An Evaluation of Indigenous Innovation Policy in China

Abstract

After China launched its national indigenous innovation strategy in 2006, the innovation system of China has undergone a major change. The key question that is dealt within this chapter is how business innovation capability is proceeding in China. The chapter analyses how the government has implemented the strategy and how state-owned enterprises (SOEs) and private companies responded to the new strategy. Through its five sections, the chapter tries to answer the following questions: Can the Chinese national strategy of indigenous innovation work in an effective way to enhance enterprises’ capability of innovation? In particular, do SOEs or private enterprises benefit more from the new national strategy? Is a national innovation system with a strong government more efficient than the one with a market-driven innovation system? Section 2 of the chapter gives the background on indigenous innovation. Section 3 analyses how the government implemented the policy, while Sect. 4 shows how enterprises responded to the policy. Finally, the concluding section argues that only open innovation can give Chinese companies the possibility to win the next wave of innovation in the world and make China an innovative country.