China unbalanced And Accelerated innovation: the new challenge from china Harvard Case Solution & Analysis

INTRODUCTION

From the past 30 years, the continuous growth allowed China to rise as an economic power. Due to the emergence of Chinese manufacturing industry, many people moved from rural areas to the urban areas. Moreover, the continuous economic growth has taken China from a poor country to the second largest economy in the world. In 2001, China became a member of the world health organization. However, in 1978 under the leadership of Mao Zedong, the country faced the challenge of low economic growth. The ten years of Cultural Revolution increase many issues such as inefficiency in the agriculture sector, highly corrupted public companies. As a result, there was poor revenue generation.

When the president Deng Xiaoping acceded to power, the miserable conditions of the country started to change. He made the reforms to enhance the domestics as well as a foreign condition of the country. He identified the issues regarding the low economic growth, such as rapid population growth, improper use of surplus earning and doomed industrial activities. Therefore, he established a policy to reduce the population growth by imposing one child policy in China. However, under the leadership of Deng, the export-led strategy failed due to tight protectionism policies by foreign state partners such as Europe and the United States. The prime minister Wen Jiabao separated the foreign and domestic currency in 1994. The purpose of the Jiabao was to transform the pattern of economic development.

Moreover, the Chinese companies introduced the new front in a global competition based on reengineering research and development and innovation processes. The objective of the process is to transform the new product development dramatically faster, with low-cost strategy. The new challenge for the Chinese market is to accelerate innovation, and to stay in the competition from domestic and foreign markets. Furthermore, it represents a diverse ways of deploying Chinese cost and volume benefits.

The leading companies in China such as Lenovo and Guangzhou River, Pearl piano group are the new pioneers in the industrial revolution. These companies are leveraging by improving cycle and combining vertical integration with the horizontal flexibility, to enhance the innovation process. Nowadays, the companies rather than focusing on technological breakthroughs, they are finding new ways to utilize innovation process, and to reduce lead times and speed up problem-solving. China should ratify a measure to increase domestic consumption, remove barriers and increase imports, to gain sustainable growth and rebalance global trade.

PROBLEM STATEMENT

According to the case, Wen Jiabao is concerned about the economic growth strategies of China. He is also concerned about the pressure from the partner states, especially from the United States and on China’s policies, currency exchange rates, global trade, energy, and investment. Moreover, the strategic reforms reduced the unemployment rate in the country and increased the GDP growth rate by 9.5% annually. Furthermore, the labor market has been flourished by 8.5% annually. Despite economic growth, the country is still struggling to maintain its speedy growth by changing development strategies.

China has obtained various strategies to sustain its rapid growth by using export-oriented industrialization process, to increase its surplus and to reduce the international pressure and lead time. However, the prime minister should develop a strategy to sustain its economic growth by focusing on domestic reforms rather than foreign exchange rate and policies. Moreover, he should shift their focus towards economic development driven by innovation to increase its growth and gain a competitive advantage.

Furthermore, the Chinese companies should develop a strategy to overcome the challenges and accelerate innovation. The companies can accelerate innovation by using low-cost strategy, rapid scale up and provide good quality to its customers. Today’s consumers are better informed than ever. Therefore, the Chinese approach is to bring affordable new product design to market segment the product on time.

Moreover, the new challenges increase fierce competition in the country among the domestic and foreign companies. There are three strategies that the global companies should develop in order to respond effectively to the new trend of accelerated innovation. First strategy is reengineering the company’s innovation process. Second strategy is that R&D should focus on time-sensitive projects and hire local staff with necessary knowledge and skills. Third strategy is to develop alliances with Chinese players and to scale-up new technologies and ideas.

MAIN ISSUES

Economic Development Strategy

Chinese economy performed tremendously to enhance the economic as well as financial conditions of the country. However, after 1978, the country faced unsustainable economic growth rate due to bullish economic and political reforms. Moreover, various measures were taken by the government to reduce the monetary and fiscal flaws of the Chinese market, but still China needs to develop strategies to enhance productivity in the country such as reengineering R&D, and accelerate innovation. Moreover, it should restructure the reforms to support the agriculture and industrial sector...............

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