Create. Make. Repeat. Can China unleash innovation?

On China: Is there a Chinese Elon Musk?
On China: Is there a Chinese Elon Musk?

    JUST WATCHED

    On China: Is there a Chinese Elon Musk?

MUST WATCH

On China: Is there a Chinese Elon Musk? 01:16

Story highlights

  • Chinese companies like Tencent and Baidu are becoming known for their tech innovation
  • China has access to talented engineers and scientists -- as well as huge amounts of capital
  • The next generation of entrepreneurs need to know how to think smarter than U.S. rivals

Kristie Lu Stout hosts "On China" on CNN International. This month's episode premieres on Thursday at 4:30pm Hong Kong time and tackles innovation.

Beijing (CNN)Master copiers. Rip-off artists. Copycats.

That may be the view of Chinese business from some on the U.S. campaign trail, but influential tech commentator and investor Kai-Fu Lee brushes it off with a smile.
    "It's very outdated," he tells me during a taping of CNN's "On China" at a co-working space for start-ups in Beijing's Haidian District.
    "China has moved forward very quickly in the areas of mobile and social. Whenever there is an opportunity to build product and make money, China has come up with innovations."
    Imitation has given way to iteration as homegrown Chinese tech firms take a product to revise it again and again, making incremental improvements based on market feedback.
    After initially launching a toy-like remote control drone, the Shenzhen-based DJI later dominated the consumer market in aerial photography with its sleek Phantom drone.
    New drone allows users many choices
    hackable developer drone dji china lu stout pkg ns_00012215

      JUST WATCHED

      New drone allows users many choices

    MUST WATCH

    New drone allows users many choices 02:11
    Pushing its technology further, the company has recently released its hackable M100 drone -- a flying platform for third-party software developers to add new functionality like thermal scanning.

    China's answer to Google

    In 2010, China's Tencent launched a messaging app that was not an overnight success. Years later, WeChat is not only a rival to WhatsApp, it's turned into the extended operating system of China's mobile millions.
    Not one to rest on its laurels, Tencent will soon add a personal loan feature to its popular app, allowing its 600 million active users to borrow up to around $30,000 without collateral.
    Baidu may still be known to many as China's answer to Google in a country where the search engine giant is banned. But over the years, it has expanded into hardware as well as advanced software research in areas like natural language processing and image recognition.
    Earlier this month, the Beijing-based tech giant released a new app that recognizes your facial structure and maps another face onto it in almost real-time. It's a creepy -- but impressive -- offering from the company's Deep Learning team.
    On China: Is China now an innovator?
    on china innovation part 1_00000516

      JUST WATCHED

      On China: Is China now an innovator?

    MUST WATCH

    On China: Is China now an innovator? 01:29
    Baidu scored a coup last year when it hired its new Chief Scientist, Andrew Ng. A Stanford professor who was the founder of Google's artificial intelligence efforts, Ng is also the co-founder of the online education company Coursera.
    And although Baidu has a self-driving car initiative and a head-mounted device called Baidu Eye that has drawn comparisons to Google Glass, Ng dismisses any notion that Baidu is engaging in deja vu research.
    "Google has done a very good job building in an Android ecosystem. Baidu is very focused on connecting people to services, not just information," Ng tells me.
    "So today, if you do a Web search for a movie ticket, Baidu thinks our job doesn't end at sending you off to some Web page. We want to help you complete the transaction."

    Upping innovation

    China is clearly out to up its innovation game. It has access to talented engineers and scientists, including overseas talent like Baidu's Ng, who was born in the UK. It also has access to the capital needed to bring new ideas and startups to market.
    "China has multiple sources of capital. The Chinese entrepreneur has almost everything the American entrepreneur has. All the top VCs (venture capitalists) are here," says Kai-Fu Lee.
    "And now there's the capability of local companies that have gone public and done very well to use (their) money to fund more companies."
    On China: China's role in innovation
    on china innovation part 3_00001930

      JUST WATCHED

      On China: China's role in innovation

    MUST WATCH

    On China: China's role in innovation 01:52
    The Chinese government has also made innovation a policy priority, with plans to reshape a slowing economy to rely more on entrepreneurship.
    So can there be a top-down blueprint for innovation?
    "If the plan is too specific, it would be wrong. No one can forecast the next ten years of innovation," says Lee. "But if it's a general strategic direction, it can work."

    Boosting growth

    Lee cites China's "Internet Plus" as an example of how the Chinese government plays a helpful role in fostering innovation in the country. First presented by Premier Li Keqiang in March, it's an action plan to use the Internet to revive China's traditional industries and boost flagging economic growth. As part of the plan, China will also upgrade its existing network infrastructure and improve broadband speeds.
    Internet giant Alibaba sued over allegedly fake products
    lklv mckenzie china alibaba sued over fake products_00013412

      JUST WATCHED

      Internet giant Alibaba sued over allegedly fake products

    MUST WATCH

    Internet giant Alibaba sued over allegedly fake products 03:24
    The top-down directive has already made an impact on DianRong.com, a Shanghai-based peer-to-peer lending platform led by American executive Soul Htite.
    "Internet Plus is a game-changer for us," Htite tells me. "Suddenly, we became a very credible player.
    "(China) is really an environment that pushes Internet business forward... funds are being created behind it, universities are teaching students about it, there are state-owned companies starting to change their platform and their infrastructure to go that direction."
    With China's economic growth dropping to its weakest pace since 2009, China must find new ways to boost production and achieve sustainable growth. Innovation is key. But in the end, it's up to China's new generation of entrepreneurs to deliver.

    Hunger

    So what is their secret to rise above the other wannabe Mark Zuckerbergs of the world?
    Does Internet censorship kill innovation in China?
    People at an internet cafe in Beijing, China, on May 12, 2011.

      JUST WATCHED

      Does Internet censorship kill innovation in China?

    MUST WATCH

    Does Internet censorship kill innovation in China? 02:07
    "It's hunger," says Kai-Fu Lee. "Chinese entrepreneurs are often the first generation in their family history who can make it.
    "When I take our entrepreneurs from Beijing to visit Silicon Valley, they are very impressed by how smart and creative people there are. But they secretly go back and ask me: 'Kai-Fu, why don't they work as hard as us?'"
    But China is aiming for pole position in the knowledge economy, not the sweat shop economy. To be a leader in innovation, hunger is not enough. China's next generation of entrepreneurs need to know how to think smarter.
    And that's a tall order in a country that lacks the freedom to openly exchange ideas, and is locked in an education system that values rote learning over out-of-the-box thinking.
    "I'd like to see the education system provide to people who are outliers, who have crazy ideas and challenge teachers," says Lee.
    "When these people are more tolerated and encouraged, I think we'll see even more innovation."
    China can create, make and repeat.
    But to unleash unbridled innovation and create entirely new markets, it needs to embrace dangerous ideas.