Shedding Light on China

Lux Research launches China Innovation Intelligence service
By Erin Voegele | July 25, 2011

China’s rapidly growing economy has a unique characteristic: its growth is occur­ring across all sectors. The country’s business environment can be overwhelmingly hard to navigate, however, particularly for foreign entities. “There is a level of confusion around the way China works and the level of innovation that exists in [the country],” says Chris Hartshom, vice president of research at Lux Research. “The need that we are serving is to uncover innovative ideas and potential partners in China that will allow companies to enter [the space] more effectively and also find technologies they can deploy in other parts of the world.”

“No other nation in the world shares China’s unique mix of strong R&D, vast manufacturing resources, supportive government policies and domestic market demand,” says Lux Research CEO Dennis Philbin. “Consequently, foreign tech developers simply cannot afford to ignore its potential for commerce and open innovation, yet they will need reliable, up-to-date intelligence in order to proceed decisively and intelligently. That’s precisely what we designed the China Innovation service to provide.”

According to Hartshom, when his group first began looking into the Chinese marketplace, they weren’t exactly sure what they would uncover. “What we found is a tremendous amount of very interesting research and very interesting technology that is under development in China today, and that will be relevant on a global basis.”

While there is a perception that intellectual property (IP) in China is not valued and that the region is like the “wild wild west” when it comes to IP protection, Hartshom notes that a current legal battle taking place in the country seems to indicate otherwise. There are actually two biofuels companies currently engaged in a legal battle regarding IP protection, which demonstrates it might be time for some of those perceptions to change.

When looking to become engaged in the Chinese biofuels sector, Hartshom says it is important to note there have been some challenges in the past. While the country did establish a B5 mandate, that mandate didn’t translate into retail sales of biofuel. “Even though they had the infrastructure, the delivery mechanism and all the rest, the block they reached was key players,’’ he continues. The key oil and gas players were just not engaging,” and unless big market players in the country engage with the policy and have “horse in the race” they tend to ignore some of the guidance that is passed down by government. “There is a bit of a problem there in that you have to get the large players onboard for any of these emerging technologies to actually take off and start reaching the market, even if there are quality policies that are actually put in place,” Harshom says.

On the scouting side, Harshom says Lux Research and its products can help its clients to effectively engage in China, build market channels, forge strong partnerships and mitigate risk. The company also actively scouts technology developments coming out of China’s research institutions and universities. For many companies entering the biobased industry in China, it will also be important to identify partners that have existing government relationships to leverage.

No matter how U.S. entities choose to engage with the biobased industry in China, it is incredibly important they do so, says Harshom. “For any company not engaged in China and is not actively looking for technology opportunities and technology-based partnerships in China—if you are not looking right now, you are falling behind,” he stresses. 

—Erin Voegele