Waterstone Management Group Says Chinese Tech Firms will Pose the Biggest Competitive Threat to American Innovation

By: PRLog
Newly released paper shows that Chinese tech companies are no longer competing just on price, they are becoming stronger innovators with an increased focus on R&D and product development
CHICAGO - Oct. 8, 2015 - PRLog -- The current volatility in the Chinese market will be overshadowed by the fact that Chinese tech companies are bringing serious competition to U.S. competitors, according to a newly published “Point of View” paper, "The Real China Threat: Innovation," released by Waterstone Management Group. The paper illustrates that those Chinese firms have evolved quickly, moving from basic manufacturing for export to real innovation and original R&D that will bring lasting changes to the global playing field.

China's stock volatility and devaluation caused concerns about derailing the fragile global economic recovery, but the real risk is not in the immaturity of the Chinese stock market – it is in the maturity of the Chinese tech industry and its emergence as a major competitive player in the world of technology innovation. "American tech firms have seriously underestimated the innovation that Chinese companies are capable of bringing to the table," said Tom Manning, Waterstone Management Group Affiliate Partner. "In doing so, Western tech firms have unintentionally contributed to the balance of power shifting away from Silicon Valley being the undisputed king of the hill. To remain competitive, U.S. based tech firms will have to acknowledge Chinese companies not just as suppliers of cheap goods based on American design – but as innovators in their own right."

According to the paper, "The Real China Threat: Innovation," Chinese technology firms are increasingly investing large amounts of money not only in building capacity, but in research and development. In addition, the Chinese government has placed high priority and significant money on seeding incubation labs, repurposing entire districts to focus on specific industries, and restructuring state-owned enterprises. "The efforts are paying off," said Manning. "Chinese companies are developing more new products, with annual patent applications in China now surpassing the applications for both the U.S. and Japan. And while many of those patents are incremental improvements on existing inventions, the number of completely new inventions coming out of China is increasing every year."

Waterstone's white paper outlines decisive actions that U.S. companies should take in the face of this growing Chinese innovation capability. "To respond to this competitive threat, American companies need to step up their game, and re-evaluate their strategies to better understand the Chinese competitive dynamic," added Manning. In addition, new strategies for the West should include shifting towards joint ventures, as opposed to wholly owned Asian subsidiaries, to allow for tighter partnerships with Chinese partners, and enhance access to important market and competitive knowledge to which local partners will have access. Other steps include taking a closer look at how to better establish an intellectual property footprint in China, bringing Chinese managers to headquarters to re-ignite growth, and engaging the Board on the seriousness of the challenge.

The white paper is available for download on Waterstone Management Group's website here.

About Waterstone Management Group

Waterstone Management Group is a boutique management consulting firm that helps technology companies and investors create measurable value by identifying and capitalizing on disruptive growth opportunities and by driving excellence in Services, Cloud, and Customer Success performance. Waterstone’s expertise-driven approach combines deep industry-specific intellectual property and a unique blend of strategic consulting and executive-level operating experience to deliver high velocity strategy and execution. For more information about Waterstone, please visit waterstonegroup.com and follow the firm on Twitter (@WaterstoneMG).

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Waterstone Management Group focuses on the information technology industry

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