General Secretary Xi Jinping stressed that “if China is to become strong and rejuvenated, it must vigorously develop science and technology, and strive to become a major scientific center and innovation highland in the world.” It is clearly stated in the “14th Five-Year” plan and the outline of the vision for 2035 that: we should take self-reliance and self-improvement in science and technology as the strategic support for national development. What are the characteristics of the new round of scientific and technological revolution and industrial transformation in the context of profound changes unseen in a century? As the main force of scientific and technological innovation, how can the research universities, scientific research institutions, enterprises and other diversified entities achieve the “cross-boundary integration”, form a joint force, and create a new path of innovative development featuring strong technology, strong enterprises, strong industries, strong economy and strong country?

To become a major scientific center and innovation highland in the world, we need to have a say in core technologies.

Q1

Wen Wei Po: “We have ushered in a new round of scientific and technological revolution and industrial transformation in the world and the historic convergence period of China’s transformation on development mode.” This is an important judgment made by General Secretary Xi Jinping in his article Striving to Become the World’s Major Scientific Center and Innovation Highland. How do you understand the “historical convergence period” from the perspective of science and technology history?

 LEI Xinghui:

Based on the summary of research and practice on industrial transformation and technological development worldwide, by using technology as the main variable, I have analyzed the evolution of international politics, economy, society, and technological environment, as well as the resulting industrial changes and changes in national competitiveness. I call it the “long-wave model”, which has several important characteristics:

The first characteristic is a cycle of about 50 years, and each wave band in the “long-wave” has its core technology and the rapid development of the industry brought by it. A country with core technologies is a technology-centered country, which is also bound to be the real economic center of the world. For example, from 1900 to 1950, it was the wave band with the steam engine and internal combustion engine technology as the core technologies, the industries such as steel, railways and automobiles, etc. developed rapidly, while the world economic center correspondingly was in Europe and gradually developed to the United States. After 1950, with the invention of the first electronic computer in the world, the core technologies were transformed into semiconductor technology, as well as integrated circuits, large-scale integrated circuits and chips, and the United States became the central country of this wave band. Since 2000, and indeed since the 1990s, the whole world has been trying to figure out what the core technologies of this wave band are. In my opinion, the core technology in this wave band is not single, but several basic technologies go hand in hand: the first is electronic and communication technology, including IC, mobile Internet, 5G, Internet of Things, etc.; the second is life technologies, including genes and stem cells, etc.; and the third is new material and its technologies represented by nanotechnology, in addition to new energy, environmental protection, marine, aerospace and other integrated technologies. And these are precisely the direction of the industry that our country has focused on developing in recent years (namely, the strategic emerging industries).

The second characteristic is that: an upwave represents a round of economic growth brought by core technologies, but a downwave does not represent economic decline, I call it the “technology transfer phase” (that is, the core technologies of the wave band at this stage will be gradually transferred from the developed countries to the less-developed countries, while the developed countries will chase and enter the core technologies of the next wave band and the industries it has driven as soon as possible after “cashing out”).

The third characteristic is that: the change or transfer of core technologies is bound to bring about the change of the technology-centered countries, thus affecting the change of economic center. Therefore, before the turning point of each wave band, some revolutionary events must occur in the fields of science and technology to establish the core technologies of the next wave band. At the same time, all kinds of disputes and crises will occur in the world.

The fourth characteristic is that: the most important contributing factors of each wave band are different. In the first half of the 20th century, material resources were the most important, including mineral resources and land, etc. In the second half of the 20th century, financial resources were the most important, because almost all assets or rights attached to them in the world could be traded after being capitalized. Now we are in a wave band where human resources have become the most important resource. The change of contribution brought by the change of core resources seems simple, but it is actually a very complicated problem, which will bring about the change of game power and the requirements for a series of policy and institutional changes, such as the valuation of assets, the pricing of knowledge and patented technology and so on.

The fifth characteristic is that: China missed the core technologies due to various reasons in the two wave bands of the 20th century. That is why we always encounter difficulties when confronted with the problem of “being hit in the throat”, although China’s economic aggregate has been ranked the second-largest in the world. In the context of a new round of world scientific and technological industrial revolution, the competition for the right to speak in core technologies, including 5G, is unprecedented, how can we break through the core technologies of this wave band? How to break through the problem of “being hit in the throat” has become the key. We have established the grand goal of building a prosperous, democratic, civilized, harmonious and beautiful modern socialist country at the end of the wave band by 2050. Therefore, we must have a say in the fields of core technologies in this wave band and truly become the major scientific center and innovation highland of the world. For this round of scientific and technological revolution, we must seize the opportunity!

Chinese Characteristics of Organizational Paradigm of Scientific and Technological Innovation: From “Industry-University-Research” to “Government-Industry-University-Research-and-Application”

Q2

Wen Wei Po: In the early days of industrialization, it usually took nearly 100 years from scientific discovery to technological innovation. But the related studies have shown that technology patents in western countries now lag new scientific ideas by an average of only seven years. What challenges does this pose to the enterprises committed to “results transformation”?

 LEI Xinghui:

I think this problem can be analyzed from two aspects. On the one hand, the speed of technology upgrading and product iteration now is getting faster and faster. Originally, technologies and products we have developed can meet the needs of a generation, or even several generations. Therefore, the reason why the capital is willing to invest in this technology or product and enterprises are willing to operate it is that: such investment can be recovered through income and sufficient returns can be obtained. With the speed of upgrading, the time window for investment is short, making investment decisions difficult. For example, we all know that there is Moore’s law in chip technology, which means that: the number of transistors on an integrated circuit doubles every 18 months, and so does its performance. It also means that: the computer performance a dollar can buy doubles every 18 months. However, the chip-manufacturing enterprises are capital-intensive, and it usually takes about two and a half years to invest and construct them, therefore, this investment decision needs to be coordinated and supported by the government from a strategic perspective.

On the other hand, for more than one hundred years, the time elapsed from the discovery of scientific principles to the technology development and engineering applications has been getting shorter and shorter, and it forms a “steep funnel,” which I call as “half-life shortening”. As we all know, enterprises usually have an important organization called the R&D Department. In the past, as the period from scientific discovery to its application was relatively long, the discovery of scientific principles was carried out by universities and scientific research institutes, which was motivated by pure interest, not primarily by application. The enterprises would not take the initiative to do research. However, since the 1990s, as the half-life period from science to technology has been rapidly shortened, the situation has changed greatly, and the competitiveness of the enterprise will be reduced if the enterprise does not do the research. Therefore, we can see that the world’s top 500 enterprises have increased their R&D investment, some of which have reached more than 15%, including Huawei, which has set up its R&D and Innovation Laboratory. And some enterprises have been shuffled out of the market in the past 20 years because they did not pay attention to their R&D investment.

Q3

Wen Wei Po: The “cross-boundary” between basic research and applied research has increasingly become a powerful engine driving the contemporary new scientific and technological revolution. Under such a background, what profound changes have taken place in the organizational paradigm of scientific and technological innovation?

 LEI Xinghui:

From the “cross-boundary integration” to promoting technological change, the development of new industries requires systematic design and demonstration effect to guide relevant Parties to make investments. For example, the emergence of Silicon Valley in the United States is not an accident. When a large number of innovative enterprises emerge and gather together, their R&D capital investment is very large in the initial stage of entrepreneurship, and of course the risks are also very huge, but the traditional financial structures cannot provide the capital to support them. At this time, the emergence of a large number of VCs pursuing risks and returns is undoubtedly the key factor. They will focus on different development stages of entrepreneurial enterprises respectively, which not only makes Silicon Valley brilliant, but also puts the United States ahead in this round of competition for core technological development.

The situation in China is quite different. The development of industrialization in China is not very long. Although China’s economic aggregate has grown substantially and the world’s most complete industrial system has been formed since the reform and opening-up, the enterprises generally lack sufficient accumulation and R&D investment. In the early stage of the reform and opening-up, it is mainly the introduction, digestion and absorption of technology from the developed countries, which requires the formation of an “industry-university-research” cooperation mechanism with universities. In the context of a new round of scientific and technological revolution, China launched the National High Technology Research and Development Program (863 Program) as early as 1986 and the National Key Basic Research and Development Program (973 Program) in 1997, aiming to solve the major scientific problems in national strategic needs, and the frontier scientific issues that played an important role in human understanding of the world. At this stage, great changes had taken place in technological development and innovation form. The government had played an increasingly important role in the construction of the innovation platform, and the user demand also had become an important driving force for innovation. At this time, the organizational paradigm of scientific and technological innovation was also shifted to the “government-industry-university-research-application”.

We shall do everything possible to set up venture capital funds and pay attention to the young group for scientific and technological innovation and entrepreneurship.

Q4

Wen Wei Po: Just as Silicon Valley relies on Stanford University, the knowledge economy circle around Tongji University in Shanghai is also a case in point. What role do you think colleges and universities can play in serving the economic and social development of cities?

 LEI Xinghui:

It is not only Silicon Valley, but in fact, the role of universities played in driving the economic and social development of the city or region is obvious. Especially in China, like Tongji University, as early as at the beginning of this Century, this University proposed that its scientific and technological research achievements should cross the campus wall and enter the science and technology park to realize economic value through innovation and entrepreneurship, thus driving the local economic development and creating an atmosphere of mass entrepreneurship and innovation, so as to gather more innovative enterprises and become the innovation highland of the region. Meanwhile, the universities are also the places where new socialist ideas and advanced culture come into being, and they should go beyond the ivory tower and the campus to integrate into the community, so as to drive local social development and urban renewal.

It is under such a philosophy that: the continuous spillover of relevant advantageous disciplines and science & education resources in Tongji University, together with the “integration and linkage development of three zones such as campus, industrial park and community” in Yangpu District where it is located, has jointly bred the industrial development mode around Tongji University with “market-driven, discipline-supported, dominated by enterprises and guided by the government”. Meanwhile, the school-run industrial system of Tongji University will also undergo in-depth reform and innovation, on the one hand, it will further strengthen the combination of science and education and the integration of industry and education, which will become an important part of Tongji University’s undertaking construction through the establishment of joint laboratory, joint R&D center and other innovation bases and talent training bases with Tongji University’s dominant disciplines; on the other hand, we should establish a whole-chain system for transforming scientific and technological achievements, and foster a service system and a capital ecology for innovation and entrepreneurship.

Q5

Wen Wei Po: The key to the integration of innovation chain and industry chain is to establish the leading position of enterprises in innovation. How do you think Chinese enterprises can fulfill the mission of self-reliance and self-improvement in high-level science and technology?

 LEI Xinghui:

In my opinion, the following aspects are crucial: At first, a comprehensive competitive analysis of the entire industry chain system should be conducted from the perspective of the whole industry, in order to identify the direction of key technology breakthroughs and the possible “being hit in the throat”. Secondly, in any case, we should further increase investment in research and development. Whether it is to establish their R&D and innovation centers, or to establish joint R&D centers with universities, it is the key for enterprises to maintain sustainable competitiveness. To truly focus on the core technology of this wave band, we should use the core technology to develop relevant new industries and even more transform our traditional industries. Thirdly, in order to improve the efficiency and effectiveness of innovation, large enterprises must do everything possible to raise funds to set up venture capital funds, and pay attention to the young group for scientific and technological innovation and entrepreneurship. For example, IBM has set up its venture capital fund, which focuses on investing in new technologies and start-ups related to IBM’s industry chain, including a portion that specifically invests in people who have left IBM to start their businesses. They thought, anyone who left IBM to start a business must have found a weakness in IBM, or a business IBM had not bothered to develop. Given the uncertainty of future technology development, it is better to make start-ups become partners than competitors. Such a concept is worth learning for our enterprises.

Enterprises are the main body of innovation and the key subjects to solve the “being hit in the throat” technology, especially since entering the wave band of this century, the importance of enterprises to scientific & technological innovation and industrial revolution has become increasingly prominent. In recent decades, China’s science, technology and industry are enjoying the best period of development, and all fields are committed to the breakthroughs in core technologies of this wave band; at the same time, we have further intensified the reform and opening-up and actively advocated and promoted the cooperation with other countries in the fields of science, technology and industry. Under such a background, with the high level of self-reliance and self-improvement of enterprises, China will surely find a new path of innovative development featuring strong technology, strong enterprises, strong industries, strong economy and strong country.

Q6

Wen Wei Po: “Without Nasdaq, there might not be Silicon Valley.” You have researched finance and strategy for a long time. In your opinion, how can we deepen the integration of science, technology and finance to achieve more “enterprises of our time”?

 LEI Xinghui:

The breakthroughs in core technologies and the resulting growth of the industry cannot be achieved without financial support. To better promote scientific and technological innovation and learn from the experience of Silicon Valley, China issued a call for “mass entrepreneurship and innovation” at the beginning of this century to actively encourage innovation and entrepreneurship in the field of core technology. This requires the strong support of China’s capital market, which not only requires a large number of VC funds to invest in this field, but also must establish an effective exit system and channel. Therefore, I fully understand the fundamental reason why China started the research on GEM as early as the late 1990s, and insisted on launching GEM in 2009 when the world had just gone through a crisis and the global GEM market was generally depressed. I believe that it will be successful. Later, we have further established the “Science and Technology Innovation Board” focusing on “hard technologies” such as integrated circuits, biological medicine and high-end equipment and the like. Now, with the arrival of the Beijing Stock Exchange, which focuses on “specialized and innovative” small enterprises, a multi-level capital market has been established that can fully support scientific & technological innovation and entrepreneurship, and further facilitate the shift of the organizational paradigm of scientific and technological innovation to “government-industry-university-research-application-finance”, thus adding wings for the “Golden Phoenix” to fly.