Why Europe and the US are falling behind China

Every year I have the pleasure to take a group of senior European business leaders on a series of ‘Innovation Tours’ where they get to see first-hand some of the technological developments that will be changing the lives of customers in the coming years. We visit the likes of Facebook, Amazon and SpaceX in Silicon Valley, but often the most eye-opening experiences happen when we visit China.

Shenzen is a city in China that has established itself one of the world’s leading tech hubs in recent years. Some reports suggest the region is involved in the production of as much as 90% of electronic devices, which means it not only exports to Europe and the US, but also the rest of the world.

On one of my recent tours, I had the honour of sitting down with David Li, who is the founder of the Shenzen Innovation Lab. This is an organisation that was set up in 2015 to help transform Shenzen from being just another big industrial city into a truly collaborative ecosystem for tech companies, with remarkable success. It has allowed the city to not only handle mass production of electronic devices, but also become a ‘go-to’ destination for global entrepreneurs that want to develop hardware solutions on a much smaller scale.

It was fascinating to get some of David’s views on China’s position in global technology, why Europe and the US move much more slowly, and where the big opportunities in tech can be found.

Don’t waste time protecting IP

When you visit the Shenzen Electronics Market, it is difficult not to be amazed by the scale and variety of everything you find there. Many of devices you see there look very familiar, so what can Europe companies do to protect themselves from Chinese companies replicating their ideas?

Talking to David, it certainly sounds like tech companies are fighting a losing battle: “The reality is that when anyone in Europe or America releases a $1000 device, if it is popular, you will see the same device on sale in Shenzen for $100 within 3 months. And it will be $10 in 12 months.”

“IP is good if you are a big company who can afford $500-per-hour lawyers and can sue people. As a start-up, IP doesn’t do much.” David also believes that tech companies focus on the wrong things when it comes to IP, continuing: “IP does not protect ideas, it protects implementation. There are 10,000 different ways to implement any idea, so as a start-up you should focus on getting your idea to market as fast as possible, getting sales and building a brand, rather than wasting time on IP. That can come later.”

We are running out of real problems

I was interested hear David’s views on what European and US tech companies are doing wrong, given how slowly we move in comparison to Shenzen. David believes that entrepreneurs are now emerging from all areas of society, but it isn’t the ones who can afford to spend 6 months creating PowerPoint decks and having meetings to raise venture capital who will be successful: “If you look at Silicon Valley, they are running out of real problems. Even the Google Duplex is a most impressive application of AI, but really, the only problem they are solving is avoiding speaking to a real person for 30 seconds.”

“Entrepreneurs need to find real problems. If you missed China 20 years ago, Africa is the place to be – they still have real problems to solve, and it is on a large scale.” I mention how I have witnessed the emergence of “The Internet of Stupid Things” and David agrees: “Everyone seems to be making smart cookware at the moment, like a device that is the smartest way to cook an egg. What’s interesting is that when we work with Africa, you never see an ‘internet of stupid things’ idea – they solve real problems and they add real value. If you can solve one small problem in an African village, that same solution can be scaled horizontally across hundreds of thousands of villages.”

The more time I spend in China, the more convinced I am that they are pointing the way for the rest of the world’s technology companies. Of course there are companies in Europe in the US that are doing truly amazing things with tech, but when it comes to speed and the scale of their endeavours, we can learn a lot from their ambition.

This piece first appeared on Irish Tech News.