Category Archives: Thoughts

Frugal innovation

One can hardly fail to notice the trendiness of innovation in and for emerging markets.

Frugal innovation nowadays comes in a variety of forms: reverse innovation (when products/services developed specifically for emerging-markets make it back to developed economies) and jugaad (the gutsy art of overcoming harsh constraints by improvising an effective solution using limited resources) both place emerging markets at the center of the innovation process.

While there are already some documented cases of emerging market innovations making it back to emerged markets (e.g. GE Healthcare’s portable ECG in India and ultrasound in China), it remains to be seen to what extent multinationals will take the risk of cannibalizing their own products. That of course also depends on whether emerging market multinationals will let them the time to think about it!

A Chinese stem-cell therapies boom and bust?

The Chinese Ministry of Health has a new battle to fight: closing down stem-cell clinics.

A recent article by Nature sheds some light on the booming and seemingly very lucrative business of stem-cell treatments for a range of diseases including autism or Parkinson. The problem? There is to date no scientific evidence that stem-cell therapies actually work.

A law passed in 2009 even requires those offering stem-cell procedures to  present clinical data supporting their efficacy and to secure approval from the Health Ministry. Unfortunately weak capacity of implementation and enforcement coupled with grey legal areas has created niches for experimentation.

Stem-cell therapies may well prove one day to be very promising avenues. Clinical trials run over many years will however be the only way to demonstrate the efficacy of Chinese stem-cell therapies.

ITU + IoT = IoU?

Things seems to be moving on the front of Internet of Things (IoT) standardization.

According to the Chinese news agency Xinhua a draft standard for the overview of IoT appears to have been approved by the International Telecommunication Union (ITU) at the end of March. It will be interesting to see whether the draft goes further than the “technical” (e.g., spectrum, numbering) aspects of IoT standardization and covers issues such as recycling, privacy, security or the environment.

Given the different views that Europe, the United States and China hold on these issues, reaching a global agreement might imply a lot of horse-trading between the key players. While not surprising given the size of the Chinese Internet population (and its potential for growth), it is nonetheless a sign of times that China positions itself among the lead countries for standardization emerging technologies.

China backs science but will it be enough?

Whether one listens to the declaration of the Premier Wen or looks at the funds set aside (USD 36 billion or a 12% increase) one can hardly doubt the resolve of the Chinese government to regain its place in the top league of scientific nations.

Will it be enough? A recent Nature article highlights some of the challenges that need to be overcome for China to excel in scientific and technological output. Among them, one finds issues of quality (e.g., few high-impact papers published and few genuine innovations) driven in part by a misallocation of funding (e.g., less than 5% of R&D expenditures goes to fundamental research and too much goes to government-led initiatives) and lack of transparency in funding decisions.

No surprisingly, there are many calls to reform the funding systems and provide more support for basic research. Whether the institutional framework can undergo such a change is altogether another question.

Uncompetitive cities

According to the United Nations there are, since 2011 and for the first time in history, more people living in cities than in the countryside. This is probably nowhere more visible than in Asia and particularly in China where the urban landscape just keeps filling up with high-rise buildings.

For the Economist Intelligence Unit Chinese cities still have a long way to go to compete with New York, London and Singapore. In terms of overall competitiveness (a mix of economics, physical and human capital, finance, culture, environment, institutional effectiveness and appeal) Beijing comes in 39th, Shanghai 43rd and Shenzhen 52nd.

One nonetheless finds 11 Chinese cities among the top 15 (!) when it comes to economic strength – not so surprising given the sustained growth rate of the Chinese economy. The list is topped by Tianjin, Shenzhen and Dalian. One can find cities like Qingdao, Chengdu or Hangzhou not far away. Whether these cities will manage to improve the other dimensions of the rankings remains to be seen. There is little doubt that they will be trying though!

Engineering 2.0

15 days to build a 30-story building?

Quite an achievement realized by a company (“The Broad Group”) which started in the business of heating equipment and air conditioning less than 25 years ago!

There are of course important questions raised by such an engineering feat, e.g. in terms of structural resistance and scalability. One may also quibble about the fact that the conception of the design and the production of the pre-fabricated elements need to be factored into the timeline. It nonetheless strikes as a very interesting example of process innovation.

If you have 3 minutes to spare, the video is well worth watching.

The value of Chinese social media

How much are the top 8 Chinese social media worth?

Close to 30 billion USD (i.e. the estimated value of Facebook) if one is to believe the report released by BV4 and the HWZ University of Applied Sciences. The growth of Chinese social media is no doubt breathtaking and still with quite some room to grow in China.

At the same time the growth is bound to be limited by the Chinese language unless the companies are willing and able to go global – something that would most likely require a fundamental re-thinking of the strategy.

The other unknown in the equation is the lack of transparency and predictability in the Chinese Internet-related industries. Between real-name registration requirements and other regulatory changes, business models are bound to keep evolving.

China 2030 is around the corner

The long-awaited report from the World Bank on the future of China has finally been released.

The report is of particular significance for several reasons. First, it has the endorsement of the Development Research  Center – the State Council’s think tank. Second, it gives 6 clear strategic directions as to China’s development strategy. Third, it highlights the importance of innovation (even open innovation) and the necessity to link the country to global  R&D networks.

To deliver on the innovation part, the focus will be placed on increasing the quality of universities and the links with industry, fostering innovative cities where talent and ideas flow freely and improving capital allocation. It all sounds very well thought through. Like all plans (and this one has 19 years to run) implementation will be key. So will be making sure that the institutional framework evolves at the same speed.

The end of genetically-engineered rice in China?

Greenpeace seems rather enthusiastic: earlier this week, the State Council has released a draft proposal to restrict research, field trials, production, sale, import and export of genetically-engineered (GE) grain seeds.

It is not the first time that GE rice is under question in China. This time it seems even more serious as there are concerns that non-approved GE rice may have already ended on consumers’ plates.

If the proposal was to become law (a process that can be rather protracted – the telecommunication law has been in draft form more than 15 years), it would mark an important policy reversal: in 2010 commercial planting of GE rice was expected to take place between 2013 and 2015.

Hacked for a decade

According to the Wall Street Journal Nortel, the now-defunct telecommunication equipment manufacturer, has been the victim of corporate cyber-espionnage for a decade or so. Plenty of time for the intruders to secure access to R&D work, business plans and other valuable information. The intrusion appears to have been spotted a first time in 2004 but its sophistication level was so high that it continued five more years.

The story does not end there: after its bankruptcy, Nortel was split into pieces and sold (hardware included) to several companies among which Avaya and Ericsson (whose heads of IT security must be running extra-securty checks on their Chinese corporate computer networks these days).

What reads like a spy novel is probably more frequent than one suspects. The risk of cyber-theft is considered high enough that officials from US government agencies use ‘loaner devices’ as a standard operating procedure (wiped cleaned before departure for China and upon return).