"We should follow the strategy of innovation as an impetus for development. Independent innovation should be the essence of this strategy and the most urgent thing to do is to eliminate system and mechanism [bureaucratic] obstacles, so as to free up the huge potentials of science and technology as the primary force of productivity."
Those were the words of Chinese President Xi Jinping, who continues to stress the importance of China's long-term ambition to become an innovation-led economy and a world leader in the development of science and technology.
It follows from the plans started by his predecessor Hu Jintao's administration. Back in 2006, China declared openly its plan to become an "innovative society" by the year 2020 and a world leader in science and technology by 2050.
China, now the world's largest economy, has boomed and blossomed before our eyes. The change over the past 20 years goes beyond the facts and figures that tell the story. It's written on the faces of everyday Chinese - there's a shift in attitude, an increase in optimism and a search for prosperity.
It's come hand in hand with economic reform. China going out to the world stimulated its growth and increased wealth dramatically, but it was far from a sustainable growth story. During this period, China became the largest exporter in the world - if you invented it, China could build it, quickly, cheaply and efficiently.
But China was merely clipping the ticket on production, rather than reaping large-scale rewards from those who developed ideas and led the way with advances in science and technology.
Now the economic growth story is starting to change. As China enters a "new normal" phase with predictably slower growth rates, Beijing's goal is to stoke economic growth through the twin engines of popular entrepreneurship and mass innovation, says Premier Li Keqiang.
Recent years have seen the rise of the likes of Alibaba (e-commerce) and Sina (online media) from homegrown success stories to legitimate internet behemoths. They have listed on the New York Stock Exchange. But as a whole, innovation in China remains too compartmentalised.
The real challenge is for China to move from a society and economy built on a platform of producing and emulating the ideas of others to one existing at the vanguard of new science and technology.
China is putting its money where its mouth is, as capital continues to be poured into research and development at a national level. China is well on the way to its target of 2.5 per cent of gross domestic product to be spent on research by 2020.
Based on 2013 GDP figures, that investment would be a staggering US$231 billion at a time where the rest of the world has been trending in the opposite direction - thanks to clawbacks necessitated by the Global Financial Crisis. By the end of the decade, the OECD predicts China's R&D spend will eclipse both United States and European Union.
China is putting its money where its mouth is, as capital continues to be poured into research and development at a national level.
The Chinese Government is also relaxing rules and red tape in an effort to improve the ease of doing business, while rolling out incentives for business development - such as providing seed capital, supporting entrepreneurs and offering tax credits to fledgling and established businesses.
There's a long way to go, however. The world's biggest economy presently sits 29th on the Global Innovation Index - an improvement on 35th last year, but still far back from where it would like to be, particularly with Hong Kong ranked number 10.
But while the shift from factories to innovation is talked about in optimistic terms, the reality is that mass manufacturing is no longer the cash cow it once was for China and change is more necessary than desirable.
The impact of the one-child policy on labour force numbers and urbanisation has seen the low-cost manufacturing pool dwindle as wages have risen. Southeast Asian countries - such as Indonesia, Vietnam and Cambodia - have become more competitive and cost-effective, encouraging major multi-nationals to invest heavily there.
It's part of a much bigger societal shift under way in China: to create an environment where innovation can be fostered and entrepreneurs churned out in a society that is inherently risk-averse. It brings together a number of threads - the reforms will likely affect the everyday life of regular Chinese people as infrastructure, education, economic policy and law are touched with the same innovation brush.
As China moves away from mass manufacturing and prioritises innovation, New Zealand must figure out how to capitalise on a rapidly changing environment. That will take a rethink of the current strategy and approach to China, but with the depth of the relationship and experience in China, New Zealand is in the box seat to carve out a lucrative niche.
Science and Innovation Minister, Steven Joyce, acknowledges the changing environment and agrees that how New Zealand approaches it will be crucial. "China is getting more innovative, but by their own admission the Chinese would say there's still a way to run," Joyce says.
"For New Zealand companies, the accepted model is that we have a lot of innovation and China has got a massive population and distribution channels - it's a marriage made in heaven. But actually, it's important that New Zealand companies acknowledge the increasing levels of innovation up there as well and be open to marrying in to that."
"Innovation is coming and fast. There is a lot of money being poured into research in China, and our challenge is to see how good are we at partnering up with that and securing a place for our companies and researchers. I think it's happening, but we need to do more of it."
Auckland-based incubator The Icehouse has been attempting to bridge the gap and increase collaboration between New Zealand and Chinese start-ups for a number of years.
Talks were held with Tsingshua Technology Park in Beijing about the prospect of a Kiwi Landing Pad venture based there, but nothing has yet materialised.
Icehouse chief executive Andy Hamilton confirmed talks were ongoing, saying "we are looking to host Tsingshua University Science Park in New Zealand later in the year. We were up there last year visiting, and we continue to work with the Head of the China Market Development Hub, Tony Wei, and his team."
Whether the Icehouse will be able to move beyond proof of concept and market validation with Tsingshua remains to be seen.
Callaghan Innovation, however, is developing its own international strategy and last year met with Torch, effectively its Chinese counterpart responsible for accelerating the commercialisation of technology and innovation in China.
With discussions at both ends, the chances of new opportunities for New Zealand start-ups and innovators in China look positive - and it could be private or government led.
During China's economic coming-out party over the past two decades, a staple of the national growth strategy has been developing infrastructure on the back of a construction boom.
Innovation has been no exception. Science and technology parks are a key pillar of the national innovation strategy and have been popping up all over the country, on a scale that few, if any, other countries could hope to achieve.
The parks are designed to stimulate collaboration and innovation, attract foreign businesses and capital, and serve as hubs for integrated economic development. In 2013, these parks were home to nearly 72,000 companies - with that figure certain to grow significantly.
The Herald visited Zhangjiang Hi-Tech Park in Shanghai - one of the largest in China and aptly dubbed China's Silicon Valley. When its next expansion is completed, the park will encompass nearly 80sq km - literally the size of a city.
"Currently, we have more than 10,000 companies with offices in the park, and GDP generated in 2014 was 3.2 trillion RMB (NZ$670 billion)," says Fan Xi You, Deputy Section Chief of Innovation Promotion Department at Shanghai Zhangjian National Innovation Demonstration Commission.
The park is already home to 300 Fortune 500 companies and has a liaison office in Belgium to help attract businesses from Europe, with a second office planned for the US.
"Bringing international companies here is one of the main strategies of the Shanghai municipal government," says Xi You.
Xi says more than 300 of the top 400 multi-nationals in the world have set up their R&D centres in Zhangjiang. "All of the companies that register with Zhangjiang and pay their tax here are entitled to receive full industrial support, so it can be quite an attractive option."
That support can extend to helping with labour issues, government relations, construction and planning management, as well as access to the park's own credit union.
The park also has strong links to the innovation community at all levels, including incubation centres for domestic and foreign companies helping to get new businesses and ideas off the ground.
"The local government has a programme which will give a certain amount of money once a year for the construction of platforms for any incubator - this is general support," says Jian Lin, vice-general manager of Tsingshua Business Innovator at Tsingshua Science and Technology Park.
"Local government will also open a bidding process for incubators to compete for funding with specific purposes - as an example, for the construction of laboratories or special equipment. There are no ski trips to Switzerland."
An example of an incubator centre is the University Students Venture Park - a full-service business hub designed to turn students ideas into fully-fledged businesses.
It's one of a large number of ventures being supported by the government, and is a collaboration between the Shanghai Science and Technology Commission and the Shanghai Education Commission.
General Manager of the University Students Venture Park, He Xueqin, says "incubation centres in different areas will focus on different specialties. Government, at different levels, provides funding and policy support to these centres, then professional industrial parks, administrative groups or agencies bid for the right to provide services."
It's reminiscent of what New Zealand has been doing with outsourced incubators and accelerators through Callaghan Innovation - such as Astrolab in Auckland - but the Chinese scale is on another level.
The University Students Venture Park has all the bells and whistles, from 3D printers and motion capture technology to state-of-the-art classrooms and film studios. The category of the idea isn't important. The focus is on the quality of the idea and development of entrepreneurs.
The venture park is home to a business nursery, incubator and accelerator, with a rigorous yet bespoke programme that has seen 45 per cent of projects successfully completed.
It's a large component of a wide-arching move to improve the creativity and business nous of the Chinese. Entrepreneurs are assisted through the development of their business, offered classes and provided with support - whatever form that may take.
The emphasis on post-graduate skills and business training comes at a time when China has been opening up its education system, with a number of reforms and developments in an attempt to be competitive at an international level.
The primary issue, however, continues to be a focus on rote learning and teach to the test, instead of a holistic education incorporating problem-solving and creativity. It's a problem the Chinese Government is well aware of, and it is changing tack on its medium and long-term education reform platform.
One of the desired outcomes over the next decade is "putting a premium on integrating learning with thinking."
The Outline of China's National Plan for Medium and Long-term Educational Reform and Development (2010-2020) says: "We will advocate teaching to be heuristic, exploratory, discussion-based, and participatory, and help students learn how to study. We will stimulate students' curiosity, develop their interest and hobbies, and foster a fine environment for independent thinking, exploration and innovation."
China plans to install 3D printers in all of its 400,000 plus primary schools over the next two years. For a country synonymous with mass production and factory labour, automation and learning to work with new technology is the way of the future.
One major hurdle still to be overcome is intellectual property (IP) law in China, which has scared some entrepreneurs and companies from setting up shop due to fears of being unable to enforce their property rights and patents. Joyce says it's a problematic area still but that's maturing as well, and understanding how to work with them is important.
China is taking the issue very seriously, but it's hardly a situation that can be solved overnight.
The Standing Committee last year approved a proposal to establish three specialised intellectual property courts, the culmination of nearly 20 years of discussions. They are in Beijing, Shanghai and Guangzhou as part of a three-year pilot programme to determine the value and effect of implementing a more rigorous IP protection system.
It is hoped the courts will create local expertise and facilitate a more widespread rollout of IP to enable China to be more competitive globally, and facilitate the entry of companies that may have previously been apprehensive.
Xiaomi is disruptive of the innovation environment in China. It means Chinese start-ups have to go global to succeed.
The Supreme People's Court will monitor the development and performance of the IP courts over the next three years and report back.
Some remain far from optimistic about China's late entry into IP protection and fear it may be too late. French venture capitalist Cyril Ebersweiler, who runs a mentoring programme in China, says "I'm afraid the window has passed for Chinese hardware start-ups because of the rise of companies like Xiaomi."
Xiaomi is relatively new - five years old - but with a US$45 billion valuation. In that short time, it has become the third largest smartphone maker in the world behind Apple and Samsung. Xiaomi has courted plenty of controversy along the way.
Apple, in particular, has been vocal in its criticism about Xiaomi copying its products and technology. Xiaomi products have been banned in India on the basis of patent infringement and commentators have gone on record speculating that Xiaomi is unlikely to move into the United States market due to a lack of its own patents and proprietary technology.
"They are commoditising, or as we call it Xiaomising, technology very quickly. That's a major threat for new companies, because if Xiaomi goes into every business and throws billions of dollars at it, what it is doing is commoditising others' innovation. But the scale and speed at which it goes is a concern," says Ebersweiler.
Xiaomi's products tend to sell for less than half the price of their equivalents, with original producers lamenting the difficulty competing with a rival who has a fraction of their original development and licensing costs. "Xiaomi is disruptive of the innovation environment in China," says Ebersweiler. "It means Chinese start-ups have to go global to succeed."
"In the US and the Western world, there is no equivalent of Xiaomi and so it's a very unique issue," he says.
Detractors argue that rather than simply producing cheap knockoffs, incremental innovation has been a pillar of China's development. However, it's not sustainable as a long-term driver of innovation.
But general manager of Weibo marketing strategy, Ken Hong, says the process has led to uniquely Chinese products which have advanced beyond their initial model. "There are a lot of products, copied in a sense - although that might not be the right word - but they've learned from the original Western examples. A lot of them have evolved significantly - whether it is to cater to the Chinese consumers' taste or in terms of the richness and functionality.
"We had a lot of functionalities in Weibo that Twitter didn't even have until very recently, like pictures and pages," says Hong. "Weibo is really big and now quite different compared with Twitter, and a lot of the things we did that have made us successful were specifically designed for Chinese consumers."
Feet on the accelerator
Recent years have seen an explosion of business incubators, accelerators and startup support networks all over the world. Varying in scale and expertise, their success has been as varied as the startups they were helping.
Taking a rather unique approach to the now burgeoning market is Shenzhen-based hardware accelerator, HAXLR8R.
Founded by Cyril Ebersweiler and Sean O'Sullivan in 2011, the programme has now had fifty companies take part, with all but one continuing as a going concern.
"When I started to invest in hardware companies, I had a hard time figuring out how people could attempt to launch a product without actually knowing how it could be built and manufactured. HAXLR8R is built the other way around," explained Ebersweiler.
"Since the beginning the idea was to actually create things from here in Shenzhen, instead of creating somewhere else and coming here to manufacture,"
The HAXLR8R programme takes place twice a year, following an open call for entrepreneurs with concepts or early prototypes of new hardware.
Successful applicants travel to Shenzhen, China for the first part of the 111-day programme. There, they work intensely with advisors, manufacturers and mentors to develop their prototypes and work on scaling their business.
The primary driver though, is getting connected in with China's supply chains early in the process and working closely with manufacturers during the development of their hardware.
HAXLR8R provide seed capital for all companies which are accepted into the programme, with an option of US$25,000 for a 6 per cent stake in their company, of US$100,000 for a 9 per cent stake.
"What we do is take our companies from prototype to global businesses. It's more than an investment focus, we want to take our businesses through to a stage where they can launch their products and get to revenue" says Ebersweiler.
Following the completion of the Shenzhen portion of the programme, all of the companies travel to San Francisco for a demonstration day - pitching to qualified investors and global media alike.
Graduate companies have collectively attracted tens of millions of dollars of investment through private investment and crowdfunding, with 3D printed drones, smartphone polaroid cameras and "smart" adult toys highlighting initial rounds.
• Alexander Speirs was awarded a travel grant by the Asia New Zealand Foundation to study China's innovation developments. He received travel assistance from Air New Zealand and NZ Inc.