Lack of innovation sapping prospects for private firms
Source:Xinhua-Global Times Published: 2013-4-7 0:33:01
Economists and entrepreneurs attending the 2013 Boao Forum for Asia discussed Saturday how Chinese firms, confronted with rising costs and shrinking returns, must innovate to survive the global economic slowdown.
China's longstanding weakness in innovation remains the most pressing issue. Although efforts by some pioneering entrepreneurs have taken the country far from its sweatshop image in recent decades, industrial giants are conscious of the uneven road ahead, with many such operations lacking a pedigree of innovation as well as capital support.
Zhang Weiying, a professor of economics at Peking University, pointed out that the free market and intellectual property are the keys to effective innovation, but the uncertainty of policy prospects and too much government interference in China has made entrepreneurs care only about short-term profits and therefore impeded the cultivation of innovation.
"Although there are enough incentives, the private sector is lacking the ability to create real technological and managerial innovation, not to mention the lack of innovation in business models, where most of the time our private enterprises are stuck in price wars that have resulted in a chaotic market," said Bao Yujun, chairman of the China Private Sector Association, echoing Zhang's opinion about authority intervention.
However, Hu Zuliu, chairman of Primavera Capital Group, said that considering China's current situation, it will be enough for its businesses to draw lessons from Western counterparts' experiences and technological advancement.
Edmund Phelps, a Nobel Prize-winning American economist and a professor with Columbia University, disagreed, saying that innovation means to stand up to be different, not to simply imitate to secure recognition, and that financial support is imperative for innovative start-up companies as they are crucial to create better investment return rates.