Created in China

First published on April 2013.

John Howkins: China is the only part of the globe that is big enough and strong enough to go its own way outside the ambit of Europe and America. It's the only viable alternative we have - a different way of doing things.

Philip Dodd: There's much talk within China of the move from 'Made in China' to 'Created in China'. The Brits have got to understand this and the reason the shift is happening. It is partly because, contrary to our understanding, China is no longer the workshop of the world. That accolade now belongs to Vietnam and other cheaper places. There are whole swathes of empty factories in parts of China, especially southern China. The minimum wage has gone up 20%, and add to that the fact that the population is growing older - China can no longer rely on throwing cheap labour at things. Also, the government needs to stimulate demand, in order to keep the economy growing in a global recession. But if they remain as ‘Made in China’ it is foreigners who are going to benefit, as Chinese consumers demand more high value goods and buy them from foreign companies. In short, there are a whole set of material imperatives why China wants and needs to move from Made in China to Created in China.

JH: I still get asked by people outside China: "Are the Chinese creative? Aren't they just copying other stuff?" They are extraordinarily creative. They just don't have the freedoms, content and the markets to flourish at the moment that we have in Europe and America. What's interesting to me though is that they have got both the manufacturing side of life and the creativity/innovation/intellectual property side of life much better balanced than in Europe and particularly the UK. Creativity and innovation are more fully integrated. Many people think that Britain has shrunk it's manufacturing sector too fast and it is now too small. This is not the case in Germany. But British designers do not have the ability any more to go and talk to manufacturers down the road. This is why Dyson left. He could no longer go to Birmingham and talk to small manufacturers, work out what to do, and get a prototype that night. We've become slightly imbalanced in our economy. If you think about 3D printing, we have a lot of design students in London who are very excited by it. They need to talk to material scientists, the suppliers of the goo that is going to be printed; they need to talk to manufacturers. They aren't really here. The manufacturing mind-set you get in China (and in India) is so much stronger. The design awareness, the intellectual property awareness is much stronger. It's a completely different balance.

PD: Two points on what you said. On copying: The word Yankee it turns out is a 19th century Dutch word for pirate. In the 19th century the Americans stole everything and didn't respect copyright. Dickens went over to America to complain that the Americans had ripped off the copyright to his books so plus ça change. In other words, in a particular historical moment of economic development it may be that an emerging economy ‘steals’ to offset uneven development.

Secondly on demand, rather than supply: The danger of all these conversations about the creative economy is that they do not ask the question: "what is the demand?". In China by 2020 there are likely to be 600 million middle class consumers. The Chinese government are very likely, to put it kindly, to rig the market to ensure that it’s their companies rather than anybody else's companies which get access to this market. The reason Hollywood came into being was that there was a very large urban population with insufficient things to do in the evenings and Hollywood came in to fulfil those leisure needs. There is something of the same situation in China now. For example, there are now 750 million mobile phones in China with not enough content. Who is going to supply this content? And don’t underestimate the demand for it. After all, it is a truth universally acknowledged that as people grow richer their appetite for and interest in cultural experiences and cultural services grows and grows. So, the key to the issue of ‘Created in China’ is not only China's creativity and its policies, but also this urgent, unappeasable demand. Will the UK try to meet that demand or keep supplying China with what Britain believes it wants – and run the risk of failing?

JH: The main reason the British creative economy took off in the mid 1980s was because of demand not supply. The government talked about supply all the time, but it was actually a demand-led activity. It's people wanting arts and novelty and risk and being willing to put their hands in their pockets to pay for it. The online video market in China last year was worth US$9 billion up from US$6 billion the year before. That is significantly bigger than the UK online video market and almost entirely demand-driven! These platforms are paying high levels of license fees to get film and television online. It’s a huge market. It's that demand by those middle class people - the word is completely valid in China - the rich urban population, sometimes called the sandwich generation, that's growing by leaps and bounds that is increasingly willing to explore their imaginations, decorate their homes, explore new media that is driving the economy - and almost entirely for Chinese not foreign material.

PD: I agree with that, but then a big issue is: if demand is so central why is Chinese government policy or British government policy not particularly good at demand? Governments are ‘better’ at focusing on supply, on 'creative quarters'... China is littered with infrastructure experiments where there is very little success. The reason why the 798 Art Zone in Beijing was so successful was that for 5 years the government left it alone, said it was 'off limits' i.e. too dangerous. One day around 2004 I suggested to an official that he take some foreigners there. Impossible, he said – too dangerous [ideologically is what he meant]. Demand kept it afloat – an increasing demand for cultural experiences allowed it to grow. 798 is a place full of art galleries and design galleries. It had to be closed the other day because 100,000 young Chinese people were in it. It's now the biggest contemporary tourist attraction in Beijing. The one great cultural quarter that was a success was one that developed out of what we would call ‘civil society’. It didn't develop out of government fiat. On the other hand, historically, if you look back to 14th century Venice, it’s perfectly possible to bring things into being by fiat. The big question for China is whether or not it can do so?

JH: There was tacit approval through Beijing Art Academy for 798. It's very hard to work without it. I have a colleague Chen Xu who is my manager in China. She decided to set up a co-working space in Shanghai called XinDanWei. She did that with her own money in cooperation with another Chinese entrepreneur and a hacker. They did not get any government support at all, whereas in this country someone would come along and give you money for a co-working space - the local authority, Creative England, BIS or even the EU would find some way to cash flow you. In China she did it with no public money at all. She had to get permission from the street committee and that was fine. She got an inquiry from the party after about a year and a half just to see what was happening. It was all right - she carried on. So on one level you've got this massive apparatus that does check implicitly, openly, tacitly but on the other hand you are beginning to see these individual initiatives. Last month ‘Fast Company’ rated XinDanWei as one of the top ten most innovative companies in China. You've got to be careful but it is possible and there are more and more of them happening every day. The vast majority are commercial businesses - not non-profit. In the UK people say – “let's do this non-profit because that's honourable or noble”. In China – “no – let’s make a business out of it!”.

PD: One has to remember that Shakespeare was a millionaire by the time he died. He never bothered publishing any of his plays but he did take equity in the actors’ company of which he was a part. Our post-romantic idea that culture is grand and pure and commerce is vulgar is historical illiteracy of a very grand order. There's now in this new generation in China a burgeoning of what we would call civil society (although the Chinese entrepreneurs are much too intelligent to call it that). The first charity shop has opened in Beijing and kids have started to put their own clothes together. They don't just want LV; they want cute cars - Beetles - not just grand cars. China is changing and I'm not sure that Britain's got those changes.

Attitudes to China

PD: Firstly, this is an institutional question. I have a broad-minded very international English speaking Chinese colleague who had worked with the British Council for three months. She said, "I will never do it again. They are so colonial you would not believe it!” The British mindset is that we can go in there and provide them with all the know-how. They are manual to our mental. It's the last fantasy of the old guard…

JH: ...that’s still hanging on.

PD: Secondly, even the smartest people still seem to think that the public sector can lead new thinking. I was talking with Geoff Mulgan at NESTA, and it is clear that the cluster of institutions he is working with are mostly public sector - AHRC, Arts Council etc. The trouble is most of the companies in China that are smart are private sector and their imperatives and their grammar are very different from the public sector. I've just signed a deal with a British company whom no-one would think of as creative - they're ‘vulgar’ and ‘commercial’ - and we're setting up a design fair in Shanghai next year which will bring 130 European companies to sell their products and their services. Nobody would ever consider such a company as part of ‘our’ conversation because they're an events organiser and don't belong to the "creative economy", at least not as we describe it. The big issue for us should be: where are the areas that we can get traction? What do the Chinese want to buy rather than what do we want to sell?

JH: I've just been involved in a big new building development outside of Beijing in Tongzhou - another artist’s village - about an hour from Tiananmen Square. We wanted to have someone to do a masterplan for us. We found Americans, French, Italians, Germans.... we couldn't really find an English firm that was interested. It's a very big site - 1km by 2km. We are involved in another similar development in the middle of city of Wuxi - we ended up with the same architect from France who now has a practice of about 100 people in Shanghai and about 30 people in Beijing.

Given the size of the construction business in China, which is experiencing the biggest building boom in history and dwarfs any other sector, and given the scarcity of top level Chinese firms (although they're catching up fast), there's a huge opening there for architects, masterplanners, urban designers, landscape designers, heating engineers, acoustic engineers etc. With the exception of Ove Arup who are very strong - people here are not interested, they don't know how to do it, they're not hungry enough. They're not getting there in the way people from other countries are.

PD: The second most important people after the Chinese Government are property developers. We all know how "vulgar" property developers are. I'm working on a project in Shekou which may or may not bring the V&A museum into China, but it's with a property company.

The problem is our wild indifference to what is actually happening in China – how things work there; where the growing points are. We still think that we are the centre of the world, and it is very, very hard for us to give up the notion that we can tell them what to do. Maybe, we can be very helpful, but only if we know what they want and only if we are patient and humble enough. I remember talking to an animation guy in Beijing who runs a company of 250 people who did a large part of the outsourcing for George Lucas. I asked him why he was doing this and he said “we can do 75% of what Lucas needs and we can learn the rest”. That humility is in so different from our arrogance here.

JH: James Cameron spent two weeks in Tianjin recently, a few weeks after my visit. It was not his first visit to the lab. I came back and talked to some people in the facilities business here, post-production, animation, video effects etc and told them that there was a business there and potential for joint ventures and so on. Not interested! There are six times as many Chinese people visiting Germany, and five times as many going to France, as there are to the UK.

PD: Our visa restrictions! At the moment I am trying to get a group of Chinese to come to Art 13 LONDON. They are being humiliated by the visa office in Shanghai. We have around 120,000 Chinese students studying in Britain at any given moment. These students we largely treat with a degree of patrician indifference to their issues, once we have got their money. They are taught by people who largely know nothing about the culture from which they come and then the students are not helped as they leave university to enter working life here or in China. These students are, in principle, our best ambassadors. A friend of mine who runs the biggest independent media empire in China is sending his son to Harvard rather than the LSE. "Forgive me, you're all not friendly", he told me.

JH: I agree - an English speaking Chinese accountant friend of mine was offered a place at Cambridge and INSEAD, Paris, for an MBA and decided to go to France rather than Britain, even though she spoke no French, because she felt that she would more 'at home' there than here.

PD What's at stake here, and I think that this is a profound problem, is not policy - it's culture. It's the culture of the UK that can't shake off a certain kind of superiority complex. As Freud says it's the return of the repressed, and beneath that hides a terrible inferiority complex. We don't need more policy- we've got bucketloads of policy - we need an idea. The idea is to educate ourselves that we are part of a world but not its heart. At the moment, there's not enough humility to learn. The Chinese know what they don't know. The tragedy of Britain is that it doesn't know what it doesn't know. And even worse - it isn't even interested in what it doesn't know.

JH: I think the government message and the message of those associated with government that Britain is No.1 and the best way forward is to give more money to those who subscribe to that idea is not only misguided but has a negative impact. It stops people opening the window and looking outside and saying "No, we're not No.1, not even in Europe. We're just like everyone else and we've got to work harder."

Lessons and a way forward

PD: The first lesson is rather than G2G (government to government) it has to be B2B (business to business) with China. To be fair to Creative England - it's a drop in the ocean - but they've just commissioned us to try a pilot where we find ten Chinese companies who want British connections rather than the other way round.

The second is to be hospitable, and that involves everything from the way visas are dealt with to the way we deal with Chinese students.

The third is to pay attention to what the market wants rather than what we think it needs.

JH: Governments around the world have shot their bolt. They claim more power than they have, especially overseas. Chinese business people have no interest in our government, just as our business people have little interest in theirs. It's up to businesses to compete hard and for some reason the Brits are just not very good at looking at the Chinese market. I don't know why they're not in the same way as the Americans and the Germans

PD: I think it takes time. You have to become friends in China before you can do business. We've become very short-termist. We want a one-night stand, we don't want a marriage. The Chinese are very good at saying that there are "no holes-in-one in China". You have to prove yourself first. After seven years a Chinese colleague said to me: "I like you Philip. You keep coming back."

JH: The converse of that, is that once you get to know somebody, they will get you to do all kinds of things that you haven't thought of or even know much about - because they trust you.

PD: The people who need educating are not Chinese (or Indian) students about our culture. The people who are tragic are our students who are often culturally illiterate about cultures outside the NATO sphere. The Chinese students involved in a club I set up called The Bridge say that British students on the whole do not want to speak to us. They're not rude, they're just not interested in us. It's criminal if cultural and educational organisations do not foster curiosity about other cultures whose representatives are now often inside the lecture hall.

JH: It’s such a boring thing to say, but education or, if I can make a distinction, learning, is so important. I often think that China is somewhat similar to America in the 1870/80s. Let's draw a parallel between Chicago or New York with Beijing or Shanghai. It's very get-up-and-go, it's ruthless, it's 24 hours, it's probably corrupt, City Hall is deeply involved, fortunes are being made, and they twist the copyright laws to their own purposes…I'm not sure that the Brits were very good at getting into America at that time. They didn't understand it, didn’t like it and was too far away...

PD: ... and it was deeply vulgar.

JH: It's the same feeling about China. But we don't have the time! It's so easy to get to China. Philip and I fly a lot and often the planes aren't full, although there are far fewer planes between China and the UK than between China and France or Germany or Italy.

PD: The big difference between China and America is that China has a 5,000-year history and if our educators were intelligent they would enable people to learn about Indian or Chinese aesthetic traditions outside institutions such as SOAS. You're going to enter a market where you don't know its history, its aesthetics, its people, and you don't speak its language. What a surprise that you're not succeeding!

Content and the Cultural Economy

PD: If the content providers want to work in China, then they have to marinate themselves in the culture they want to enter. My guess though is that it's very hard for a company that's surviving day by day to find this out. That's why we want the educational providers to do their part. The question is what knowledge would you need to be a global citizen?

JH: If you look at the people going through education who want to work in one way or the other in video production or post-production, animation, advertising, TV etc., the element of non-UK stuff that they are learning is miniscule and is regarded by the educational system, and probably by the firm they are joining, as marginal and optional.

PD: We've got to be more flexible in what we see as constituting the cultural economy. Sometimes I feel the cultural economy is like Walter Savage Landor in the mid-19th century, writing Latin poetry and not quite understanding that Dickens was rather more important. Single Market Events, which is run by a group of people who are not 'cultural', set up Art Hong Kong which has just been sold to Art Basel. It provided a platform in China for 270 galleries from around the world. They just launched Art 13 here in London. Nobody would go to Single Market Events to talk about the creative economy because they don't dress like us, they don't speak like us, but we ought to embed NESTA or AHRC with them because they're successful. Single Market Events don't need the British Council or UKTI.

JH: As Philip says, we need less G2G and more B2B. It would be wonderful if more British recognised the realities, stopped assuming greatness and woke up to the business possibilities.

Contributions made by Philip Dodd and John Howkins to the original ‘After The Crunch’ can be read here and here.

Created in China

Attitudes to China

Lessons and a way forward

Content and the Cultural Economy

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