The 'knowledge factory'

China is the world's manufacturing factory. However, the game is changing in China and most countries may not really know what to do when the full impact of this mass production converting to mass innovation takes place.

A recent global survey held by PISA clearly proved that the top four performing regions on education criteria all belonged to China. The PISA survey is carried out every three years by the Paris-based Organisation for Economic Cooperation and Development (OECD). The survey was carried out in 37 member states and 42 partner countries and economies. Teenagers from four big Chinese regions outshone their contemporaries in Western nations in a survey of education capabilities published recently which also showed no improvement trend in developed countries over the past two decades.

The survey carried some great insights. Bigger European nations languished well behind in the rankings, with Britain in 14th place, Germany 20th and France 23rd. The United States was placed 13th in reading. The assumption that the more developed the country the better the education level is not totally correct. Also, socio economic classes within a country are no firm indicator of education quality and performance. OECD secretary-general Angel Gurria said students from the four Chinese provinces had "outperformed by a large margin their peers from all of the other 78 participating education systems" Moreover, the 10 percent most socio-economically disadvantaged students in these four areas "also showed better reading skills than those of the average student in OECD countries, as well as skills similar to the 10 percent most advantaged students in some of these countries."

The premise that the developed nations spend higher per capita income on education and thus get more quality education is under test. The other hypothesis that the teaching methodology of allowing students to do critical thinking that later helps in innovation and development needs more study. Singapore has also fared very well in this study. The assumption used to be that since the South and Far Eastern cultures are more consent oriented and discourage dissent, critical thinking will be missing in their education and training. This led to the inference that these cultures will produce more of the same with discipline at low cost but little in the form of new products. No longer so.

Steadily, China is repositioning itself From a low cost, low quality piracy haven to a high end innovation pioneer in diverse industries. They were the cheap phone copiers. Anything that iPhone or Samsung produced was made in China at one tenth price for the lower end of the world income pyramid. That is history. Chinese mobile phone brands have quietly entered the global market in the last few years. They are challenging established competitors like Apple and Samsung and furthering the nation's reputation as one that values quality and innovation. Three Chinese smartphone brands are now the second, fourth and fifth largest smartphone suppliers in the world, respectively.

How has this upgradation happened? Due to a very planned and process controlled approach. China knows that the only sustainable competitive advantage is to be the knowledge-driven innovation leaders. That is how the US and other countries in the world leadership category have done. The government decided that they need to envision a China that is no longer an assembly line of left over innovation in the West. Consequently, "Made in China 2025" government initiative was formed. This imitative aimed at transforming the nation into a lean, innovative and green world manufacturing power by 2025. Among other requirements, the plan calls for more sourcing of key, high-tech components from domestic suppliers. While many Chinese firms will need to adjust their strategies to appropriately meet demand, the plan till date has already boosted investments in technological innovation.

Innovation needs not just vision but action. Putting money where it is needed was the next step. The central government has established the National Integrated Circuit Fund in an effort to develop a competitive, domestic semiconductor supply chain. China raised 139 billion RMB (22 billion USD) for the "Big Fund" in its first funding round in 2014. Thus China's advanced manufacturing is not limited to phones. Dubbed "the drone dominator" by Time Magazine, Dajiang Innovation, or DJI for short, controlled 72 percent of the global drone market in 2018. Their drones sell for as much as $4,999, can fly for up to 31 minutes and can capture high-resolution video.

To lead in the minds of the citizens of the world the culture has to pervade. Bollywood has sold the western culture and products more than any company. Product placements like Pepsi and Coke in worldwide blockbuster hits is a key positioning tool. The Chinese have started building their cinema industry firstly locally and then internationally. In 2012, 47.6% of China's box office was local films, but last year this rose to 62%. This soft power makes Chinese take pride in their own products and sends a message to the world. One of China's smartphones brand became a model example of a Chinese brand using locally targeted marketing campaigns and technological innovations to their advantage and has now assumed a positioning in the west as a "cool hip" brand.

The latest PISA survey is telling. It is telling the Chinese story. Tom Loveless, an educational researcher from California, said the Chinese provinces that were tested saw a substantial increase in their scores. He said China is the only country where the national government chooses the provinces that are tested. This survey shows two consistencies. How China is continuously making progress in educating its children, and, it shows how the US is continuously hanging in the middle category of education achievers. While on Chinese products US imposes tariffs to stop them from out doing American products, how is the US planning to put barriers on the brains of an increasingly smarter future generation. With this alacrity in China and mediocrity in the US very soon China may convert its image from the being the world's manufacturing factory to being the world's knowledge factory.

(The writer is can be reached at [email protected])