Innovation in China Isn't What You Think It Is. And That's the Point.

You've probably heard the term "Shanzhai" before. The assumption is that China copies. That innovation in China is derivative—taking Western ideas and making them slightly cheaper. And sure, there's some truth to that.

But that's like thinking about American innovation and only mentioning the knockoffs.

What's actually happening in China is so different from what's happening in the West that using the same vocabulary doesn't even work. The rules are inverted. The priorities are reversed. The entire context is different. And if you don't understand that—if you think you can import your Western innovation playbook and just execute it at a lower cost—you're going to get your ass handed to you.

I recently talked to Brian Tam again about this, months into running his innovation agency. He'd seen enough of China's ecosystem by then to know something most Western consultants never discover: Innovation in China works because of three forces that you literally cannot replicate anywhere else. You can try. It'll just be a lot harder. And you'll be wondering why everyone else seems to get it and you don't.

The Government Actually Moves Fast

This one probably seems counterintuitive if you've never worked in a centralized system. But Brian hit on something crucial: When you have a political system that can make decisions from the center and focus resources on specific sectors, you get an ecosystem that's impossible to create anywhere else.

Compare this to the West. Innovation is mostly decentralized. Companies compete with each other. Government tries to stay out of the way (or when it doesn't, things slow down). You get fragmentation. Different organizations moving in different directions. It's beautiful and efficient in a lot of ways, but it's also slow.

In China, the government can say: "Shenzhen is going to be the hardware capital. Shanghai is going to be financial and digital. Beijing is going to be political and strategic." And then resources flow to those bets. Entire ecosystems form around those decisions. You get a concentration of talent, capital, and infrastructure that no Western city can touch.

Is this good or bad? That's not the point. The point is it's real, and it changes everything about how innovation works. You can't complain about it. You have to work with it.

Low Labor Costs Create Different Risk Profiles

Here's the uncomfortable part of the story that nobody wants to talk about: A lot of Chinese innovation exists only because labor is cheap.

Think about the Ofo bikes. The Mobikes. The Ola delivery services. These aren't rocket science. They're just execution at scale with different economics. In the West, you'd be bankrupt before your unit economics made sense. In China, you can burn through hundreds of millions of dollars employing thousands of people because the math works at a scale nobody in the West can afford.

This creates a completely different innovation dynamic. You can run experiments that would bankrupt you anywhere else. You can scale too fast and optimize later. You can hire entire teams just to solve one problem. And some of those bets are going to work in ways that shock everyone.

Brian watched this happen over and over. Chinese startups would try something that looked completely reckless by Western standards. And somehow, it would work. Not always. But often enough that the risk calculus is completely different.

If you're trying to compete with that mentality using Western capital and Western labor, you're playing a game you can't win. You have to be smarter. More efficient. More thoughtful about what you're actually solving. And most Western companies aren't built for that.

Pragmatism Doesn't Care About Aesthetics

This is the one that shocked Brian the most, probably because he came from the design world. In the West, we've been trained to believe that good design and good function are connected. If something looks good, it works. If it looks bad, it doesn't work (or people assume it doesn't).

In China, nobody has that assumption. They've lived through too much history where nice things fell apart and broken-looking things worked perfectly. They've had to make stuff themselves. They're problem-solvers first, designers second.

So you walk into a Chinese startup and see something that looks like it came from a garage in 1997, and it's humming along, shipping millions of units, making money. The Western designer in you is offended. The Western startup person in you is confused. The Chinese entrepreneur is like: "Yeah, it works. It makes money. Who cares what it looks like?"

This creates innovation in different directions. It's not innovation in the "move fast and break things" sense. It's innovation in the "I have constraints, so I'm going to solve the actual problem instead of the problem as an aesthetic exercise" sense.

Brian saw this in every company he worked with. Western multinationals came in expecting polish, process, beautiful artifacts. Chinese companies came in asking: "Does this solve the problem? Can we iterate? What's the next version?" The sophistication was in the question, not in the presentation.

The Bridge Nobody Wants to Be

Here's where Brian's perspective gets tricky. He's American-born but Chinese by heritage. He speaks English fluently but doesn't speak Mandarin. He understands Western consulting frameworks but has lived in China long enough to know that most of them don't apply the way you'd think.

So what is he exactly? A bridge. An interpreter. Someone who can walk between two completely different ways of thinking about innovation and help them understand each other.

But here's the honest part: He doesn't really want to be that. And I think that's important to acknowledge.

He'd rather be useful. Useful means understanding what clients actually need. Some clients wanted him to be the Western guy who helped them understand how to work with American partners. Some wanted him to be the guy who understood Chinese pragmatism and could teach their Western teams to think differently. Some just wanted him to solve problems.

He let the work define the relationship, not the other way around. And that's why the clients kept coming back. It wasn't because he was a brilliant bridge. It was because he wasn't trying to be anything other than useful.

The Real Insight About What's Happening

If I had to distill what Brian learned about innovation in China into one sentence, it's this: China innovates by doing everything the West thinks is wrong, and it works because the context is so different that Western rules don't apply.

Shenzhai isn't just copying. It's remixing with purpose. Taking existing components and assembling them in new ways at scale. Tencent didn't invent the social network or the instant messenger. It took those concepts and iterated obsessively on what Chinese users actually wanted. WeChat didn't invent mobile payments. It just executed them better than anyone else and wrapped them into something more useful.

That's innovation that comes from pragmatism, not from creativity for creativity's sake. It comes from desperation and density and the ability to say: "I don't care if this is beautiful. Does it solve the problem?"

And honestly? That's a form of innovation the West is really bad at.

Why This Matters Beyond China

You're probably not going to build a business in China. That's fine. But understanding how innovation works there teaches you something crucial about everywhere else: The innovation that matters isn't the innovation that looks like innovation.

It's the innovation that solves actual problems for actual people, using the resources you have, in the context you live in. China doesn't need Western innovation because China's constraints are completely different. Which means China's solutions look weird to Western eyes. But they work.

The lesson isn't "go to China and get rich." The lesson is: Stop believing your context is universal. Stop assuming that the innovation that works in Silicon Valley will work in Lagos or Jakarta or São Paulo or anywhere else. The moment you stop trying to be like something else and start solving for what's actually in front of you, you start innovating in a way that matters.

Brian figured this out by living there. By watching. By being honest about what he saw instead of trying to force Western frameworks onto it. And that's why his agency succeeded in a market where most Western consultants come in, get frustrated, and leave.

The Full Picture

If you want the complete perspective on what makes Chinese innovation different—how it actually works, why Western approaches often fail, what you're missing if you only study Silicon Valley—listen to the second part of my conversation with Brian on The School of Innovation podcast. He goes deep into the ecosystem, the culture, the actual dynamics that create innovation at scale in China.

Because here's the thing about innovation: It's not universal. It's not portable. It only works when it's designed for the reality you're living in, not the reality you wish you were living in.