China innovation: The next big surprise

Tremendous pressure in China to find more affordable products than in the west is leading to innovation

Innovation will be the next 'big surprise' out of China, according to Jack Perkowski, the chairman and chief executive officer of ASIMCO Technologies, an important manufacturer in China's automotive components industry.

With 17 factories in eight provinces across China, ASIMCO Technologies -- which produces parts for commercial vehicles (trucks and buses) -- is a foreign invested company, headquartered in Beijing, and established some 20 years ago to serve the China market.

Speaking at an American Chamber of Commerce lunch in Singapore, Perkowski said there is a 'tremendous pressure' in China to find more affordable products than those offered by the west, which will inevitably lead to innovation.

He said that the 400 million Chinese people who now earn more than US$7,000 a year can afford notebook computers, but they'd rather not pay what the West pays for them.

"The other 900 million people can't afford notebook computers," Perkowski said, "so every day you have 1.3 billion Chinese waking up trying to figure out how to make these things cheaper."

"Even if you never go to China and your company's never going to have an operation in China, unless you have a product that is completely insulated from China, then you'd better be aware of this [drive] because this will be the cause of a lot of future global competition."

Perkowski said that although China was now the most competitive country in the world, with every multinational operating there, it was still 'the best country in the world to start up and build a business'.

This was due, he said, to China's incredible economic growth -- 10 times in the last 20 years -- which 'cures a lot of sins'.

"Despite China now being the number three economy in the world, it's still an embryonic economy; so it's got a lot of holes," Perkowski said. "China has all these gaps that people don't realize are out there, so whether you are Chinese or not, you can go there, realize these gaps and have some tremendous opportunities."

He also predicted that 2008 could be the first year in which China produces more automobiles that the United States.

Perkowski said that 2008 was shaping up as the first year when the US was likely to produce less than 10 million vehicles and, last year, China produced 8.8 million vehicles, with productivity growing by more than one million vehicles a year. Last year it exported 612,000 vehicles, a 78 per cent increase on 2006.

He described China as 'being in fast forward' with particular opportunities in distribution since China joined the World Trade Organization in December 2001.

"I think health care is also a huge opportunity, as well as any technology that has anything to do with helping the environment, because I believe China will be an early adopter of new technologies.

"Technologies that have some very interesting characteristics, that may not get traction in US or Europe or elsewhere, they will have a ready market in China. The one thing about China is, if you've got a product that works, it gets into production fast, you don't have to wait around two years for a lot of testing."

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