‘Innovation’ is the buzzword of the moment – not just in Australia, but globally. In his first speech as Prime Minister Malcolm Turnbull asserted, “the Australia of the future has to be a nation that is agile, that is innovative, that is creative.” Sometimes little can be said for policy rhetoric, but it is these words that the Australian entrepreneurial community not only wanted to hear, but needed to hear.
While Australia has always been strong in developing ‘new ideas’, we have a poor track record of commercialising them. Despite high rankings in quality research output, in 2013 Australia came in last out of OECD countries for businesses linking with research institutions on innovation. Despite no short supply of entrepreneurial spirit, Australia’s startup scene has been suffering. Australian investors have been unwilling to take stakes in home-grown innovations and ideas. Instead they are looking to invest in a larger, more promising, and low-risk markets overseas. So the question is how to capitalise on the potential of Australian innovation and give startups access to capital?
The Turnbull government has jumped on the innovation train in full force with its ambitious National Innovation and Science Agenda (NISA) in an attempt to bridge this gap. Worth more than one billion dollars over four years, the initiative aims to capitalise on Australia’s strong research capabilities and encourage an #ideasboom that will drive growth, employment and success in the global market. The initiative brings to fruition a long-awaited policy from the Australian government – one that recognises the importance and strength of Australian innovation and facilitates its global competitiveness. However only time will tell whether it has been worth more than its rhetoric.
The Chinese government is also unleashing innovation and Research and Development (R&D) initiatives on a mass scale in a bid to aid its slowing economy. With Chinese corporations now struggling to move any further up the global value chain, there is a push for entrepreneurs to take centre stage.
As part of the One Belt One Road initiative, China is dishing out massive funds toward R&D and international cooperation in infrastructure and advanced manufacturing, as well as focusing on cultivating an international startup ecosystem. As a newer market with dynamic and growing demand, the allure of China’s innovation scene overshadows that of its East Asian neighbour economies. Despite being ranked number one in innovation, South Korea is struggling to foster an international innovation community due to inflexible government restrictions. Japan’s startup scene is also struggling, in an industry that is characterised by growth from failure and a country where being a square peg in a round hole is an anomaly. Innovation and entrepreneurship in Taiwan is thriving, though somewhat limited by its smaller market size and increasingly tense cross-strait relations.
As part of NISA’s global strategy, millions of dollars are being dedicated to setting up five ‘Landing Pads’ overseas for Australian startups to take their ideas global. One of the Landing Pad locations will be in Shanghai – the hot bed of Asia’s thriving innovation scene. With over 400 incubators and accelerators located in the city, and over twenty thousand operating across China, this market boasts incredible potential for Australian entrepreneurs. With Australian investors averse to investing funding in domestic startups, the eager China market presents Australians with the opportunity to access the capital to bring their ideas off the ground.
However, the risks involved in accessing the China market also deter some Australian entrepreneurs. Protection of Intellectual Property (IP) is a pressing concern. More so than other markets, the startup and innovation scene in China is characterised by ruthless competition and the need for speed in bringing products to market. As well as this, Australian entrepreneurs entering the China market must be aware of its uniqueness. Unlike entering other more traditional markets, ideas and products must be specifically tailored not only to the domestic Chinese market more generally, but also to the individual consumer trends and demands in each city. At the same time, it has the potential to foster a dynamic community and act to bridge the two nations in the innovation space.
While NISA has been important in acknowledging the importance of Australian innovation, there is a greater need to encourage startups to be more adventurous and tap in to the already huge traffic of idea exchanges between China and Australia. Australian universities and research institutes are rapidly engaging in partnerships with China. UNSW recently secured a multimillion-dollar deal to set up a Chinese innovation precinct in Sydney – the first partnership of its kind outside of China. Australian accelerator Muru-D has also recently expanded in to the Chinese market to offer participants great opportunities, as well as various Venture Capital (VC) funds being set-up to help Australian startups launch in China. To capitalise on Australia’s innovation potential and China’s access to capital, there is a need for more collaboration and communication between the different parties engaging in innovation with China. There is a need to go beyond the #ideasboom to foster the growth of a broader innovation community.
Luisa Cools is the China Fellow for Young Australians in International Affairs. The views of this article are that of the author and do not represent the views of Australian government entities.
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Image Credit: Boegh (Flickr: Creative Commons).