As Russia has been “pivoting to the East” over the past few years, a study released earlier this month aims to describe the two countries’ innovation ecosystems, and analyze the new links being established between them.
The report, named “China and Russia: Innovation and Entrepreneurship,” is a joint project by the Skolkovo Foundation on the Russian side, and the Tsinghua University and TusPark on the Chinese side.
The report contains four main parts:
- Part I provides a framework to analyze the role of science, technology and innovation in the context of economic development.
- Part II and Part III analyze the Chinese and Russian innovation systems, respectively, their “innovation archetypes” and the related state policies. (The analysis of the Chinese system makes large use of reports published by McKinsey Global Institute and the OECD.)
- Part IV outlines the current state of economic cooperation between Russia and China, and reveals the results of a survey conducted among Russian tech startups about cooperation with China.
“When it comes to the relationship between China and Russia, researchers usually focus on the political sphere and large corporations, while innovations and cooperations involving small and medium-sized enterprises have received significantly less coverage thus far,” notes the Skolkovo Foundation, whose report aims to “close this gap.”
The report will be useful to tech players of all sizes — in Russia and beyond — who work with Chinese partners or plan to do so, as well as to policy makers and development agencies, market analysts and researchers.
AMONG STUDY FINDINGS:
About the Chinese innovation system:
Over the past few decades, China’s national innovation system has demonstrated an outstanding performance. One of the key factors of its innovative development was a targeted government policy aimed at opening up the economy and attracting investment and technologies, as well as the development of infrastructure and innovation competencies. Chinese companies have gained a strong position in the world’s markets, where the key competitive factor is efficiency-driven innovation. Strong economic growth has contributed to the formation of a vast domestic market and fostered the development of customer-focused innovative firms.
Nevertheless, the old model of economic development — labeled by the ‘Made in China’ brand — can no longer maintain sustainable economic growth, as the competitive advantages of low-wage labor and a high return on capital are gradually being exhausted. The future of the Chinese economy is inevitably linked to the development of scientific and technological capacities and the related innovation system. An important role should be played by innovators, including and high-tech small and medium-sized enterprises.
About the Russian innovation system:
Russia has started developing a new model of economic growth, which is more dependent on innovation and the development of high-tech industries. In spite of its achievements, the traditional development model, focused on exporting natural resources, is not conducive to obtaining leading positions in the emerging high-tech world. Not only does this transformation of Russia require to raise productivity as public and private investment tend to decrease; it also requires to gain access to international financial resources, technologies and markets. Russia tends to seek them more and more in Asian countries.
Russia is actively investing in science-based innovation and still competitive in several leading areas; however, in terms of outputs, these investments have not yet fully translated into innovation leadership and commercial successes. Russia’s relative isolation from global knowledge exchanges, which significantly hampers its innovation-led development, may be overcome by new international connections and talent repatriation.
About the relations between the two countries in the field of innovation:
Cooperation in innovative projects between Russia and China — including such fields as civil aviation and high-speed railways — may leverage the complementary competencies of both countries and develop significant synergies. A significant potential for cooperation exists, not only for large companies but also for high-tech small and medium-sized enterprises.
The successful experience of China’s public policies to support innovation may also be a source of inspiration for Russian policy makers. Russia’s development agencies (such as Rusnano, RVC and Skolkovo) can play a significant role in bridging the public and private sectors.
In order to facilitate technology transfers from Russia to China and increase the share of high-tech exports, Russia should build an efficient state support system complemented by financial and non-financial instruments focused on high-tech export oriented companies and startups. China does offer excellent market opportunities, but this is a demanding and competitive market with its own rules, cultural and language practices.
Survey findings:
The survey was conducted among 603 Russian small and mid-sized businesses from various technological fields, essentially residents of the Skolkovo tech hub. More than 60% of the respondents are based in Moscow and the Moscow region; the remaining ones come from all over Russia, including regions neighboring China.
Only 8% of the respondents have an existing experience of cooperating with China. The vast majority of these companies (80% of 8%) consider their experience as being positive.
More than one third of the respondents (35%) expressed interest in entering the Chinese market, or have already worked there. Almost 50% of those who expressed interest in the Chinese market either have already entered it or are planning to do so in the short term.
- The report can be downloaded here.
