Economic Watch: Chinese firms speed up tech innovation amid trade tensions

Source: Xinhua| 2019-06-25 16:52:30|Editor: Li Xia
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GUANGZHOU, June 25 (Xinhua) -- While the United States has resorted to trade restrictions to get ahead in the global tech race, China has offered a more sustainable alternative: investing in its own competitiveness.

In Shenzhen, the country's tech hub that is home to Huawei and various tech giants including Tencent and DJI, companies are actively coping with the U.S. trade policies by accelerating research and development (R&D).

"It's of no use if you just complain about the tariffs. You have to address the challenges upfront," said Zhang Zhimin, chairman of fiber optic communication firm T&S Communications Co., Ltd., in an interview with Xinhua.

The company provides fiber-connecting products that are indispensable to data centers, which are also critical to the daily operation of global Internet giants such as Google and Facebook.

While most of the company's products are exported to the United States, Zhang said the tariffs would have a limited impact on revenues as long as it maintains its edge in product quality and cost-efficiency.

"You have to continue to develop new products and enhance the quality to the point where the clients would hate to switch to other suppliers," said Zhang.

With more than 140-percent year-on-year hike in R&D costs in the first quarter, the company saw its profit surge more than 60 percent during the period, according to its filing with the Shenzhen Stock Exchange.

"Of course the trade war brings us pressure. But it's also an opportunity for us to focus on our core business and raise our global competitiveness," Zhang said.

For many export-driven businesses, what brings the most pressure are not the tariffs themselves but the uncertainty that comes with them.

"As long as the policy is certain, we will find a way to cope," said Lao Jiewei, secretary of the board of directors of Guangzhou Haoyang Electronic Co., Ltd. (Golden Sea), a professional lighting provider.

With some 70 percent of its products being exported to overseas markets including the United States, the company plans to counter the uncertainties with what's certain: investment in new technologies.

According to Lao, one out of 10 employees in the company engages in research and creative design, while R&D investment, now accounting for some 6 percent of sales, will continue to grow.

Another certainty for the companies is growth in the domestic market.

Compared to the United States, the market for data centers in China is far from saturated, creating huge demand for companies in the optical communication industry, Zhang said.

The commercial use of 5G technology adds to such demand, as it not only dramatically boosts download speeds for smartphones but also enables industries such as the Internet of Things to realize their full potential, he said.

In such an ever-growing market, companies have to innovate to keep up.

"China can make a lot of things. But there are still a lot of things that it can not make at the moment. This is the time for us to work them out," Zhang said.