China is that friend you have who’s always hitting the gym.
They have immense power and brawn. But the nation of 1.3 billion people lacks brain power.
That’s the common thought anyway.
It why they can’t innovate, can’t invent. And it’s why in 2014 many believe China stole trade secrets from the US.
The targets included Westinghouse Electrical Co. and SolarWorld AG [FRA:SWVK]. Both are extremely dominant in the fields of nuclear power and solar energy, respectively.
If you can’t innovate, why not copy…right?
This probably doesn’t come as much of a surprise, either. Last week, Donald Trump was clear about the unfair practices between China and the US.
The general gist is that China hasn’t had an original idea for years. They simply look at US technology and take what they want.
Speaking to the press last week, Trump said:
‘We have a tremendous intellectual property theft situation going on, which likewise is hundreds of billions of dollars.
‘And that’s on a yearly basis.’
US officials believe China’s foreign ownership restrictions back up Trump’s accusations. The Chinese government restricts foreign ownership in many industries. Thus, it’s easier for technology companies to transfer their know-how to local firms.
Yet in doing so, it becomes easy for China to view and copy trade secrets. This was also probably a fair assumption years ago.
But is China really still all brawn and no brains in 2018?
China pulls out of Israel
Like businesses, countries have to find an advantage. Australia has land rich in natural resources. Japan is great with electronics. Israel, while small, is an innovation nation.
For a long time, Israel has been pumping out patents. From robotic to medical devices and computers to biotechnical inventions. Israel does it all. But because of their size, they’ve yet to be able to mass produce these inventions.
This is where China comes in. Israel’s longest running newspaper, Haaretz, writes:
‘This is the way it’s supposed to work: Israel (a tiny country with a world-renowned high-tech sector that isn’t especially competitive in manufacturing) teams up with China (a huge country that’s the world’s factory floor but is a technology laggard).
‘Together we will become a global force, with Israel providing the innovation and China bringing the productive capacity.’
From 2013–15, China was investing huge amounts in Israeli start-ups. Since, they’ve been far more concerned with their own technology. Now, China is a relatively small player in Israel’s start-up scene.
‘There are certainly a lot of signs that China is becoming a global tech power using its own brain power. Its biggest tech companies, like Alibaba, Tencent, Baidu, ZTE and Huawei, are near the size of their American and Korean peers.
‘Didi Chuxing administered a humiliating defeat to America’s supposedly unconquerable Uber in the Chinese ride-sharing market.
‘A cluster of cities in the Guangdong province are emerging as a “Silicon Delta” of innovative start-ups, venture capital funds and accelerators.’
China isn’t just thinking for themselves anymore. They’ve become one of the most important contributors to our global technology advance.
And they’re helping to create must-watch industries, which hold huge promise for the future.
Opportunities you can’t miss
Financial technology, alternative energy and robotics are some of the most promising industries of the future. And, of course, China has their finger in multiple pies.
To increase their technology status, China is buying more of the robotic and chip building tools, to Japan’s glee. They’ve seen a noticeable spike in sales for the machines to make silicon chips and for metal-working.
China already is one of the great patent producers in the world. Now that the government has doubled their quota, you’d expect China to increase their tech focus.
Financial Times columnist, Duncan Clark, writes:
‘Massive investments in mobile broadband and a highly competitive handset market means that nearly all of China’s approximately 750m internet users use smartphones.
‘Payments via QR codes, led by Tencent’s WeChat and Alibaba’s Alipay, are making cash obsolete. Dockless bikes line the streets of Chinese cities.
‘The country’s physical infrastructure — roads, high-speed trains and airports — are facilitating as big a boost to consumption as President Eisenhower’s roll out of the Interstate Highway System in the US in the 1950s.
‘I have lived in Beijing for more than 20 years, yet only in the past year have I felt on returning to London or Silicon Valley that I’m going backwards in time.’
But China isn’t just helping to develop these technologies in the lab. The nations newly rich are also helping to push demand for these industries.
As you would imagine, this is again great news for tech nations like Japan and South Korea. In a 16 year period, Japanese and South Korean exports to China have jumped 295% and 681%.
Before long, we could see China as the overwhelming producer and consumer of all things tech. Make sure you’re watching this space!
Editor, Money Morning