Innovation and cultures in China: the example of shanzhai
companies in the telecommunications sector
Laurent Mériade*
Innovation is not only guided by economic, technological or geographical
but also by the culture that is crucial in the interpretation of innovation
systems. Our concern is to highlight the influence of culture on innovation
strategies in China and to better understand the forms taken by the
national culture of innovation.
We are interested in the innovation strategy of enterprises called shanzhai
(literally "the bunker in the mountains") to measure the links between
innovation and culture in China from the reading grid proposed by the
Chinese cultural literature (Granet, 1968 , Barber, 2001; Billeter, 2006;
Goxe, 2012) and more particularly that of Jullien (Jullien, 1996, 2005,
2009).
Our results analyze forms of creativity culturally embedded whose
knowledge by western entrepreneurs is essential to better understand the
needs of emerging countries in terms of creativity and innovation.
Field of research : innovation management and chinese culture
*
IUT Aurillac University of Auvergne - CUFR Albi, France, meriadelaurent@gmail.com,
0033471468612
1. Introduction
For nearly 4000 years to the early 19th century (Manchu Dynasty), China has been
the most innovative civilization in the world (it still accounted for 32% of global GDP
in 1820). He was responsible for writing, printing, but also the great discoveries in
medicine and in the maritime domain. However, while China now reappears as a
major nation in science (the first in 2011 by the number of patents in the world 1) and
economic (2nd World GDP), its culture of innovation seems poorly understood by
West or at least misinterpreted. Indeed, the creativity of Chinese, even if it is not
completely denied by Western countries, is often associated with a massive
borrowing in advanced countries innovations resulting from strategies of imitation or
incremental innovation. However, this western interpretation is mostly the result of a
cultural misunderstanding rather than a real advance in production scientific foresight
seems to contradict (Annual Report 2011 Thomson Reuters 2 on innovation indicates
that the number of patents should be close to 500 000 in 2015 in China, against
nearly 400,000 U.S. and nearly 300,000 in Japan).
Innovation is not only guided by economic, technological or geographical. Cultural
determinants of different countries play a significant role either in enhancing
innovation internally or using external knowledge stock to build new ideas and
develop new products.
Practically speaking, it is to describe forms of creativity culturally embedded (Polanyi,
1983; Granovetter, 1985) whose knowledge by Western entrepreneurs is essential,
first, to deal with this new form of competition and on the other hand, to anticipate
and better understand the needs of emerging countries in terms of creativity and
innovation.
On a theoretical level, we describe the cultural creativity of shanzhai companies by
bringing the main analyzes of traditional Chinese culture (Granet, 1968; Jullien, 1996,
2009, Barbier, 2001; Billeter, 2006). Our concern is to highlight the influence of
culture on the development of new ideas and a better understanding of the forms
taken by the Chinese creation.
On the methodological level, we use secondary information from newspapers, books
and other scientific research describing examples of shanzhai companies in China. In
a second step, we compare these data with those obtained through face to a review
of the literature on culture and Chinese thought. The aim is to extend and check
interrelationships between Chinese culture and practices of shanzhai.
2. Literature review
Almost all current definitions of creativity and innovation agree on the importance of
three attributes: novelty, value and utility (Rehn and Cock 2010; Boden 2004).
Mednick (1962) defined the creativity as the ability to combine elements to form new
combinations which have scientific, aesthetic, social and technical value. He spotted
1
2011 Trademark Report: Trademark Activity, Evolution and Important Changes. Available at
http://thomsonreuters.com
2 2011 State of Innovation: Twelve Key Technology Areas and their States of Innovation, Available at
http://thomsonreuters.com
in the creativity new dimensions but based on existing structures and features.
Previously Walters (1965) perceived creativity in the conclusion of a process
combining knowledge, experience and reflection giving meaning and importance at
the creative process more than to the final creation. Amabile (1983) also insists on
the creative path that produces the generation of new ideas, offering original and
useful answers adapted at the socio-organizational environment. If as pointed
Amabile (1988, 1997) the creativity is an integrated process model of innovation then
a specific individual or organizational management of this process can be defined.
According to Cook (1998), a successful innovation product or service depends on the
creativity but it is as built from a problem as determined by a favorable context for the
outbreak. Innovation is the successful implementation of creative ideas by an
organization (Amabile, 1988). Indeed, in practice, new ideas must be put to the test
of an organizational context has to pretend their implementation and transition to the
rank of innovation.
Getz (2002) sees in management systems ideas (SMI) management tools creativity
promoting its practical application. Innovation is the production and implementation of
new creative ideas that are built for the improvement of production activity or service
(Canadian Centre for Management, 2000). Also, in organizations, it seems quite
difficult to completely separate the creative innovation as it determines the
environment in which new ideas appear.
We take the hypothesis formulated by the current culturalist considers to belong to a
given culture can promote or limit the absorption of external knowledge flows (Sapir,
1921, Pinker, 1995; Sjöholm 1996; Botazzi & Peri 2003). In the dissemination and
development of knowledge, belonging to the same cultural space seems to be more
important than proximity. Westwood and Low (2003) see the culture as a very
powerful interpretation of the process of creation and innovation. It gives rise to
different interpretations and perceptions of the innovation process that are difficult to
reconcile. Herbig and Dunphy (1998) approach the innovation process of religious
practices and suggest that when the monism give to God the privilege of creation
(such as Islamic cultures), this has the effect of curbing science and innovation.
For Baal (1981) religion is "the most distinctive cultural feature". The relationship
between culture and innovation appear decisive and therefore produce very different
effects depending on the geographical area where they operate.
For Boas (1940), “every culture has a particular style that is expressed through
language, beliefs, customs, but not only. This style, this spirit of each culture
influences the behavior of individuals. " For Westwood and Low (2003) strategies
favoring the use of external knowledge rather than endogenous innovation are
constrained by culture, but they meet both the requirements of the innovation
process (Cohen and Levinthal, 1989) even if they are collected separately in the
West and East. For Hofstede (1980), culture is "the collective programming of the
mind which distinguishes members of one group from another" (p.21). In addition,
because it is basically the origin of human perceptions, the culture induces different
ways of understanding the innovation (Hussler, 2004).
Shane (1993) tries to show that cultural features design the population creativity and
suggests instead that each country or each culture encourages a particular type of
innovation (promoting increment, facilitating individual initiative, or favoring imitation).
Crossing the two cultural dimensions proposed by Hofstede (power distance and risk
aversion) Hussler et al. (2010) define three types of culture Innovation: culture little
innovative, culture of imitation and culture of endogenous innovation to meet all the
characteristics of an innovation process. According to these authors, the belonging to
the same cultural space is a prerequisite for the innovation before the geographical
proximity. This is particularly true in China, where the national culture favors the
"potential situation" and not a proposed plan ahead bounded by means and ends
where Western culture tends to model for creativity make it "manageable" and then
optimally to develop innovation.
The innovative action takes place in a process of "silent changes" (Jullien, 2009)
while Western companies and organizations prefer breaking science and technology
to manage innovation. Instead in Chinese culture and that of Asia more generally, the
innovative action takes place only on condition that the scientific and economic
potential is considered sufficiently dense to ensure a successful creation.
Consequently, latter is still perceived as a real adaptation to ensure its effectiveness
when it comes. Therefore planning innovation in China has much less meaning than
in the West because they are opportunities scientific or economic will be determined
in space and time in the course of the innovative process.
The dichotomy between theory and practice consubstantial Western thought that
cultivates modeling and heroism of the innovative action is fairly customary in China
where the culture of innovation relies more on the evolution of things whether
practical or theoretical. It emerges then a strategic and "procedural" approach of
innovation where creative forms (imitation, disruptive innovation, incremental or
technological), (Freeman, 1982) are various but also secondary to the actual and
potential changes in the situation.
3. Conceptual framework
Jullien believes that for Chinese people, every situation has a potential that should be
acting above discreetly. It is then analyzed and used the situation to his advantage
without compromising the course of events imposed by the Nature. This
conformation and the adaptation to existing situations is also very characteristic of
modes of innovation in China including those run by shanzhai companies.
Whereas in the West, the cultural and social context may be seen as a decoration or
ambience often exotic, in China, is a strategically important element upon which a
significant part of creation. Thus, existing products and specific market will be almost
permanent confrontation without even ask about its necessity or utility. However, it is
often essential for multinational companies to understand this innovation approach in
order to understand what are the various forms of creativity legitimized and sought by
consumers, particularly in Asia and more specifically in China. Indeed, latter, to the
differently of Western consumers, are often prescribers innovations in China for not
accepting that imposes products or services that ignore their needs and local
realities. The example of the experience of rental vehicles that has emerged in the
face of international firms Hertz or Rentacar, powerful domestic competitors who
have adapted the model of western rental to the Chinese context by offering drivers
for rented vehicles to allow customers to pursue their personal work during travel
time much more time consuming than in Europe.
The culture of action in China defined the adaptation to potential situation as a key
element of the success of a product or service. Where a Western company will
reason in terms of creating original and immediate cost, the Chinese company will
focus on long-term benefits obtained by adapting a new context is constantly
changing. Why create a break by offering a product or service that is completely new
as it will be challenged by the changes already underway in reality? Such reasoning
imposes indeed always hold a head start on future innovations proposed by the
direct or indirect competitors. This can be seen in a context of competition
concentrated around a few innovative firms but face a global competition on all
continents, this type of approach becomes quickly unproductive for emerging
companies wishing to settle on a market. And even for leading companies, the price
to pay is such that it requires to implement financial and protection increasingly
exponential.
Pragmatism inspired by Chinese culture and thought advocates a gradual integration
into the reality rather than a technological breakthrough as Western thought tends to
favor. In other words, the influence of creativity on the existing situation will
determine the innovation. It can actually show that if the potential technological and
socio-cultural environment allows. This offers a model of innovation or goal
(revealed) is not like, often in the West, a technical or technological prowess but
rather a gradual adaptation to the local context, which is also a form of learning
favorable to the appearance of new market entrants.
Jullien (2005) helps us to identify the culture of innovation in China from the
superposition of the major cultural forms of action in China and the West, which are
presented in Table 1.
Table 1. Efficiency in the West and in China (Jullien, 2005)
The action model in Western
The action model in China
countries
Model reality
Transform reality
comply with reality
Reality is subject to the will of men
Evrything is process. Men must submit to
the reality
Course of action follows this
sequence:
- definition of purpose,
- meeting means,
- production of an effect
The action on the potential position
determines the action on the situation
Distinction between theory and
practice
Operating reality bounty on his theory
The victory is seen after the fight
The victory is decided before the fight
Destruction of the enemy
Disintegration of the enemy
Nature is transformed by human
action
Man is transformed by the action of
nature
Think the crisis from its manifestation Think the crisis in the tiny in weak
abilities
signals. there is crisis before the crisis
4. Methodology
On the methodological level, our qualitative research aims to understand the
innovative action in two shanzhai companies using multiple sources (direct
observation, interviews, research notes, docuements, participant observation
physical artifacts), the heterogeneity of sources empirical guaranteeing objectivity
(Yin, 2012, p. 10). In the absence of credible information on the modes of
development of shanzhai companies, we seek this objective by combining three
types of data (Yin, 2012, p.18).
We use as secondary information, newspapers, reports and other related scientific
work describing examples of shanzhai business in China. This information should
allow us to retain the essential information (in press articles and scientific
management reports) to measure the forms taken by the innovation strategies.The
aim is to extend and check interrelationships between Chinese culture and practices
of shanzhai. For this, we compare the information gathered with the literature on
Chinese culture to build assumptions about the practices of innovation management
in China. Jullien (2005), making a comparison between the West and China presents
a framework relevant comparison between the conceptions of innovation in China
and in the West.
We use this approach as a guiding principle of our analysis while confronting
regularly has some critical currents (Billeter, 2006 or Goxe 2010). The objective of
this initiative is to bring together key knowledge we have about the Chinese culture
with practices such shanzhai are described by both entrepreneurs and management
researchers.
5. Findings and discussion
We suggest that the widespread assumption that originality and innovation are
fundamental to the creative process is essentially cultural or ideological to some
extent. Indeed, despite the general celebration of novelty (Keane, 2011), the creative
industries are often made of standardized practices or trends recycled (in industry or
television for example). Creative design in Western countries is sitting on a finitude of
the world and its creation. In Chinese philosophy, although there is a "creation myth",
the world has no beginning and a creator. Things interact continuously and
constantly changing. The "ten thousand things" (wanwu) is a Taoist metaphor refers
to the endless transformation of the Nature and the reality of which depends on an
act of creation. The "objective world" of the West does not really make sense since
there are no universal truths other than the ongoing transformation of the world. Puett
(2001) describes the act of creation in China guided by the efficient use of resources
and circumstances in contrast with the Western scientific model seeking uniqueness
and specificity of creation.
In China, originality is rarely privileged because permanent mutations and
adaptations imposed by the natural course of events will cause other changes even
more original and unexpected. To Hall and Ames (1995) Chinese thinking is based
on a correlative approach, as opposed to the Western approach which is based on
causal thinking. Therefore, in the Chinese world, changing (bian) and continuity
(tong) between things (ti) are interrelated and interdependent. The Chinese language
is a very characteristic mode of thought and history attests to its important cultural
influence. Its 50,000 characters are composed by combinations with two hundred key
and attribute a great complementarity between similarity and difference. This
framework provides to the creativity cultural dimensions relatively unknown in the
West, or at least not easily accepted. Indeed, Western thought brings the creativity to
ideas of novelty and originality, even if not to give a sense of much creative economy
including the issue of Eastern thought. In the West, the creativity is often perceived
as a single phase in the process of generating new ideas to trigger dramatic
breakthroughs (Tatsuno, 1999, p. 49). It is conceived as a new way of unorthodox
thinking (Tatsuno 1999, p. 49-50) and to see the world, while in Eastern thought, the
world is as it is to say independent of our mental representations but defined by the
reality of nature.
Shenkar (2010) describes the role of imitation in corporate strategy including China
for thirty years. While in both western and eastern history, imitation has always been
widespread, it is given a bad reputation recently mainly due to its innovative
capabilities. Indeed, with globalization and codification of knowledge, which facilitate
reverse engineering, imitation "is easy and very effective in terms of cost and
performance” (Shenkar, 2012). Another concept often confused with the idea of
imitation is adaptation. Adaptation refers to a work that has been rebuilt in a new
form which suggests a substantial change and a new interpretation. Film and
television industries multiply examples of adaptation movies or series without it being
seen as a lack of creativity or defined as a forgery. For example, the game show
“Who Wants to Be a Millionaire” was redone in more than 150 countries (Keane,
Fung and Moran 2008). “Things may be similar and may be different” (Bohm, 1998).
If they are equal then there is obviously no creativity.
In many cases, adaptation involves creative aspects both contextualized and new.
Adaptation is indeed both an imitation and renewal. And even if the degree of
originality is often not what matters the most innovative aspect, the legality of
adaptation is rarely denied. For Hutcheon, the adaptation is primarily a process of
changing social and cultural environment (Hutcheon 2006, 7-8), which culminates in
a "creative process" combining existing products and services and the historical and
sociocultural context. Creative activities are permanently dependent on the
rapprochement of cultures. The example of the encounter between traditional and
contemporary art represents very well this adaptation not really new but by creative
recombination of ideas and techniques (Moran and Keane 2010). It would be absurd
for example of denier any creative dimension to Picasso in his adaptation of Las
Meninas by Velazquez (1656).
During its long history of contact with foreigners, China has excelled in adaptation of
outside ideas. The time of the Silk Road in the Han Dynasty (206 BC-220 AD) to the
grand opening of the Tang Dynasty (618-907) and Song dynasties (969-1279 AD),
China received the leading intellectuals and adventurers worldwide. Under the Yuan
Dynasty, Marco Polo visiting China described a trade of ideas and objects between
the countries of the East increasing very quickly. Under the Qing Dynasty (AD 16441911) the widespread expression zhong xue wei ti xi xue wei yong encouraged
traders to learn from the West (technology) was good to further strengthen culture
and Chinese technonology. shanzhai companies say, literally the "fort in the
mountains," offers a fairly significant way the Chinese creativity thinking through
cross-cultural adaptations. In fact, these firms innovate by their creativity, but with
their scale with little money but a very good knowledge of their customers and their
expectations.
The creation is not to obtain by an absolutely new product but rather by the
contribution of small innovations from existing products or services in thinking
primarily on the expectations of emerging consumers with resource limitations. We
can identify behind this process a model of innovation shanzhai firms where the
creativity is not only inspired by the above, but more specifically by the emerging
middle classes. These shanzhai companies seek to respond to their expectations
while seeking niches sensing development costs relatively low. So, it goes as
Chinese companies in Beijing like Tianyu developing integrated speakers to the
smartphone brands for the migrant worker who wants to listen music in his dorm or
allowing him to insert two SIM cards, one personal, the other professional while
contracts between operators and manufacturers prevent. In the last 7 or 8 last years,
shanzhai companies have developed in China, especially in the mobile market, to
represent in 2012 more than 40% of this Chinese market. This phenomenon is also
found very established in the computer, electronics and television programs or
internet. In automobiles, Chinese companies have long contented engineering
"reversed" as the research and development.
Today, manufacturers like Geely, rather than counterfeit, develop their own models
inspired by their competitors or their partners (Geely bought Volvo at Ford Group in
March 2010) in order to progress in terms of branding and security with Chinese or
emerging countries consumers. From then on, shanzhai is there an economic model
which will have full access to all international industrial tempted emerging or
developing countries? Or is it an artifact of the Western model of creativity? Up to the
appearance of a bubble of the underground economy in emerging markets. The
answers we try to provide to these two questions for practical to participate in a
complementary effort of understanding cultural determinants of creativity and
innovation in China. They do not claim to be exhaustive as forms of creativity in
China are diverse. But by relying on a creative type commonly recognized
(shanzhai), we try to present an analytical framework and recommendations intended
to evaluate the power and potential of these forms of creativity in the face, or rather
in addition to those submitted by Western companies.
The imitation or adaptation of models that are already successful then are shortest
paths and more efficient to profitability often short-lived. Given the success of
shanzhai companies over the past ten years with success in the biggest local brands
(such as Tianyu, Beijing) and the diversity of the activities concerned (TV, laptop, car,
television programs ), the analysis of their innovation strategies can help us
understand their cultural backgrounds and the reasons for their success.
We try to present a framework of assumptions and recommendations for further
assessment has the power and potential of these forms of creativity in the face, or
rather in addition to those submitted by companies and Western companies. This
suggestion framework is proposed in Table 2, which adapts the conceptual
framework of culture of innovation in China developed by Jullien. We incorporate
these assumptions in the general scheme of management innovation (Weil, 2003) to
highlight the practical implications of the two models (Western and Chinese) that we
compare.
Table 2. Comparison of models of innovation (authors)
Innovation
Management
Innovation on the Western innovation as the Chinese model
model
Innovation
policy
Innovation is to change an innovation focuses on the potential
actual
and not on the situation
Innovation
strategy
Innovation
comes
response to competitors
Innovation Plan
Distinction between theory
and practice
Innovation follows a pattern
type
means-endsconsequences
Taking into account the reality
bounty on his theory
Innovation does not follow any
pattern if it is the reality
Management
means
The reality is subjected to
the will of men Innovation is
therefore dependent on the
initiative of men.
Reality is transformed by
human action and their
creative abilities
Men must submit to the reality.
Innovation can not happen outside
of this reality.
creative and innovative capabilities
of humans are determined by the
fact
Management of
innovative
projects
Innovation
consists
modeling reality
Performance
Management
The
success
of
an The success of an innovation is
innovation depends on the decided ahead of launch
result
Change
Management
Change and innovation Innovation is the result of gradual
appear dramatically
and small adaptations
in Innovation will
obsolete
the
competitors
be to render
initiatives
of
in Innovation will be the result of the
transformation of reality. It must
first comply
Given the success of shanzhai companies over the past ten years with success in
the biggest local brands and the diversity of the activities concerned (TV, laptop, car,
television programs, etc. ), we consider that the analysis of strategies for creativity
and innovation shanzhai companies may help us understand the reasons for their
competitiveness.
In this communication, the shanzhai is defined as one in which companies integrate
internal and external resources in a flexible manner through vertical alliances or
restructuring while adapting to the constraints of the local market (functionality,
quality, property rights intellectual property, trademarks, taxes, etc.). The objective is
no longer imitation and reproduction identical but rather the creation of customer
value combined with lower costs and higher yields obtained with the possibility of
launching a wide range products quickly to test the market and identify customer
segments accessible. The collection of consumer feedback is an important step
because it allows the model to make quick adjustments in the design and facilitate
the success and profitability well in advance.
Indeed, if we analyze in detail the innovation strategies of these structures, we can
see that competitiveness comes from three main factors: cost reduction, speed of
response to customer expectations poorly equipped for lack of resource but also
collective innovation between companies within the same sector. More by adapting
existing products or services, shanzhai companies expand the use and popularity of
the parent brand which allows latter to set up or strengthen on emerging markets with
low cost (eg the cherry QQ that strengthening the QQ messaging in China has
undermined the implementation of Google and MSN in the Chinese market).
In Shenzhen, for example, the company MediaTek has structured its market success
from the surrounding rural areas to avoid direct conflict with the leading
manufacturers and thus accumulate funds, awareness and experience necessary for
growth. Another shanzhai contractor installs in Guangzhou refers to knowledge of
consumer preferences as vital information to the success of the model to adjust the
design to compensate initially low quality products through continuous adjustment of
their characteristics. Similarly, the adaptation of existing products provides cost
containment components that are standardized and therefore purchased
subcontracting. Shanzhai company limited to the design and production of new
features. A corollary to reduce management costs to a minimum thanks to savings in
staff costs and structure.
In a major study on the telecom industry in Beijing, Breznitz and Murphree (2011)
speaks of an "uncertainty structured" to describe the unpredictability and ambiguity
face that shanzhai entrepreneurs adopt strategies to avoid risks of rapid
obsolescence of novelty and originality of their creations. The imitation or adaptation
of models that are already successful then are shortest paths and more efficient to
profitability often short-lived.
6. Conclusion
Shanzhai innovation model has been developed massively since the early 2000s with
the opening of China to international trade and WTO accession (2001). But it was
included in a comprehensive understanding of the innovation in China often called
counterfeiting or copying.
But from 2005, the market shares of shanzhai companies grew exponentially for
certain industries (mobile phones, computers, business services) become the main
competitors of Western leaders in the market. Due to their proximity to consumers in
emerging markets and their ability to adapt technological and cultural, these
companies have demonstrated their strength and ability today to build a diagram of
collective innovation. Shanzhai companies offer, despite low resources, a model of
innovation by integrating the existing industrial system which corresponds
significantly to Chinese culture essentially oriented efficiency concerns (Jullien,
1996).
Shanzhai companies base their competitiveness on a restructuring of existing
activities by giving them a new value in marginal activities but often developing their
own business model. To do this, they build vertical alliances to leverage skills diffuse
but, concentrated, can create a model of adaptive innovation. In addition, their
proximity to customers in emerging markets and market tests they practice allow
them to build their competitiveness gradually and fairly quiet before infiltrating the
mainstream market.
This model innovation must focus attention research on forms of creation not only of
existing industries well-established nationally or internationally, but also on related
and marginal industries that build their competitiveness through their reactivity
associated with the power of emerging markets.
However, as pointed out by Weick (1969) and Argyris& Schon (1978) from the
concepts of enactment and double-loop learning, cultural behaviors of these
companies can change their way of thinking about innovation and disrupting Chinese
culture adaptation we tried dewaxed here. Indeed, innovative, one can learn to learn
(Hussler et al., 2009), ie to examine and change our mental models. It is also to
studies on the hybridization of cultures of innovation that communication opens
perspectives to analyze the cultural changes that may have been the opening
generate business and technology of China during the last 10 years.
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