60 People, 60 Stories

Industries of tomorrow

By Dr Bernhard Hartmann (China)
Updated: 2009-09-30 08:26

China has the opportunity to lead the world in the industries of tomorrow if it builds on its research and development capability.

New industries, such as those in alternative energy, biotechnology, nanotechnology and genetics, are wide open to those who are prepared to innovate.

With shorter and shorter technology cycles, the mature markets of the West no longer have a key advantage in these areas.

This is the major challenge for China's State-owned enterprises and private companies.

Until recently, China's strength in research and development has been in its academies and universities.

The main driving force of the economy has been its manufacturing sector - its production hub - supplying the rest of the world with low-cost products but not necessarily with cutting-edge technology.

There is a time limit on how long China can remain in some of these industries with countries like Vietnam emerging as attractive manufacturing centers.

And that is why its research and development effort is vital. The private economy has to replicate the success of China's excellent university research base.

The government is making funding available to companies to make this happen and aims to increase research and development expenditure to 2.5 percent of GDP by 2020.

China has already made great strides in the development of hydrogen cars - for which the country itself will be a huge market.

Not only will it be at the forefront of solar and wind power, but also be a major testing ground for new technologies as China aims to have 10 percent of its power generation from renewables.

If China manages to take full commercial advantage of its research and development, its future economic success will be substantially underpinned.

Dr Bernhard Hartmann is managing director of global management consultants A.T. Kearney in China.