Understanding the China effect on global innovation will be essential for companies that wish to compete in China, take advantage of China’s innovation capacity, and adopt Chinese approaches to innovation to improve their own performance. The overall effect is that more innovation will originate in China—from both Chinese and global companies—and more companies would adopt the Chinese style of innovation. What has helped many Chinese firms make remarkable strides—not just in the realm of innovation—is their swiftness in reformulating themselves, eschewing hierarchical structures, and adopting a customer-centric approach. Alibaba’s value-driven rather than control driven management and Xiaomi’s iterated development and quick upgrading of products are based on the logic of experimentation and quick learning cycles.
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