As our time in China draws to a close (bar an overnight stay at the airport hotel on the way home) my mind turns towards the future.
One of the biggest things that has caught my attention here in China is its race with technology. It wants to become the next centre of technical innovation – but there seems to be a concerning flip side.
China appears to be reluctant to adopt industry standards if those standards are based around a royalty based licensed specification.
Linux is the official operating system of choice of the government and government agencies here in China. The main reason for this, of course, is that it means China avoids paying licences to Microsoft.
However recent news suggests that China has it’s eye on the ongoing next-generation DVD format war. Rather than electing to favour either Blu-Ray or HD-DVD, China is looking to produce it’s own Gen II DVD standard in order to avoid paying royalties to the rights owners of whichever format ‘wins’. It will be based on HD-DVD, but not compatible with HD-DVD.
China is also looking to create it’s own 3G mobile phone technology, TD-SCDMA, for exactly the same reason. Nokia has even stepped in to help create it, clearly wanting to be a part of any major mobile-phone standards creation.
With over a billion people, China is big enough that it can leverage this kind of positioning in the world market. But what’s concerning of course is that this breaks global ubiquity. You want that disk purchased in China to work in the UK, and you don’t want to have to buy a different phone to get 3G access just in China.
But perhaps crucially China has the opportunity to take this all one step further. Rather than just decide to adopt it’s own standards domestically, it also has the position to persuade (passively or perhaps aggressively) for the rest of the world to adopt it’s standards. How? Why? Well, China is the worlds factory and if it’s making the phones and DVD players you own then clearly it has the opportunity to have a ‘good say’ in the technologies that are used within them.
Sure, companies such as Nokia can try to get their products made elsewhere, but inevitably most of the worlds electronic goods will still be made in China. Their massive manufacturing capacity is unrivalled which in turn leads to better economies of scale.
China is also moving into product R&D, with many companies using China as a base for innovation. China is even buying previously Western-run brands, such as Lenovo’s purchase of the ThinkPad brand and intellectual property from IBM.
BBC News has written a fantastic article about this, which I highly recommend.