Zhou Qiren: Four Steps for China's Future

​Zhou Qiren, Professor, National Development Institute, Peking University

Four Steps for China's Future

Zhou Qiren | Wen

Four steps.

We have a heavy historical burden to solve: "The Needham Mystery." China has been a leader in many fields, why not kick the last foot at the door of the scientific revolution? The Scientific Revolution, the Renaissance. Needham had a guess, China was engaged in the imperial examination, all the clever minds were guessing what the emperor would issue, what the standard answer was, write a clever article to be an official, and there was no such great attention to the interesting things in nature. This is our historical baggage.

The second burden, catch up thinking. The most powerful thing about the Renaissance and scientific revolution in Europe is to liberate the mind and liberate the cognitive ability of the whole nature. We fall behind here, fall behind, get beaten, then catch up. The consequence of catch-up thinking is to focus on something you can see and touch.

"Two bombs and one star" everyone is proud of, great, but this is not original, is the result of the "Manhattan Project," has been bombed in Hiroshima. All of our innovations to date have this characteristic to a large extent. People are proud of high-speed rail, high-speed rail original idea is who? We call it combinatorial innovation. A little here, a little there, together, is better than nothing, but not enough.

We value education very much, but why is our education called exam-oriented education? Exam-oriented education is a standard answer, to see who is close to the answer. Can we discover something new? We have no problem mastering the known, exploring the unknown, lack of interest, and even less ability. It has to have an atmosphere. Why are there so many great people in the Bay Area? Interact with high density. You either cost lead or be different. China's cost is no longer leading. We can try to control costs, but as long as the economy develops, the per capita income will always rise, and the cost will be expensive. The more economic development goes to the middle income, the more it depends on being different.

There is a town in America that goes to the sky, on the edge of the desert. There are a number of engineers and managers who have been there for many years to build an engine that can be sent to Mars. I don't know if it can be done, but this strength is admirable, what atmosphere can make a group of people in this semi-desert area for many years to do a prospect I don't know how to do? To some extent this is part of the United States Comprehensive National Power. In China's next development, we should focus on innovation and put innovation in a more prominent position.

What is a new step? The first step is the quality level, China's speed growth today is no problem, the total amount is no problem, we have hundreds of products accounted for the world's first. But quality is the problem, the first step is not new, is how to do things well. Because we are export-oriented, the domestic start is very poor, the domestic can not afford to buy, the demand is not high, good things first export. The good thing of Japanese enterprises is to give the domestic first, we have exported for many years, leaving the tail goods to sell to the people, which is called the tail list of foreign trade. As a result, the quality of domestic products is generally poor.

Xiaomi's market analysis said that now the country is not without good things, is very expensive, more expensive than Europe and the United States; Cheap things are very bad, is "either expensive or poor." Why does Lei Jun put the cost price together? "Non-expensive or poor" corresponds to doing cost-effective. You have to make something worthy of the buyer. I appreciate the strength of his entire team. One of Xiaomi's products is an electric plug-in board, which has no scientific and technological content, but the market is extremely large. In the past, the quality of China's electric plug-in boards was very poor, and some people were electrocuted because of the leakage of electric plug-in boards. Japan, Germany's electric plug-in board is a whole copper, there are arts and crafts design, very reasonable. Millet took the lead in stirring, and now the mainstream electric plug-in board companies began to react.

What hinders quality? This is a big market problem. Our mainstream market is to recognize the price cheap, the price how cheap? Bargain to the end is to cut corners, looking for alternatives, it seems to be a thing, a problem. It is even more unfair to low-income people. In this market structure, to win with low prices, many consumers, dealers are also price sensitive, in this case you have to do a good job of product, quality competition with the price competition how to fight? This is a question that we have recently researched and it is still inconclusive.

The second step is that people's time is getting more and more expensive, and the opportunity cost of time is getting higher and higher. People now have a little time to go shopping, convenience and convenience. This area is the big topic of manufacturing and service integration. For example, there is a company in Foshan that produces gas stoves, pots and range hoods, all of which are overcapacity. A Dongfang Maitian Industrial Design Company has made great efforts on this product. For five consecutive years, it has covered 10 provinces and 30 cities, sent 10,000 questionnaires, 2000 in home interviews, and 200 videos of housewives cooking for half an hour. After investigating improvements, an improvement in Bluetooth technology increased sales by more than a billion dollars.

The third step is that China's market is changing, the consumption upgrade is real, because the income is increasing, all the parameters are changing. There are many new requirements in this change. So in China, do not think that there is no market for excess capacity, there is a market, depending on how you look at it. The enterprises and products I have inspected in the past two years, such as Xibei Shinogawa Village, Haitian Soy Sauce, Surfer Fish, Liu Qiangdong's Running Chicken and Li Ka-shing's Artificial Meat, are all looking for new ways to upgrade consumption in the traditional market. In Austin, Burger King already has a burger made with artificial meat, which is very good.

The fourth step is supply change. A professor at Zhongshan has developed biodegradable plastic that disappears in water. A company that manufactures plastic molds in Nanhai is forming a partnership with the professor. Of course, there are Liu Zihong's flexible display materials, first papers, then key technologies, then products, and then open the market. Several companies in Shenzhen have this feature, which is a very important direction for China's next innovation.

This leads to a new trend - alliances. How can the US solve the rust belt? It turns the rust belt into a brain belt, that is, it aligns with universities, laboratories, and research institutions in Pennsylvania to develop new industries, new products, similar to Silicon Valley and MIT. Across the United States, such industrial belts are beginning to emerge. There are thousands of companies surrounding the Austin campus, and they call themselves Silicon Mountain.

Choices and actions determine the future.

In terms of innovation, I have a few ideas. Innovation is not a slogan shouted out, the distribution of innovation is extremely uneven, and it is not necessarily a function of population. A large population is not necessarily a large number of ideas, and where it falls is an extremely complex, multi-element cobble together process. All kinds of ideas, ideas, assumptions, and then to discover the principle, invent technology, make products, and form an industry, a series of conditions must be put together. Original ideas, supporting technology, intellectual property protection, financing, scientists, inventors, craftsmen, entrepreneurs, investors of all kinds, businessmen, etc.

The best carrier of innovation is neither a large company, nor a single person, but a group, that is, a group with the same idea, the same idea, high spontaneity and cohesion, large or small, and the important thing is the high-frequency interaction. The idea is not a genius in the middle of the unknown, from the beginning of Greece is the powerful mind dialogue out of each other, so the key one is density, one is concentration, leaving these two conditions is very difficult.

We looked at these so-called hubs of innovation, and it's very important to have a universal joint. Why is Stanford ahead of the curve on this? What is a node? Friedrich Terman, the dean of the Stanford School of Engineering at the time, was able to deal with many people at the same time, to have many people trust him, to speak to many different people, to the military.

San Francisco was the base of the Pacific Fleet, which had a very high demand for communications, which was a very important force in the rise of Silicon Valley. He can communicate with many innovative people with artistic sense, communicate with banks, communicate with investors, and communicate with lawyers. These are the most important conditions for forming an innovation base. It takes an organizational innovation to turn principles, human curiosity driven by the natural world, into a source of economic activity.

There is always a chance in the existing combination, the problem is that there is always more chasing, starting from the principle of original things. We should attach great importance to the innovation generated by the application of new principles. China has thousands of universities, many national research institutes, published papers, trained doctors, engineers, the number of ranked in the forefront of the world, the question is the next step.

The Greater Bay Area is a very promising place. The Global Innovation Index released last year showed that the highest innovation density in the world was in Tokyo and Osaka, followed by Shenzhen and Hong Kong, and then Silicon Valley. This statistics does not calculate the level of patents, only in terms of the number of patents, Shenzhen, Hong Kong, that is, the Greater Bay area is very promising. The problem is that we need to break through innovation, raise the level of breakthrough, and continue to fight from the bottom up, but there should be some companies and some fields that start from the principle and fight from the top down.

China's economic trend is generally very clear context, we from the status quo of poverty, the most successful is the use of globalization, the use of opening up, the introduction of capital, the introduction of technology, combined with our capable, low-income population, completed a revolution in the Chinese economy. Now the new problem is that the cost curve has turned upward, there are domestic problems in the country, the system cost has risen again, and the market cost has risen sharply. Trump so noisy, China's future import and export costs will rise. The next step is two things: reform and innovation.

There are four specific steps to step, the first is quality. If we do not reflect on our quality line, we are not only sorry for consumers, but also sorry for the environment. We have too much industrial waste, which is unsustainable. Our rapid growth is an achievement, but there are hidden problems. Things go bad fast. If the quality is better, our growth rate will not need to be so high, and in fact, the welfare of the people will not be low. The second time has become more expensive, and to make things more convenient, Apple's conquest of mankind is largely about convenience. The third is to upgrade consumption, size up the situation and follow it. The entire supply system is changing.

As for what you are concerned about in the future, the future trend is uncertain, the future does not depend on what economists say, it depends on whether you are optimistic or pessimistic. The future is not seen, the future is made, choices and actions determine the future.(This article is a speech given by Mr. Zhou Qiren in Yi'ci in 2018. Source: WeChat public subscription number "Tengyun" on October 22, 2018, with abridged)