Smartphone users in China put the world at their fingertips, and a flood of start-ups have leaped forward in strides. From high-speed trains and mobile payments to social media and artificial intelligence, China has enjoyed a seemingly unprecedented technology boom, earning its bragging rights as a global technology powerhouse. However, vulnerabilities and threats lie behind the prosperity, making many industry insiders to realize that the boom has disillusioned them.
It was evident when ZTE, China’s iconic cell phone makers are facing a US ban crisis. A hefty penalty and a 7- year ban from the US prevents it from purchasing computer chips from the country upon which it has heavily relied. The sanctions have nearly crippled the tech giant, plunging its share values and wiping out a significant portion of its market capitalization. The infamously arrogant state enterprise has been forced to bow in apology to the Trump administration, begging it to suspend the ban and opening itself up to U.S. inspections of its sites.
While China has become an enormous manufacturing base for cellphones, it mostly depends on import for the critical components of the gadgets, producing a small fraction of computer chips. In 2012, China consumed $82 billion, or 32%, of the world’s chips, but only $8.8 billion was produced domestically, representing only 10.8% of the world’s production. In 2017, while the chip consumption has soared to 38%, its domestic production only increased to 13%.
The ZTE incident has created a moment of reckoning for China’s tech industry. Embracing mindsets that could only set it up for failure, in the recent decade, it amply rewards lucrative tech start-ups with quick returns but ignores long-term research efforts and hard work.
Under Beijing’s grand narrative of national rejuvenation, a wave of quick-results-driven innovation has swept through China’s tech industry. Its penchant for a shortcut to success has led to efforts to exploit foreign talent pool, research efforts, and expertise.
Short-sighted venture capitalists in China set their sights on Canada’s research institutes with strong technical skills but under weak IP protection, hoping to harvest its products through investments into Canadian R&D operation. According to the Globe, Huawei, China’s telecommunications champion has injected large capitals in Canadian universities to develop 5G mobile technology that can potentially lead to hundreds of patent filings.
But such efforts would only fuel its foreign dependence crisis and may backfire. It has irritated Canadian patent lawyers, who complain about China’s stealing of Canadian patent rights. It also has deeply troubled national security experts in both Canada and US who call for the Trudeau government to take immediate actions. Any crackdown or sanction from Canadian government would force Canada to join its Western allies to sever the partnership and shut Huawei’s products from their domestic markets altogether, crushing China’s dream of reshaping the future of global 5G telecommunication network.
Crisis lurks behind China’s tech boom. An impatient, seeking an instant success mentality is a prime barrier stopping the technology rise of China and preventing other industries in the country from growing.
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