Follow the Chinese way on high tech

Opinion on China is generally hostile in this country. War in the 1960s all but obliterated a unique friendship and a shared vision for peaceful co-existence that was enunciated in the Panchsheel Agreement between India and China in 1954. So inspiring was the set of principles announced by prime ministers Jawaharlal Nehru and Zhou Enlai that it was incorporated in the Bandung Conference declaration a year later by 29 Afro-Asian countries for a new era of peace and development. Rajiv Gandhi’s epochal visit to Beijing in 1988 managed break down the great wall of animosity between the two countries, but relations have become a lot worse in recent years.

When it comes to the economy and China’s technological prowess, the Indian government and its handmaiden media, in particular, tend to be dismissive and disparaging, fuelled by barely disguised resentment and envy. This results in paradoxes. In recent years, when the Narendra Modi government banned around 250 Chinese apps citing these to be “prejudicial to the sovereignty and integrity of India,” there was a frenzy of nationalist messages on WhatsApp exhorting patriotic Indians to boycott the apps. The irony is that the messages were, for the most part, being sent on Chinese-made mobile phones which they were unwilling to jettison!

While the world is overawed by China’s cutting-edge scientific and technological breakthroughs, albeit with some trepidation, Indians tend to act like ostriches. Nothing is reported. Nothing is acknowledged. Instead, we have commentators writing that India should take care to avoid the patent follies of China, where apparently quantity was the criterion and not quality. One of the most absurd and peevish observations I came across in a business paper was that China’s policy had spawned a frenzy of patent-filing of very little value—“junk patents with scant innovation”. Was the writer taking his cue from the official line on China? Possibly since an official in the top economic advisory body was also cautioning India not to follow the Chinese model based on utility patents.

Let’s understand why patents are granted in the first place. Broadly, these are granted for innovative ideas that have utility value. For some years now China has emerged as the top patent filer worldwide, a development that has caught the interest of the world. While there may be dross in the pile of gold—it’s easy to find silly patents everywhere—China’s patents have been spectacular in several fields such as communications technology. In early February, China Mobile, the world’s largest telecom carrier, launched the world’s first satellite to test 6G architecture. It was successfully placed into a low orbit to “offer low latency and high data transfer rates”, according to an official statement. Using domestic software and hardware, the autonomous 6G architecture was jointly developed by China Mobile and the Innovation Academy for Microsatellites of the Chinese Academy of Sciences (IAMC), yet another example of industry and top scientific institutions working towards clearly defined objectives. Academia is also closely involved in this effort as we have written (see “Patents zoom but where is the innovation?”, Down To Earth, December 16-31, 2023). 

If one is looking for the Chinese way to excellence it can be found in the IAMC system—the very antithesis of the situation in India, where moribund scientific institutions are unable to shake off the legacy of a hierarchal bureaucratic system of working that produces very little of merit. Industry flounders on its own.

A little digging revealed some interesting details about IAMC. It is just one of the major microsatellite innovation research institutes in the country, focused on development of micro satellites and related innovation. So far, IAMC has launched 95 satellites into the space and emerged as a leader in the commercial satellite industry. The more fascinating revelation is that IAMC has around 700 staff for scientific research and administration work, of whom the majority are postgraduates and holders of doctorates. Now, hold your breath: the average age of the staff is just 34. Could any of the patents that these institutions have garnered be termed junk?

There are some unique aspects to China’s staggering technological breakthroughs. The World Intellectual Property Organization (WIPO) notes that first and foremost, there is an emphasis on forward engineering. In this system, new or nascent scientific and technological knowledge is acquired in university labs and then applied in a top-down fashion for the development of commercial products. This is in sharp contrast to the reverse engineering approach adopted by South Korea and Taiwan which became powerhouses of technology much earlier than China. Secondly, China has made it a policy to acquire technology and brands through international mergers and acquisitions, and lastly, it has used parallel learning from foreign direct investment firms to promote domestic companies. WIPO calls this “Beijing model” of innovation. Firms like Huawei and ZTE were set up in a university and became leading global obms or original brand manufacturers. Similarly, China has produced three giants—Baidu, Alibaba and Tencent—in the platform business which WIPO says are leading the country into what it terms the era of the Fourth Industrial Revolution. There is, however, a difference. Many Chinese universities run their own businesses, which differ from ordinary spin-offs. The university sets up the companies and also funds and staffs them, which means it retains managerial control. A more spectacular revolution, and transformational from the environmental aspect, is in electric vehicle (EV) manufacture with Chinese firm BYD—it stands for Build Your Dreams—overtaking Tesla in the number of EVs it manufactures, dominating both the domestic and export markets. But more on this another time. 

To come back to India’s touchy relations with its neighbour, there is a new cause of friction over mobile phones, this time more serious. India has recently arrested Chinese and Indian executives working in Chinese smartphone company Vivo, accusing them of being involved in money laundering activities. A Beijing Foreign Ministry spokeswoman while promising full support to the arrested Vivo employees in “safeguarding their lawful rights and interests”, has asked India to recognise the mutually beneficial nature of business cooperation between the two countries and “to provide a fair, just, transparent and non-discriminatory business environment”.

Till then China is no longer sending its nationals to oversee operations here. As a result, India’s export of smartphones is taking a big hit. Does it ring any bells?

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