theory better explains economic development and technological innovation in Liangjiang New Area. The theory posits that development is not consistent over a whole region; however, it takes place around a certain cluster or pole (Darwent, 1969). This pole is often exemplified by key industries (such as technological innovation), with each industry being linked to other industries developed mainly through indirect or direct effects (Darwent, 1969). In the case of the Laingjiang new area, the cluster has adopted a two-process trade mode to facilitate growth within the cluster. These two processes include “one end in and one end out and both ends in,” which are used to utilize foreign investment and attract cote-type and leader type huge scale global enterprises. The enterprises are expected to found their factional projects (like R&D institutions and regional headquarters, purchasing centers, merchandize distribution centers, and settlement centers) in the cluster (Komarovskiy & Bondaruk, 2013). Liangjiang New Area has also developed impeccably; however, some regions such as Shuitu and Zhaomushan have developed more than others making development and innovation unbalanced. But these areas have tried to improve transportation through air, water and rail to bring the development balance close and bridge that gap.
Policies for promoting open innovation networks in China
The government of China has, in the last few decades, seen a need to promote open innovation networks by promoting policies that support the cause. For instance, in the 90s, china introduced various laws to promote open innovation by promoting Science and Technology-related innovation in a collaborative manner (Lo & Wu, 2014). In 1999 specifically, china introduced plans for ‘vitalizing trade through science and technology’ (Lo & Wu, 2014). This policy entailed exploiting technology in terms of export and tax preferential that supported high-tech products. The same year saw the government supporting the decision to strengthen technological innovation development of high-tech and the realization of its industrialization. The policy entails exploiting technology in regards to tax preference, credit and loans, direct financial input for commercializing Science and Technology, Science and Technology input, and management reforms of S&T, among others (Fu & Xiong, 2011). In 2002, the government of china extended its support towards open innovation by supporting the State industrial Technology Policies. Lo & Wu (2014) assert that on this document, the government highly advocates for the establishment of the production-study-research that is an association of various enterprises, private or public research institutions, domestic universities which collectively form a market-oriented R&D system. In addition, the document introduced an open production-study-research where mechanisms are implemented based on strategies needed and comparative advantages of China. As such, the country could select independent areas of development with the aim of advancing and exploring new technology routes via mutual absorption, system integration, and development of novel technology with independent policies.
Such policies have seen the development of various high-tech innovations such as the Chongqing Liangjiang New Area high tech park. Liangjiang has become an economic growth leader in Chongqing, a position that has been achieved by implementing action plans on innovation-driven strategies. Such strategies involve large data intelligence sectors, the construction of a national pilot zone for technological economy innovation, development of a national demonstration zone as well as the development of three collaborative innovation platform. Those platforms include Liangjiang collaborative innovation zone, Liangjiang new area’s digital economy industrial pack as well as Lijia Intelligence Park. Liangjiang New Area has also become the center point for Singapore and china business projects with significant open platforms like Guoyaun port and bonded port. Liangjiang New Area is using some of those policies such as the preferential policies to promote aspects such as first low building costs with the rate of construction tax and developed land being considerably lower than in China’s eastern region. Secondly, lowering logistic expenses with suitable transportation benefiting people in Liangjiang New Area more so its close linkage to 16 other big metropolises via the ‘golden waterway’ of the Yangtze River. Thirdly, lower manufacturing costs with the all-inclusive costs of industrial electricity, water land, gas, and labor, among others. Fourthly, lower financing costs because of new financial products and a variety of financial institutions in Liangjiang New Area that offer convenient and fast financing. Last but not least, lower tax costs with various preferential policies. These preferential policies govern domestic and foreign investments in Chongqing and, by extension, in Liangjiang. These preferential policies cover aspects such as taxes for both domestic and foreign investors, business registration, land and real estate, imports, and exports as well as a residence for foreign investors (Liu et al. 2011).
The government of China is also in support of the Decision and Implementing of Outline of the scientific and technological plan and enhancing the independent innovation capacity policy developed in 2006. The policy entails the process of exploiting technology by encouraging the multiplication of technology and selling of IP by the transfer of ideas to outside, innovation talent strategy, and independent innovation. It further supports the cultivation of large-sized enterprises, technical alliances, and enterprise groups. Liangjiang New Area has taken this initiative into account and formed joined initiatives with mage enterprises such as Tsinghua technology and Innovation Holdings Co., limited and Alibaba Computing Co., Limited (Cision PR Newswire, 2019). The center forms an innovation and entrepreneurship incubation services dais that serves the Chongqing area with services such as cloud computing, internet, digital economy, and big data (Cision PR Newswire, 2019). Cision PR Newswire (2019) further assert that Liangjiang New Area targets the incubation of medium-sized and digital economy enterprises with the aim of creating a digital economy closed-loop ecosystem that entails a state of the art technologies of big data, cloud computing, artificial intelligence, virtual reality, mobile internet and the internet of things.
China is embracing the idea of open innovation through the implementation of policies and practices and the development of high-tech parks, as seen in the Liangjiang New Area digital pack. The adaptation of open innovation by china has some similarities to that of the UK, but while china focuses on high tech industrial parks, the UK is focusing on universities and research centers. In the UK, the idea of open innovation is promoted via the facilitation of wider access to full research bases, including research infrastructure and universities, the enhancement of innovation collaboration, and excellent research with the aim of addressing shared challenges (HM Government, 2017). On the other hand, the idea of open innovation in China, as seen, is facilitated through the development of Science and Technology-based centers in the form of high-tech clusters that collaborate with existing universities and research centers to address shared challenges (Ichongqing, 2020). In addition, China seems to be committed to promoting indigenous innovation by supporting initiatives such as ‘going global’ (Fu and Xiong, 2011). Such initiatives support the export if technological innovations and other products which encourages overseas acquisition and investments. While with the UK, their idea of international collaboration is via the development of international partnerships with other countries. Economic and Social Research Council (2011) assert that the perception of china’s collaboration with other countries includes their own collaboration with aspects like Research and Development, technological export as well as the exportation of other manufactured goods. While with their UK, their collaboration is based on research and development, sales of manufactured goods as well as marketing of goods and services to other countries. As such, the UK has for a long time been known as the epicenter for Research and Development as well as scientific discovery/ however, it faces various challenges when it comes to exploiting innovative ideas or developing new products (UK-Innovation Research Centre, 2014). While in china, they are known for adopting others ideas and developing on those ideas at home as well other on other developing countries. Rather than focusing on High-tech parks like china, the UK is focusing on supporting baseline budgets which promotes aspects such as the reaffirmation of ‘ring-fenced’ research and science budget through the support of Catapult Centers previously known as Strategy Board and Technology Innovation Centers (Quantum Innovation Centre, 2017). The aim of these centers is to provide new intelligent national networks that bridge the gap between business and academia as well as supporting the commercialization of new technologies.
To conclude, open innovation is not a new concept in china but with economical and technological advancement, the government of china has gradually been adopting it with the aim of promoting businesses and improving the economy. The government has been supporting open innovation by promoting indigenous innovation where they pay attention to Science and technology as well as industrial. As such, the government has been developing various policies and practices that promote open innovation and support indigenous innovation. The country has been presented a wide range of incentives like taxes, loans, unprecedented policies, Science and technology policies and institutions such as financial institutions that promote the idea of open innovation. These policies have promoted the development of various initiatives such as multiple high-tech industrial clusters like the Liangjiang New Area located in Chongqing china that are focused on promoting indigenous innovation through internal and external collaboration with other businesses and institutions. The adaptation of open innovation in china is different from how other countries like the UK are promoting the initiative. While china is focusing on developing Science and Technological, industrial parks all over the country, the UK is using open innovation to promote research centers and universities and bridging the gap between businesses and technology. However, the two countries are similar when it comes to the promotion of open initiative through collaboration with other institutions within the country and international companies. As such, these two countries have adopted the concept of open innovation and implemented policies that suit their needs as well as goals and objectives. But china can consider focusing on developing and building their own ideas rather than adopting other ideas and building them in their country.