For years people have moaned and groaned about the outsourcing of U.S. manufacturing capability to other countries, namely countries where the cost of labor is substantially cheaper. Whether or not outsourcing is a good thing is really a moot point because it’s now a fact of life. I’m afraid that it won’t be too long before we say the same thing about innovation. The fact is that an amazing number of corporate research laboratories are being opened in China. Brand names like Microsoft, IBM, Hitachi, Sony, Eli Lilly, and ExxonMobil Chemical–to name just a few–are now dotting the landscape of China and investing heavily in its reseach capability. In fact, ExxonMobil is spending a whopping $70 million to build a research center in the Zizhu Science Industrial Park in Shanghai. It should be operational in 2010.
So why is China becoming so attractive for innovation? Because they put a high value on science and technology. In a recent McKinsey & Co. quarterly report, Eric Drexler asserted that China "has been outstanding in its capacity for learning from experience, radically transforming government policy, and unleashing a hyperentrepreneurial business culture." When you consider that eight of the nine members of the Politburo (China’s ruling body) are engineers (science and engineering backgrounds are rare in the U.S. Congress), it’s not surprising that they clearly understand that technology innovation drives the global economy. China is now spending almost five times what the U.S. does in R&D and is turning out PhDs in science and engineering at an astounding rate.
The U.S. dominated innovation in the 20th Century, but whether we like it or not, China is definitely on track to become the global innovation leader in the 21st Century. Can we prevent that from happening? Should we? The questions are definitely ripe for debate. I believe we need to do a better job of preparing our students with solid skills in math and science, and we need to support science and engineering research. Technology innovation and entrepreneurship have always been the keys to America’s economic greatness. Do we really want to outsource that greatness to China?