Just Under the Radar: Where Does It Go From Here?
By Bob Pinato, MPD Editorial Advisor
While times have been tough over the past few years, many companies have persevered and continued to innovate their way past the problems, trying to stay ahead of the market demands, waiting for future growth. In some areas such as green technologies, telecommunications, mobile smart phones, tablets, GPS and data storage, innovation has gone forward unabated.
Markets have continued to develop and create more demands, technology has continued to drive this development and provide solutions, but, more importantly, entrepreneurs and business owners have been at the cusp of much of this drive. While governments have spent lavishly to bail out key industries in finance, some pet projects in the green industry and of course in high tech aerospace and military hardware, it is the businesses which have built up the R&D labs and product developments used daily by the consumers and other businesses that are crucial.
R&D expenditures are not the domain of only the USA, but of course the investments of many corporations, governments and institutions around the world. Investments increasingly made in the USA into institutions, university labs and businesses to gain leading edge technology for bargain prices, but also the IP ownership which comes along with the largesse. In the 1990s there was quite a bit of soul searching done when the US government cut back R&D support funding and the US government incentivized companies and universities to go out and seek outside funding. No longer were DARPA and other three to five letter acronymic institutions going to have the deep pockets of yore. The government was in the midst of a COTs program, telling R&D labs to sell their products to the commercial world where possible to raise funds for future developments. It did yield great results by commercializing GaAs HBT technology for non-military applications in mobile handsets and base stations -- revolutionizing the way we talk, increasing efficiency in phones and extending battery life to where the smart phone today is a practical, even necessary to get through daily life.
What wasn’t expected was the investment in universities and development labs by foreign concerns seeking advanced technology at bargain prices, as the base technology was financed by US tax dollars. These concerns included governments, corporations and agencies around the world. Most are our friends and had plenty of money in the 1990s to throw at new technology for future product developments.
In today’s hard times, the government is again beginning to run short of funding in non-vital areas of investments. DARPA, SBIRs and funding by the government is beginning to be much more selective as budgets are squeezed. Key pet projects continue to roll along funded, popular green initiatives are selectively slated for support as a need for our national future energy security, and as the country bounces along trying to gain support for a launch up and out of this third bump in our recession, we manage investments and funding when and where needed. The rest need to look for outside sources of funding for their proposals and laboratory developments.
It is happening again. There have been recent articles written about the strong pitches made by foreign companies, governments and agencies to investing in US university labs and independent development labs across the nation. The USA government has set up a review board to monitor the so-called investments and their impact on technology, R&D, IP control and ultimate effect on the future of the use of the products developed from the technology investments in R&D. (At least this is one lesson learned from the 1990s.) But the players are a bit different than in the 1990s. Back then it was Japan, Canada, Germany, Britain, Taiwan and others who were intertwined in USA markets and technology. They had a strong vested investment in seeing the technology developed and utilizing the IP for commercial purposes.
According to the articles in the Economist and in Bloomberg, the players are quite different this time around. Yes, some of the same IP seekers as in the 1990s, but now they also include Russia, China, Japan, Korea, Canada and Germany. Russia and China were not yet on the economic map in this country back in the 1990s.
This is happening in other growth countries -- much the same as it has been happening in the USA -- by foreign entities and multinationals. R&D labs and investments around the world are booming to where not only are other nations graduating more engineers, mathematicians and scientists than the USA (we were the leader until 2006), they are now gaining on experienced seasoned and trained engineers and scientists. So just not sheer numbers of graduates who don’t know much yet, but more with internships and mentors to guide them more quickly into the work place. Since 2002, China has opened 83 R&D centers around the nation, quadrupling the investments made into the many institutes as well as by the corporations in a growing entrepreneurial capitalistic social atmosphere. Just since 2006, China has more than doubled investments in technology developments and opened up centers not only along the coastal regions, as it had done in the 1990s to 2005, but also in the western regions. So much so that the western cities such as Chengdu, Xian and Chongqing now resemble the coastal cities, with high rises, grand airports, and technology parks so that the locals can now settle closer to home and not have to move to the east any longer. It wasn’t that long ago when I was walking though these towns on wooden sidewalks and heavy traffic congestion caused by hundreds of thousands of bicycles during rush hour. Then there were not even 2 million cars in all of China (that was 12 years ago), now there are 78 million and are leading world production with 13 million a year. (In contrast, the USA has over 270 million automobiles registered, producing about 12 million a year today.)
This story is being repeated all around the western rim of China, as it is in 2012 beginning to happen in the central Tier 2 and Tier 3 cities such as Wuhan, with its grand plans for a fiber optic technology park, which is near completion. With USA, Asian and European multinationals all making strategic investments in localized R&D to gain close access to market and consumer needs, there will be balancing of R&D resources to fit the needs of varying markets around the world.
India has its own version of institutes called incubators at the many India Institutes of Technology around the country. This along with government funded research in aerospace and defense (India has deep investments in space and satellite technology open to international technology) makes India in the top five of R&D investors in the world. With the growing economy -- admittedly hitting a few political bureaucratic snags of late -- India is poised to be the second largest economy, as measured in GDP, by 2030. There are over 40 new R&D centers in India since 2005, most of which are driven by the new-found corporate wealth and productivity. Some are destined to be technology centers for GE (Jack Welch Technology Center), Intel, Nokia, Ericsson and others, as well as by the local huge multinationals such as Barti, Bahrat, and Tata.
While GDP isn’t everything, it is a key gauge we have been using for many years to measure the outputs of countries. Eventually we will have to find other measures of a country’s productivity, output and contribution other than GDP as these countries with billion person populations begin to reach middle class status.
Russia is yet another story. While the lineage of the corporations is a bit murky, what is sure is that their corporations are exercising their new-found wealth muscles grabbing for new technology around the world. The oligarchy in Russia, while enabled initially by the government connections, is well poised to lay out big funds to finance university labs in the USA, Europe and Asia. While many are skeptical of the intentions of the Russian firms, they are slowly winning over converts with their pools of funds.
It is not only the opinion of this author regarding the trends of R&D investments and their potential impacts on our institutions; there are many articles being published which look at the many benefits and downfalls of such investment. But realistically, they are happening everywhere in the world, and with not only a fervor to gain access to not only local markets and technology, but to also infuse technology garnered from other labs.
Another trend that is helping the US entrepreneur is the close working relationships with local VCs and corporations to develop the technology needed to launch new industries and products. Small businesses always seem to do this faster and with more zeal than the large concerns; however, the large concerns have the deep pockets to finance and enable the developments. The path to prototyping and manufacturing has typically been a big hindrance for small business owners as they move towards finalizing designs and testing out many versions and iterations.
In the past, one would have to work closely with a manufacturing partner early in the stages of a product development to launch. Some of the partners were local, with facilities overseas (assuming that most have moved overseas in the past 10 years), exacerbating the time lag to getting a product to completion and properly vetted. Move forward to 2012, and we now see new creative ways to get around this issue and quickly create prototypes in hours, right in one’s own labs, using 3D printer technology.
This is all happening under our very noses and in many cases we will be affected by the overseas investments in technology access, the 3D printer phase in R&D and the ultimate renaissance in volume manufacturing due to this new technology. As the USA again comes out of the malaise and starts to move aggressively in key areas where individual businesses and entrepreneurs can drive business forward, we will see the results of our efforts in new venues not yet ascribed to in any publication to date.
Entrepreneurs go forward, create business and jobs, investors fund and propel markets, and inventors develop technology and products, as this is what makes the world go around. This is one of the great undertakings of our country and innovators of our national culture which inspire us all to aspire and reach to nearly unlimited opportunities in life, liberty and the pursuit of happiness...and innovation.
ICCS Global LLC. is a multinational consulting firm with offices in the USA, China, Hong Kong and associates in Korea, India, Singapore and SE Asia.
MPD Editorial Advisor
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