Chinese tech firms thrive on innovation
Industry insiders see companies’ focus on R&D as key to capturing market share
Chinese consumer electronics companies are stepping up their innovative strategies, fueled by a deep commitment to research and development and a growing focus on creative business models.
Companies like BOE Technology, a leading Chinese display panel manufacturer, exemplify this transformation.
“Technological innovation is the foundation and soul of BOE,” Si Da, the company’s vice-president and chief brand officer, told China Daily.
The company entered the semiconductor display industry in 2003. In just 20 years, it has become a global leader in the display industry. Si attributed the rapid growth to its commitment to technological innovation.
BOE ranked 15th among the most innovative companies in the US last year, according to a report released last month by IFI Claims Patent Services, which tracks patent applications and grant data.
“This is the sixth consecutive year that BOE has ranked in the list’s top 20,” Si said in an interview during the Consumer Electronics Show in Las Vegas last month.
The company filed more than 90,000 new patent applications in 2023, more than 90 percent for inventions and over 33 percent for overseas patents. Behind the impressive patent portfolio is the R&D investment exceeding 7 percent of annual revenue with the R&D personnel accounting for 23 percent of the total workforce.
This dedication is echoed by Hisense USA, the fastest-growing TV brand in the US market. “Consumers are recognizing the quality of our products and willing to pay more for it,” David Gold, president of Hisense USA, told China Daily.
This shift in consumer perception is driven by Hisense’s focus on R&D centers in both the US and China, ensuring they cater to local preferences while leveraging Chinese innovation expertise.
“The continuous investment in R&D is our engine of growth,” said Gold, “There’s continuous investment in R&D from our headquarters in China.”
Looking at the Chinese companies participating in the CES in recent years, it is clear they are increasingly relying on quality and technology to win, said Liu Chun, vice-president of the China Chamber of Commerce for Import and Export of Machinery and Electronic Products.
“They have reached the consensus that it is difficult to win by competing on price. This is a marked shift from the past when Chinese companies were often seen as low-cost competitors,” she told China Daily.
Eye on expansion
This focus on innovation isn’t just a corporate strategy. It reflects a broader shift among Chinese companies that have set their sights on global expansion.
Innovators based in China filed around 1.58 million patent applications in 2022, accounting for nearly half of the global patent applications and exceeding that of the US, according to a November report by the World Intellectual Property Organization.
The organization saw the highest volume of filing activity from China and sees China as the “main driver of global growth”. In fields like solar cells and electric vehicle powertrain batteries, China has emerged as the largest source for patents, both applied and granted.
Rebecca Fannin, founder of Silicon Dragon Ventures, observed a significant shift. “We have seen the shift of copying from the US to China innovating on its own terms, and now taking some of these brands global,” she said.
This shift is evident in areas like e-commerce and electric vehicles, where Chinese companies are “getting ahead of the United States”, said Fannin at a recent webinar examining US-China innovation landscape.
“We definitely have seen this spread of Chinese technology innovation and also moving up the ladder to the creative aspect of it,” she added.
Chinese companies aren’t just innovating in technology; they’re also redefining business models.
“The aspect of business model innovation can’t be ignored. The Chinese have excelled at this,” said Fannin. Examples include the separation of car sales from battery subscriptions in electric vehicles and targeting rural shoppers in e-commerce.