Chinese companies need the freedom to innovate

China wants its innovators and creators to emulate the success that its traders have enjoyed by becoming international competitors in their own right. Unfortunately, the “remedy” that the Chinese government proposes- government-run programmes aimed at raising awareness about how to rip off foreign companies- is short-sighted and will ultimately prove to be counterproductive. Instead of funding seminars about how to undermine the competition, the Chinese government should understand that Chinese entrepreneurs can stand on their own two feet, and even beat the competition – but only if they are allowed the same tools as everyone else.

Many of the mainstream brands that China laments not having originally started as input producers themselves. Legendary innovators 3M, famous for the now ubiquitous “post-it note”,  started out mining a mineral for making grindstones at the start of the 20th Century. IBM originally manufactured household appliance components. These businesses were forced to expand and develop new products through exposure to competition. Had they been protected and thus denied the incentive to stay ahead of their competitors we probably wouldn’t have heard of them today. 

In order to give its businesses the same opportunities China needs to become a country that respects all contracts, whether foreign or local, and also protects the intellectual property rights that drive the innovators of today and tomorrow.  Without these tools, it will be much harder for China’s manufacturers to climb up the value chain. Moreover, it could also end up costing the local economy billions in lost investment, as foreign companies retreat from what they consider to be a hostile environment.