Why China won’t be innovative for at least 20 more years

Xu Xiaoping, one of China’s most prominent angel investors, doesn’t think China will be able to produce its own equivalent of Steve Jobs or Bill Gates in this generation.

On Saturday, I went to a Yale Club of Beijing talk by Xu Xiaoping at Peking University. He’s an investor in tech startups as well as in film and philanthropy. At the end of 2011, his angel fund Zhenfund announced its partnership with Sequoia Capital China to create a $30 million joint-venture seed fund. Xu is probably most famous for being the former co-founder and Vice Chairman of New Oriental Group, a NYSE-listed education company that helps prepare Chinese citizens to study overseas, mainly in America.

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The Yale Club discussion was focused on the lack of innovation in China. Xu said that while things are changing, it will take more time for creativity to become mainstream. Here are some of his reasons why China could take years to start truly innovating:

We like to joke about Asian parents being strict and paranoid about their children’s education. Of course, not every Asian parent is like this, but there is some truth to the stereotype.

In China, a number of factors feed into parents’ paranoia. The main one is fierce competition. With so many people fighting to get into the best schools and presumably best jobs, the only way-in besides guanxi (relationships), is through stellar grades. Xu explained that China’s most important high school and university entrance exam, called the Gao Kao, is a killer of passion and creativity — a rather bold statement.

He explained his reasoning with the story of two people. The first was a Chinese boy in Canada who had a great passion for programming and was encouraged by his parents to explore his skills. This boy went on to do amazing things and created a valuable technology company. The second boy was in China. He also had a deep passion for programming and even invented something that Apple could have used. But his parents told him to stop working on it and instead focus on studying for the Gao Kao. Years of draining preparation sucked his passion away for programming and he eventually just became an employee of a large company. Xu believes that this traditional Chinese mindset of fighting to be accepted, rather than encouraging people’s natural curiosity and passions, deters China from reaching its true potential.

Xu is convinced that China’s education system lacks behind more Western countries such as America. That is why his former company, New Oriental, sends people from China overseas to study, broaden their perspectives, and discover themselves. However, as China’s economy booms, this trend is starting to slow.

At the end of the talk, I asked Xu Xiaoping, “How long will it take until China has to keep sending students overseas to become really creative and innovative?” He replied, “At least 20 years.”

Xu feels many Chinese tech companies and their products and services lack “soul.” For example, Steve Jobs was more artist than engineer. He believed his products needed a personality and evoke emotions in people. Xu said this way of thinking and intuition is largely missing from China and is a fundamental reason why China will not have a Steve Jobs in this generation.

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