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April 14, 2016

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Switzerland and China have many lessons in innovation to share with one another

ALTHOUGH Switzerland and China are confronting very different economic challenges, both countries have set innovation as a priority.

In Switzerland, we have no choice but to be innovative. A lack of natural resources, high production costs and the small size of our internal market force us to be innovative if we want to remain competitive abroad, create jobs and ultimately assure the welfare of our society.

Switzerland is regularly ranked as one of the most innovative countries in the world. We are often asked to share the recipe for our success.

One of the major players is the private sector. Two out of three Swiss francs spent on research and innovation originate from private sources. Private sector involvement in the innovation process and the willingness of entrepreneurs to take risks are key factors in this success.

The excellence of our system is supported by two funding agencies: The Swiss National Science Foundation, whose main role is to fund basic research and promote talent; and The Commission for Technology and Innovation, whose mission is to support start-ups, especially in their very early stages, and to give co-funding for research and development activities.

Talking about research and development, we should not forget that the Swiss education system as a whole is key to the achievement of our innovation economy. With its strong vocational and professional education system, great emphasis is placed on practical skills. It allows a large proportion of young people to gain genuine hands-on experience.

Indeed, practical skills are highly valued in Switzerland, allowing businesses to recruit qualified people. I know that this system is also of interest to China and we have recently established a dialogue to explore possible ways of collaborating in this field.

Switzerland also has world-class research institutions that share a strong commitment not only to delivering high-quality education, but also to encouraging entrepreneurship and adapting to the needs of industry.

It is through the commitment and the autonomy of all these stakeholders, who know how to cooperate and who work hard to succeed, that innovation is possible. Thanks to their active involvement, we were able last year to establish the Swiss Innovation Park. The idea is to offer prime sites across the country, close to research centers, to create ideal conditions for companies wishing to conduct research and development. Its mission is to bring together great minds.

Now if I take a look at China, I see a country that is often still associated with low-cost production and copycat manufacturing. However, my frequent visits have shown me that China is extremely innovative. With its strong entrepreneurial spirit, its capacities are developing fast.

New generation

I hear that the mind-set of young Chinese is changing: there is now a whole generation who, instead of keeping their heads down and staying safe, are choosing instead to speak their ideas and make a difference. This spirit, combined with the experience that Chinese companies have accumulated, means that innovators are working to build the technology giants of tomorrow.

The business environment is challenging, though. Customers are demanding and competition is fierce: Chinese companies must be fast and agile.

Chinese consumers have also become extremely technology oriented. Given the very high rate of smart phone penetration in China, digital life is now everywhere. Services such as mobile payments and e-commerce are very advanced.

That’s what the Chinese call “Internet thinking” and it is certainly a source of inspiration: representatives from SwissPost were here recently to learn about this dynamic environment.

Digitalization, industry 4.0 and the Internet of Things are some of the major transformative forces that our economies will have to address. They offer opportunities, but also challenges that we should not underestimate.

I believe the best thing governments can offer with respect to these challenges is good framework conditions — this means having an open society, a liberal job market, low taxes, protection of intellectual property and, of course, continuing to invest in education and research.

Switzerland and China have different experiences in innovation: I am convinced that we should share them. If we want to stay innovative, we can’t simply rely on models that work. We should also be flexible and ready to learn from each other.

 

The author is President of the Swiss Confederation. The article is adapted from his keynote speech at China Europe International Business School on 9 April 2016.




 

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