Government-encouraged Innovation

This article was originally published with The Manila Times on June 27, 2019.

A few weeks ago I was invited to participate in the 2019 Mass Entrepreneurship and Innovation Week in Hangzhou. It is one of China’s largest expos where hundreds of companies showcase technological advancements that shape the way for the future. I saw first-hand the latest innovations on smart cities, automation and artificial intelligence, self-driving electric cars, next-generation surgical equipment, among many others.

I looked forward to the trip with great anticipation, as Hangzhou is famous for its picturesque scenery, lush green mountains, and the renowned West Lake. For me, Hangzhou always reminded me of those classic Chinese paintings of mountains and lakes.

There is another, more technological side to Hangzhou. While it is home to Jack Ma’s Alibaba, it is also where as many as 600 new tech start-ups have set up shop to develop their ideas and turn them into reality. This modern side of the city is called the Internet Dream Town in the Cangqian town area.

The Dream Town is simply massive, comprising numerous buildings, convention centers, and shopping areas. Housed in those buildings are many of China’s new innovators, where they are able to incubate and develop their ideas into an actual product ready for the consumer. One company I met with is quite small, probably less than 20 employees, but are developing newer, more efficient consumer drones.

What impressed me with Dream Town was also the mix between the modern and the traditional aspects of the area. On one side, the start-up offices are hidden behind wooden window panes in two-storey old-fashioned buildings, with a lotus and koi pond just a few steps away.

A building or two away you can find food establishments like KFC and Starbucks, also cleverly disguised into the buildings you would normally find in a classic Jet Li film. Yet, these food establishments have embraced modernity as well. In a fast-food joint, for instance, there is neither a queue nor a till. All you find are touch-screen menus where one orders and pays through e-wallet systems. Take a seat, and your number is called and your food is ready.

The entire area is an example of how by encouraging innovation, a suburban area can grow and thrive into an economic ecosystem. Imagine an entire area where like-minded people live, eat, sleep, and work. There is an area for soul searching and inspiration-seeking, and a support system to combat burn-out and fatigue.

This is a place where everything is connected, and shops are popping up to cater to the growing demand in the area. A place where cashless transactions are more common than those with the actual handover of physical currency, and sales are concluded in mere seconds.

I wondered how this all began, and it turns out it is a government-led initiative, implementing the national plan to support accelerated growth in automation, AI, innovation, and advanced manufacturing. The Dream Town, as large as it is, is only one of many similar areas across China geared to help those with the ideas to become the next Alibaba, Tencent, or Baidu.

This reflects how the national government has made it a priority to invest in, and support innovation. In last year’s Global Innovation Index (GII), a study which ranks countries’ suitability and support for technological innovation, China ranked 17th globally and fourth highest in Asia. The Philippines ranked 73rd.

To inspire and cultivate innovation is not just a matter of investing in a project. For instance, the strength of China in the GII shows the strength of the human capital, the regulatory environment, the existing ICT infrastructure, the energy costs, the ease of setting up a business, and the ease of getting a loan when needed, none of which were identified as strengths in the case study of the Philippines.

Now I do not mean to say that we should be exactly like China. After all, we do not have the economic and human capital resources for such a big endeavor. We can, however, learn from their successes. We start-ups (yes, myself included) can benefit from even some governmental support. For instance, a better preferential tax rate, or an easier means to find credit without the usual difficulties in providing physical security, or a means of linking us with the right angel investor or venture capitalist, those types of support would be truly helpful and meaningful.

Although I love the idea of an innovation city, and with the right benefits and infrastructure, I definitely see myself moving to another area in the Philippines to better develop and launch my start-up.

The author is Founder and CEO of Caucus, Inc., a multi-industry, multi-disciplinary management consultancy firm. He graduated MBA (De La Salle University), Juris Doctor (Far Eastern University), and Masters of Law in International Commercial Law (Honours, University of Nottingham, United Kingdom). He also studied Mandarin Chinese Language and Culture in Fuzhou, China, was a Chevening-HSBC UK Government Scholar, a Confucius Institute Scholar, an alumnus of the US State Department’s International Visitor Leadership Program, and a Fellow of the Asia Global Institute – University of Hong Kong. The author may be emailed at iap@caucusinc.com.