Innovation, services to drive future growth

Q3. You mentioned innovation just now. And you have noticed, innovation is the theme of this year's Summer Davos. In your opinion, how can China achieve its goal of innovation?

First of all, for innovation, to become innovative, you need to invest something for a period of time. You cannot start to do something today, and expect to be innovative the next day.

So if you look at the amount of investment China, or Chinese companies, has put into R&D versus their GDP, you'll find why we are less competitive, because the amount of investment into R&D in China is very, very, very small compared to that in the USA. So innovation comes from R&D, and R&D is the investment you need to be committed over a long period of time. So we need to start now, because we are already late.

Then, in the meantime, we need to learn to be more creative. "Creative" and "innovative" are similar but different things.

For example, Apple is innovative because they created the iPhone. Samsung is creative because they copied the idea of iPhone and made the screen bigger and added more features. But to me, iPhone was innovative, but Samsung was creative. Both are successful, but the driver for success is very different. The investment into R&D, the appetite for failure is higher at Apple than Samsung. Successful creativity is fast reaction -- putting the existing pieces together, and creating something different.

But innovation is something that you need to dream up. They require different business models, they have different payoffs between the two. So for China, I think what we need to do now immediately is, for the companies, start to think about R&D. How much of your revenue you want to set aside every year that you put into R&D.

The education. How do we change our education system that facilitates innovation? How do you train our people to think outside the box, to question the status quo.

The third is the social and business environment. We must be willing to accept failure. The problem for China and Asia as a whole, generally, we don't deal with failure very well. Failure is a stigma. So how do we brace failure, how do we accept failure as not to be a bad thing, but as something on the path of innovation? If someone who goes into a business failed - they became bankrupt - would the bank give him a second chance?

So what do you think the government should do to promote innovation?

Again, education is one. Education produces talents.

Policy is the other. Policies that allow people to try and fail, and be able to try again.

And campaigns that encourage people to think outside the box, to challenge the status quo.