The Power of Innovation
A History of Creativity
Firstly, creation in China is not something new. For much of the 3,000 year period up to the mid-19th century China was the most technologically advanced nation on Earth. China’s natural creative energy has produced thousands of world-changing inventions, which have been shared with the world to fuel development and prosperity. Take promissory notes, from 100BCE, Han Dynasty, China, which enabled the growth of European banking after Marco Polo brought the concept to 13th century Italy. This was an enabling technology applied with huge global success by Europe. A few other notable examples include:
· The compass (c. 200 BCE), originally for building orientation; adopted by European & Arab traders in the 8th Century and enabled global navigation.
· Paper-making invented by Cai Lun c.100CE spread throughout the Muslim world in the 8th century and later to Europe enabling communication and sharing.
· Paper money & private banks (1000CE). Gold-reserve backed banknotes in 1265 enabled sophisticated financial systems and colonial era global commerce.
· Moveable type printing (Inventor Bi Sheng, circa 500 years before Gutenberg) enabled the first great information revolution.
· Iron furnaces, the chain drive, clocks, wheel barrows, and rain umbrellas (parasols were Egyptian) and rockets with explosive payloads are just a few more from a very long list.
Secondly, intellectual property is something new. Originally “literae patentes” were monopolies; an award of exclusive business rights which suppressed competition. They evolved into protection of inventions and underwent modernization in the 19th century. Legal protection of intellectual property rights enables big returns to modern inventors that were never available to the earlier inventors in China. These earlier inventions were essentially shared over hundreds of years for free with European and other civilizations before IPR became established. This great dissemination of innovations and ideas is not only a Chinese gift to civilization; countless inventions and improvements from other parts of the world have been shared in a spirit of cooperation and competition that has driven human development for thousands of years.
The transformation of IPR came with the industrial revolution. English inventors suffered from copying and reverse engineering from their transatlantic cousins: Sam Salter copied Hargreaves groundbreaking “Spinning Jenny” and F. C. Lowell the weaving machine, two transformative English inventions that started industrial-scale weaving.
The British Parliament was so concerned with copying that it was moved to ban the export of this cutting-edge technology. With state subsidies, anti-competitive practices and tariff protectionism from the US Treasury Secretary Alexander Hamilton, these copied inventions fuelled cloth production in the US and transformed the US economy in the 19th century from agrarian, rural, and poor.
Globalization and Collaboration
The sharing of ideas and innovations continues at a fast pace today driven by globalization, digital communication and trade expansion, which have created complex global value chains interconnecting people and economies from all over the world. Whilst there exists a digital divide and not everyone is connected, more and more people are connecting to global economic networks using innovative technology. Huawei is committed to building a connected and intelligent world where technology is open to all in a spirit of collaboration, just as earlier Chinese inventors contributed to the spreading of innovations that supported human development.
Huawei is particularly strong in ICT innovation due to a number of factors, none of which are secret and all of which open for all to understand.
Firstly, it is useful to understand the business context. Huawei began 30 years ago when the Internet was in its infancy. US & European telecoms giants were selling globally, as the demand for services and infrastructure boomed. In China, foreign switchboard equipment dominated in all major cities. It was very challenging for a small start-up called Huawei to access that market. Huawei grew initially as a local authorized reseller of US invented Mitel PBX equipment in rural and medium-sized towns.
The Road to 5G Leadership
Our first big breakthrough was in 1993 with the first digital telecoms switch, C&C08. It became a best seller. In 1991 Finland made the world’s first GSM mobile phone call and 6 years later Huawei made its own. The same year Huawei started R&D for 3G and produced its own 3G chipset in 2001. When licences were delayed for the deployment of 3G in China, Huawei turned to international markets. In 2004 Huawei created the “distributed base-station” for Telfort (now KPN in the Netherlands), prompting more telecoms operators in Europe to turn Huawei for partnerships, including British Telecom and Telefonica around the same time. Huawei became a global leader in 5G through strong investment, continuous innovation, and simplified solutions. Investment in R&D has been 10% to 15% of our revenue for many years, totaling US$15.1 billion in 2018.
Huawei’s annual reports (IFRS compliant and audited by KPMG) show that in the past eight years, government grants accounted for about 2% of Huawei’s R&D spending, equivalent to around 0.3% of Huawei’s total revenue. Continuous innovation produced 2,500 patents filed in Europe in 2018. Simplified solutions deliver the lowest energy consumption, and the lightest equipment with minimum assembly, meaning the total cost of ownership is optimized for operators and users.
Each Huawei business unit researches what their customers need today and tomorrow. 2012 Laboratories work on tech R&D for next-generation products, and the generation after that. Huawei aims for technology leadership across specific fields of science and engineering, through partnerships, interdisciplinary research, and by connecting academia and industry.
At Huawei we have over 90,000 R&D staff, but we know that is not enough to find all the answers, which is why we develop extensive partnerships with Universities from around the world and particularly in Europe, which is home to a strong and vibrant University innovation ecosystem. The Huawei Innovation Research Program (HIRP) is an open innovation competition that has been running for 16 years in Europe. Using an online portal, Universities can propose ideas for research which will benefit Huawei’s telco customers.
Additionally, Huawei has thousands of partners around the world where close collaboration is essential to Huawei’s engineering solutions.
Given that creation in China is nothing new, China is resuming its position as a leading place for science and innovation and a global contributor to the distribution of inventions, embracing the current system of strong IP protection, globalization, and digital transformation. Huawei takes a long-term perspective and is dedicated to creating a fully connected and intelligent world underpinned by a spirit of collaboration to bring technology to all.
This blog first was published on Huawei’s global blog site: https://blog.huawei.com/2020/03/04/the-power-of-innovation-created-in-china/
Craig is a lawyer and experienced advocate for the ICT sector to governments, institutions and stakeholders around the world on law, business & policy for Huawei.