China’s Growth Will Force an Innovation Competition with the West

One key point for R&D managers in Knowledge@Wharton article  Clayton Christensen: ‘China’s Growth Will Force an Innovation Competition with the West’:

But because China is growing so fast, they are now starting to feel the impact of their policy on population control. Wage rates are going up at a very fast rate… I don’t know who else can join them, but this will force China to not just knock off designs from the West. They’ll have to compete on innovation as well, because other countries can take the low end.”

I think this can be a very important driver of long-term R&D strategy.  We have discussed how  necessity is the mother of innovation. When companies compete in low cost markets, they have generate new innovations – which in turn improves their competitive position in the high value market (what is normally called frugal engineering or reverse innovation).  However, this article points out the next frontier – challenge from the BRIC countries in high cost  market.  Are we ready for that?