China eyes innovation to spur growth

Li Keren holding his plane model Mr Keren says he is very protective about the design of his plane

Related Stories

At 57 years old, Li Keren is at an age when most people start thinking about retirement.

But instead Mr Li has turned his hobby into a business and became an entrepreneur designing model aircraft.

You can sense his boyish enthusiasm as he runs through the final checks of a model plane on the outskirts of Beijing.

"I think the biggest difference that I have with others my age is that I still have a dream," he said. "I wake up every day feeling energetic and more driven."

Operating the control panel in his hands, he wriggles all of the plane's flaps and gives the propeller a quick whirl.

And then it is off - but not for long. The plane races about 40m down the road before sharply turning right and ends nose down in the soil of a field.

First rule of being an entrepreneur: learn from your mistakes. Mr Li chases after the plane, looking a bit perturbed.

The orange propeller is broken before the aircraft has even got airborne. But Mr Li quickly changes the propeller and soon the aircraft is looping around us in the sky above.

Start Quote

Li Keren

When it comes to copying, the Chinese are the best in the world”

End Quote Li Keren Entrepreneur

Mr Li employs eight people in his home city of Chongqing. He tells me he has sold dozens of the planes for about $300 (£183) each.

But what makes Mr Li proudest are his innovations in the plane's design. He has built remote-controlled doors on the bottom of the aircraft that mean you can drop firecrackers when it is in flight.

It is all a bit of fun, he insists. But Mr Li is serious about protecting his designs.

"When it comes to copying, the Chinese are the best in the world," he said.

"I fear that if I don't have a patent for my design that it would simply get stolen. For that reason, I don't even give people a drawing of my plan when asked."

Government support

While copyright abuses and intellectual property theft remain rampant here, China is desperate to bottle the can-do, creative spirit embodied by Mr Li.

The government is pouring billions of dollars into the creative industries to support a new breed of entrepreneur in the hope of creating higher-end products that will generate higher-paying jobs.

While the government still wants to see "made in China", it wants to see created, designed and innovated in China as well.

Mr Yang's animation studio Mr Yang's animation firm has benefitted from government measures aimed at spurring innovation

As part of this national blueprint, the authorities built a $690m animation facility in the port city of Tianjin - close to the capital, Beijing.

The vast, sprawling complex - it looks like a university campus - opened in 2011 and is home to hundreds of animation, film and computer game companies.

The companies pay below the market rates for their offices. They also have access to top of the range facilities such as 3-D studios.

One of the animation companies is run by Yang Zhengxiang. The 39-year-old produces cartoons and animated films in the style of traditional Chinese paintings.

He says that with government support he has managed to expand his business from 10 staff to almost 70.

"Without government support we'd still be eating, living, and working in a single apartment," he tells me.

"I wouldn't be able to pay insurance for my staff and I would have trouble holding onto them. Parents used to come to our studio and drag their kids away. That doesn't happen anymore."

Growing need

After years of blistering expansion China has seen its growth rate slow in recent years.

One of the reasons has been an economic slowdown in China's key export markets such as the US and eurozone, which has hurt demand for its goods.

That has prompted Chinese policymakers to take measures to sustain a healthy rate of growth going forward.

A worker at a factory in China China is looking to move beyond manufacturing low-cost goods

At the same time, China is also trying to move away from the label of being a manufacturer of just low-cost goods.

Policymakers are keen for Chinese businesses to make goods that would not just help boost demand for its exports, but also create higher paying jobs.

The hope is that higher wages would eventually see people spending more money and spur domestic consumption and future growth.

And Beijing is betting big on innovation - seen as one of the key factors towards achieving that aim.

But in a country geared towards conformity rather than creativity it will take more than just money to bolster this industry.

More on This Story

Related Stories

More Business stories


BBC Business Live


    Here's the line from the Treasury. It says: "We have seen stronger growth in receipts this month [that's true enough; income tax rose £200m, or 2.2%, to £10.7bn] but as today's figures show, the impact of the great recession is still being felt in our economy and the public finances. At the same time, we have to recognise that the UK is not immune to the problems being experienced in Europe and other parts of the world economy."

    Public borrowing graph

    In the month of September itself government borrowing stood at £11.8bn. That's an increase of £1.6bn compared with the same month a year ago. We await the usual email from the Treasury telling us that income tax will be back-loaded into the year. But the Chancellor at this point looks increasingly likely to miss his £95.5bn borrowing target (as the chart above shows) for the financial year. Don't forget on Monday the FT reported that Treasury Secretary Danny Alexander told his colleagues in the Cabinet there was no money for any tax giveaways in this year's Budget and the Office for Budget Responsibility last week warning about income tax receipts.


    Public sector net borrowing excluding public sector banks from April to September 2014 was £58bn, an increase of £5.4bn compared with the same period a year earlier, official figures show.

    09:23: ASOS SHARES
    ASOS share price graph

    ....have leapt this morning after the publication of its annual results. The online retailer, which had warned on its profits on three occasions this year and suffered from a fire in one of its warehouses over the summer is up 17% to 2,275p.

    09:14: TESCO PROFITS

    ...are not published until Thursday, so don't worry - you're not in a time warp. But the drip feed of information may have started already. HSBC analysts David McCarthy has put out a note today in which he says the supermarket behemoth will need to invest £3bn in its customer offer to achieve a turnaround. But he says most of that could be self-funded. Mr McCarthy adds: "Tesco has been going wrong for six years or more and it could take as long to put things right as it took to go wrong".

    the new eurostar e320 train

    Eurostar has reported a 3% growth in passengers to 2.7 million for the three months to 30 September compared with a year earlier as well as 2% growth in revenue to £211m. Just last week the government announced its intention to sell its 40% stake in the firm it jointly owns with the French. Under the plan the government hopes to raise about £20bn from corporate and financial asset sales by 2020. Eurostar celebrates its 20th birthday on November 14th. It will unveil its new fleet (see above) to mark the occasion.

    08:46: MARKET UPDATE

    Markets are down again today. The FTSE 100 in London fell 0.35%, the Dax in Frankfurt declined 0.31% and the French CAC dropped 0.11%.

    • ARM Holdings led the gainers up 2.5%
    • Reckitt Benckiser led the losers down 2.4%
    • Whitbread fell 2.2%
    08:36: BAE BUYER

    BAE Systems continues its movement into cyber security, stumping up £144m for Perimeter Internetworking Corp, which trades as SilverSky, a cloud security firm. The purchase will add to earnings in three years, says the firm

    08:24: TOTAL SHARES

    Shares in French oil firm Total are understandably lower this morning following the death overnight of the company's widely respected chief executive Christophe de Margerie in a plane crash in Moscow. Total has opened down nearly 3% to €42.94.

    08:12: WHITBREAD
    General view of cup from a Costa Coffee shop,

    Revenue for the owner of Costa Coffee and Premier Inn was up 13% to £1.29bn for the six months ended 28 August. Whitbread chief executive Andy Harrison said: "The trading momentum of our strong first half performance has continued into the first few weeks of the second half and positions Whitbread well to deliver full year results in line with expectations."

    08:00: GKN RESULTS

    GKN, which makes parts of planes and cars, said sales fell of the third quarter - that's July to September - but profit rose. A stronger pound than last year caused much of the lost revenue. For the rest of the year, the motor and aerospace market will grow, while agriculture "looks set to continue its recent decline," it says.

    07:50: ARM CHIPS BBC Radio 4

    Simon Segars the boss of chipmaker ARM is on the Today programme. He says lots of companies license his firm's tech so he's not worried about competition from the likes of Intel, which is now targeting ARM's market. "Competition is a good thing," he says. He adds: "History has shown the technology solution that we produce is the one that goes into most devices. Virtually every smartphone in the world uses an ARM processor". So, safe to say he's not worried in the slightest then.

    ASOS webpage screengrab

    Online retailer ASOS has reported as 14% slump in profits to £46.9m. Last year ASOS reported profits of £54.7m. There are no surprises here, though. The firm has previously warned "disruption" from investment in warehousing and the launch of its new business in China would hurt profits and that remains the case. Boss Nick Robertson says the firm is "in a period of major investment that comes at a short term cost, but the medium-term benefits will be significant."

    07:20: ARM CHIPS

    ARM, which could well make the chips in your mobile phone, says it made $320m (£195.5m) of sales in the third quarter, up 12% compared with last year. It will probably sell $350m in the final three months of the year, it said.

    Reckitt Benckiser products

    Reckitt Benckiser says it now expects full year revenue growth at the lower end of its total revenue growth target of 4-5%. The firm "delivered a robust performance in tougher markets in the third quarter" it said.

    07:00: CHINA GROWTH BBC Radio 4

    China's economy grew by 7.3% in the three months to September, compared with expectations of 7.2%. But it's still the lowest growth in six years. The BBC's Chief Business Correspondent Linda Yueh tells the Today programme Chinese monetary policymakers want to slow the Chinese economic growth gradually and allow the rest of the world to get used to it. China is becoming a "middle income economy" she says and will revert to a normal path for a developed economy over time of around 3% to 4%.

    Via Twitter Linda Yueh Chief business correspondent

    tweets: My interview with CEO of Oscar de la Renta fashion house, Alex Bolen, from Talking Business

    06:41: ENGINEERING SKILLS Radio 5 live

    We don't have enough engineers in the UK or scientists for that matter argues Ann Watson of Semta, an engineering skills charity, on 5 live. She says: "We need a million scientists, engineers and technicians by 2020, We are starting to see a shortage in education; people training those recruits." The perception of engineering as a "dirty, oily industry" doesn't help, she says.

    06:30: STOCK MARKET Radio 5 live

    Jane Foley, senior currency strategist at Rabobank is on 5 live talking about the falling stock market. "If we see stocks fall more we may see companies bargain hunting," she says. So more firms may start purchasing each other.

    06:21: HEATHROW TRAVEL Radio 5 live

    Travel writer Simon Calder is on 5 live talking about the weather. He says he sees about 50 weather-related cancellations at Heathrow, so perhaps about 5% of flights so far. Flights to Frankfurt look hard to come by, he says.


    Heathrow airport has said this morning that around 10% of flights will be cancelled today as the remnants of Hurricane Gonzalo hit the UK. Flights with the 20 biggest carriers would be affected, it says. British Airways has already cancelled some ahead of the expected severe weather. The remains of the hurricane are predicted to bring heavy rain and gusts of up to 75mph in some areas, causing disruption to rush-hour travel. If you're travelling today it's worth checking before you arrive at the airport.

    06:02: TOTAL CEO DEATH Radio 5 live

    Christophe de Margerie, the chief executive of French oil company Total, has died in an air crash in Moscow. Sarah Rainsford, the BBC's correspondent in Moscow says poor weather with low visibility is a possible cause of the crash. His plane crashed when it collided with a snow-clearing machine killing him and three crew, she tells 5 live.

    06:01: Howard Mustoe Business reporter

    Good morning! Get in touch via email or on twitter @BBCBusiness.

    06:00: Matthew West Business reporter

    Morning folks, we have the latest public borrowing figures out at 9:30 today. But before that we have full year results from online retailer ASOS, and interim figures from Whitbread, plus the weather is promising to play havoc with the transport network today with 10% of flights out of Heathrow already cancelled this morning. We'll bring you everything as it happens.



From BBC Capital


  • Smart glassesClick Watch

    Smart spectacles go into battle – the prototypes looking to take on Google Glass

BBC © 2014 The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.