The effects of China’s innovation policies have been hampered by their own low usability and, more importantly, the lack of initiative among many entrepreneurs for championing innovation, according to analysis by Ma Mingjie, a researcher at the Development Research Center of the State Council, published in National Governance Weekly.
Ma’s analysis was based on a national survey led by the National Bureau of Statistics in 2015, which collected feedback from 650,000 enterprises to assess the country’s innovation policies.
High barriers to entry, inadequate publicity, and complicated procedures are among the major factors that are impeding the policies’ implementation.
The policies may help lower the costs for innovation-led enterprises, but they fail to encourage those who don’t see the benefits and therefore do not want to innovate at all, according to Ma.
Most Chinese enterprises are reluctant to innovate: Ma quoted the survey results to show that only 40 percent of enterprises surveyed have attempted to innovate.
While generally considered as the major source of a country’s innovation capability, Ma said, small enterprises in fact proved to be particularly inactive in terms of innovation. The smaller a company is, Ma added, the entrepreneur is found to be less aware of the importance of hiring innovative personnel.
The limited impact on profit is found to be the major reason that discourages enterprises from innovating, Ma said. The survey shows that the average profit margin among the 378,000 enterprises (with an annual revenue of 20 million yuan, or US$2.9 million, and above) was 6.22 percent between 2013 and 2014, while the margin was only 6.28 percent for those that had made an effort to innovate.
Speeding up the reform of the market economy system is the key to steering enterprises toward innovation, Ma suggested. Fair market competition and protection of intellectual property rights can ensure a higher return among innovation-led enterprises, Ma said.
Meanwhile, restrictions on the scale of the beneficiaries, such as the amount of profit and scale of innovation investment, need to be lifted, in order for more small enterprises to get on board.
Given the essential role of small enterprises in fueling the country’s economic growth, Ma suggested, innovation policies need to be supplemented with additional government support that targets small and start-up enterprises.
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