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Standards in a Post China World

posted by Ajit Jaokar on Thursday, June 24th, 2010 at 9:05 am

Newsweek this week featured an interesting article titled: “the Post China World”.

On first impressions, it seems odd to be speaking of a “Post China World” – but upon reading, the article makes some interesting points.

The synopsis of the argument is that China is growing through an internal investment equal to 45 percent of the economy. But that is not sustainable. Normally, consumer spending is an economic driver after internal investment. But consumer spending is already at 9 percent and not likely to grow further. With rising wages, the drivers for growth are increasingly limited. As such, double digit growth may slow to a more modest 6 or 7 percent.

So, we could ask: Where would the growth come from and would it be export led or internally focused?

In either case, ICT will play an important part. By extension, so will standards.

Under this situation, how will Chinese companies interact with the Global market?

Firstly, as the Newsweek article demonstrates, China has its own need for engaging with Standards bodies i.e. it is not only a case of the western companies benefitting from access to the Chinese markets but also the need for Chinese companies to grow beyond their current growth, driven by lower cost labour, towards a labour market driven by a more advanced skill-set.

If we accept this rationale, then what would the focus areas be within technology?

I think it will be the new areas, since western companies are well entrenched in existing areas. For instance, China’s premier Wen Jiabao sees IOT as the next vehicle for China’s growth, penning the following interesting equation: “Internet + Internet of Things = Wisdom of the Earth”.

So, to address the question – How will Chinese companies interface with global ICT standards? – the answer seems to be with an increased emphasis on new domains but also with some pragmatism since the need is not just one sided (i.e., access to Chinese markets) but rather to use technology to drive export drive high tech growth which needs a pragmatic engagement on the standards process with other global companies.

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Ajit Jaokar says:

Thanks Peter. there is a parallel with Japan here .. hardware standards and excellence can be implemented but software and services are harder to do. ex Sony walkman is dominant product of that age but not the PCs and the services that came from the same era and still dominate. The PC is a generative device(ability to be open enough for others to add value through services). The walkman is essentially hardware. So, I see the same challenge ahead. ie hardware will be easier to ‘dominate’ but not services without managing standards.
Peter Gray says:

Ajit, I have not read the Newsweek article, but it is interesting to consider China’s rapid growth in this context. I suspect that future growth will come from a solid combination of both international and domestic factors. China is in a unique situation where policy’s such as indigenous innovation can to some degree succeed in areas such as ICT. The huge domestic market gives developed standards both a strong base for domestic firms to build upon and makes the standard attractive to foreign firms and investors.

Standards in a Post China World

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Ajit Jaokar

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