I recently delivered a talk in Shanghai to a group of Master’s and PhD degree candidates from the American George Fox University. The group had come to China to witness first-hand and then to fold into their theses the impact of China’s economic development on international business and the American economy.

A point several of the students seemed dismissive of was that Chinese industry would one day be as innovative as the South Korean and Japanese. Incredulous, they pointed out issues such as the continued culture of IPR violations and a color-by-numbers education system.

Of course I agreed with their assertions, as one cannot argue with the numbers nor with the anecdotal evidence. Still, other trends are impossible to ignore: the increasing number of IPR-violation suits that Chinese companies are bringing against other Chinese companies (implying the Chinese themselves are beginning to develop products and approaches worth protecting and fighting for); the establishment of more R&D centers in China by multinationals; the fact that China has been posting amongst the highest numbers of patents in the world, rivaling the States itself.

I made the point that one of China’s greatest assets is the huge size of its increasingly rationalized marketplace. Compared with the higgledy-piggledy Indian economy, the speed and depth with which China is normalizing its information, transportation  and logistics infrastructures as well as its commercial protections is breath-taking. Also dizzying is the pace of its adoption of technology at all levels of social strata: whether TVs, washing machines, mobile phones, computers – China is intent on becoming a nation of savvy consumers.

Most of the R&D centers that Western manufacturers and IT outfits are establishing in China are to meet Western design requirements. Increasingly, though, I’ve met GMs in China who are excited at the potential of a well-trained R&D staff adapting Western-born technologies to use in the Chinese marketplace.

“A fundamental difference between America and China is that China has too many people in too small a space with too few natural resources,” I offered the George Fox group. “Meanwhile, America has relatively few people in a relatively large space with an abundance of natural resources. It’s a truly challenging environment into which technology is being channeled in today’s China, and in which the technologies are being adapted.”

“Now,” I went on to say, “once China has overcome those barriers of a rote-based education system and rampant copying so it reaches a threshold of innovative design and implementation – just as the Americans had eighty years ago, the Japanese forty years ago, and the South Koreans twenty years ago – and has become comfortable innovating to meet its domestic demands, its will begin exporting technologies to a world that increasingly has…” I ticked off on my fingers, “…too many people, too little space and too few natural resources.”

Though ten or even twenty years off, the world needs to prepare itself for China’s Innovation Blowback.