Most Western assumptions about China are stuck in the past. We still see a low-cost factory of copycats. However, that’s a dangerous mistake. To separate myth from reality, Sigli’s CBDO Max Golikov invited Pascal Coppens onto the Innovantage podcast.
Pascal is a sinologist and tech entrepreneur who has spent almost forty years bridging the gap between Silicon Valley and China. He breaks down how a survival-first mindset is now driving China to lead the global race in innovation.
In 1988, Pascal Coppens started studying Chinese at the university in Ghent, Belgium. What began as an academic interest quickly became a lifelong focus. But his fascination with Asia started even earlier. As a child, he practiced martial arts, including kung fu and karate. That early exposure sparked a deep curiosity about Eastern culture.
By 1996, Pascal moved to China to continue his studies. It was a turning point. He quickly realized that language alone would not set him apart. He expanded into engineering and business, later completing an MBA. This combination would define his career.
Pascal entered the tech industry in 1999, working for Alcatel, a major telecommunications company at the time. His career soon took him across borders and industries.
In the early 2000s, he became part of a company acquired by a US firm. This led him to Silicon Valley, where he spent several years during a critical period of global tech expansion.
By 2005, he returned to China. There, he built and ran his own business for over a decade. In total, he spent nearly 20 years working outside Belgium, most of it in China.
In 2017, he moved back to Europe to launch another software venture. After returning, Pascal noticed a gap. Many people in Europe had a limited or outdated understanding of China.
He began sharing his experiences through talks and presentations. Demand grew quickly. Today, he writes and speaks extensively about China, helping businesses and policymakers better understand its rapid transformation.
According to Pascal, China’s innovation story has changed dramatically over the past two decades.
In the early 2000s, China was still learning from the West. But around 2015, a shift began. The “Made in China 2025” strategy marked a new phase. China no longer wanted to follow. It aimed to lead.
Chinese innovation does not mirror Silicon Valley. It operates under different pressures. As competition is intense, survival is often the primary driver. Companies must move fast or disappear. Such an environment explains why sectors like electric vehicles and AI are advancing so quickly in China.
China is not just competing with the West. It is building its own ecosystem, with its own rules and priorities. Meanwhile, Europe struggles with slower decision-making and fragmented strategy. This makes it harder to respond at the same pace.
China’s economy is full of contradictions. That is exactly what makes it hard to understand from the outside.
This country often feels more capitalistic than Silicon Valley. At the ground level, the market is intense. People are driven to compete and make money. The energy comes from the bottom up.
At the same time, China shows strong social features. There is a clear effort to spread growth across society and avoid leaving people behind. Wealth is not meant to stay only at the top.
This creates a paradox. On the one hand, there is fierce competition and ambition. On the other hand, there is protection and control.
In practice, this balance works. For generations, people have been taught to work hard, improve their lives, and support their families. But the system does not allow chaos to grow unchecked. The government plays a key role here. It does not remove competition. Instead, it manages the pressure created by it.
This is where many Western views fall short. Chinese entrepreneurs are not limited. They operate in a system where intense freedom at the bottom is balanced by control at the top.
Pascal highlighted that much of what people believe about China is no longer accurate. Some of it was never fully true. But a lot of it is simply outdated.
One reason is distance. During the pandemic, travel to China became difficult. Since then, visibility has remained limited. China is also less direct in promoting its achievements. As a result, many still rely on old assumptions.
China is still seen as a low-cost manufacturing hub, driven by cheap labor and poor-quality products. The reality is more complex. China now operates across the full spectrum of quality. Low-end products still exist, especially on mass-market platforms. But at the same time, Chinese companies produce some of the highest-quality goods in the world.
Another common belief is that China mainly copies the West. That may have been partly true in the past. Today, it is far less so. Chinese companies are now major innovators. They compete not just with global players, but with each other. This internal competition has pushed the need for stronger intellectual property protection as well.
A key driver behind this shift is the rise of China’s middle class. With hundreds of millions of consumers demanding better products, companies have been forced to improve. Innovation is no longer optional. It is expected.
There is also a misunderstanding of how China’s system works. Many see it as purely top-down, shaped by government plans and long-term strategies. But that is only part of the picture. The government may guide the direction, but the momentum comes from the market itself.
China is one of the most competitive markets in the world. Success is possible, but it requires a different mindset.
Government support can help, but it comes with trade-offs. Subsidies and incentives may offer an advantage, yet they often bring restrictions. For this reason, many companies think carefully before accepting them. It is never a free benefit.
In the past, Western companies had a clear edge. Ten or twenty years ago, China welcomed them with strong incentives, like tax breaks, cheaper land, and preferential treatment. In some cases, they even had advantages over local firms.
That era is over. Today, the playing field is more balanced. Through joint ventures and partnerships, foreign companies can access similar conditions as Chinese businesses. The legal and business environment has matured.
But that does not make things easy. The biggest challenge is understanding the market. Without local knowledge, language skills, and a willingness to adapt, foreign companies struggle. What works elsewhere rarely works in China without changes.
In some sectors, the barriers are even higher. Software and social media are among the toughest. Regulations are strict, competition is intense, and scaling is difficult. Many global tech companies have faced this reality and failed to gain traction.
Entrepreneurs do not need to move to China or learn Chinese to succeed. But understanding the environment makes a big difference.
Language helps, as it builds relationships. And in China, relationships matter. Strong networks make business easier. Still, it is not a requirement.
What matters most is knowing how the market works.
In China, the moment a new idea appears, dozens of competitors follow. Not because they copy, but because they see opportunity.
The challenge is not demand. China has plenty of consumers. The challenge is the sheer number of competitors chasing the same market.
That pressure shapes better entrepreneurs. Those who can survive in China can compete anywhere.
In Europe, startups often begin with an idea. They aim to build something new, solve a problem, and stand out. Innovation comes first, and growth follows.
In China, the order is reversed.
Companies start with the simplest possible product, not just a minimum viable product, but the absolute minimum needed to get a first customer. Speed matters more than perfection.
From day one, the focus is on sales and market feedback. Products are launched quickly and improved in real time. Instead of creating new markets, companies respond to existing demand.
Only after this initial battle, when fewer players remain, does true innovation begin. At that stage, companies refine their products, differentiate, and expand into new markets.
Reputation also plays a different role. In many Western markets, quality must be strong from the start. In China, early imperfections are accepted. If a company fails early, its reputation does not matter anyway.
Both models can work. The Western approach, which includes building a strong idea, securing funding, and scaling, can be very effective, especially in stable markets with fewer competitors and industries that require time and precision.
But in fast-moving environments, the Chinese model often performs better.
When competition is intense and customer needs change quickly, speed matters more than perfection. Markets like consumer tech evolve rapidly. In these conditions, the Chinese approach has a clear advantage.
As Pascal explained, the idea that Chinese cars are low quality no longer reflects reality. Today, Chinese manufacturers cover the full range. There are still cheaper models, but there are also premium vehicles that compete with top global brands.
Take companies like BYD. They offer everything from affordable electric cars to high-end models. The gap between entry-level and premium is wide, but that is true for any global brand.
Chinese companies can now match international standards across most categories. In the past, they competed mainly on price. Today, they compete on quality, features, and innovation.
Another shift is happening behind the scenes.
Much of the innovation is no longer just consumer-facing. It is happening in the supply chain. A large share of modern car components (batteries, software systems, electronics) comes from Chinese companies.
In many cases, even non-Chinese car brands rely on Chinese technology inside their vehicles.
China has large, dominant companies. But true monopolies are rarely allowed to exist unchecked.
The government plays an active role in this. Like Europe, China has anti-monopoly regulations. In recent years, authorities stepped in more aggressively to limit the power of big tech and protect smaller players.
Companies like Alibaba dominate large parts of the domestic market. Others, such as CATL, hold major global positions. In some sectors, Chinese firms lead the world.
These companies operate under closer oversight. If they grow too powerful or risk harming competition, the government intervenes. The goal is to keep the market dynamic and prevent smaller companies from being squeezed out.
Another key point is timing. Many Chinese giants expanded globally later than their Western counterparts. But that is now changing. Companies like BYD are entering international markets and competing directly with established European and American brands.
Policies such as tariffs or delays in the transition to electric vehicles aim to protect local industries. But they may also slow down competition. In the long run, this can be risky.
China’s market moves fast. Prices drop quickly. Entire industries shift in short cycles. In this environment, rigid strategies fail. What works instead is agility.
It means adjusting quickly, working with partners, responding to new conditions without delay, as well as accepting a level of chaos as normal.
In many ways, Chinese companies are used to this. They operate in uncertainty every day. Over time, that builds resilience.
One of Europe’s biggest challenges is decision-making. Unlike China or the US, Europe struggles to prioritize and pick winners in strategic industries.
In China, the government invests in ecosystems rather than individual companies. They decide which sectors (like green energy, EVs, or batteries) are critical, then build partnerships and momentum around them.
Europe has done similar things historically. Airbus is a classic example: different countries contributed components to build a powerful aviation industry. Belgium and Switzerland excelled in biotech and chemicals by fostering specialized clusters. But today, European policy often tries to be fair to everyone. It spreads resources thin and helps companies that might not survive on their own. This approach dilutes impact. Europe often fails to strengthen ecosystems in a decisive way.
Another difference lies in funding structures. Chinese support often comes as loans tied to performance, encouraging companies to build value. In Europe, grants are more common. Sometimes they go to firms that already have significant resources, favoring the most bureaucratically savvy rather than the most innovative.
European leaders are entrepreneurial and willing to take risks, but the organizational culture often slows execution. In China, speed and flexibility are built into the system. Competitors can emerge overnight, and market positions are constantly challenged.
A striking example is Temu. Within a decade, it challenged Alibaba’s dominance by rethinking distribution, cutting middlemen, lowering prices, and engaging younger consumers.
Huawei illustrates this mindset on a global scale. Even after being blocked from US markets and having restricted access to chips, the company survived and adapted. It expanded into energy, EVs, airports, and chip production, constantly searching for the next opportunity.
The popular idea of an AI race between the US and China is misleading. In reality, the two countries are approaching AI very differently.
The US is focused on AGI (artificial general intelligence), which presupposes creating AI as intelligent as humans. The country sees the competition as a race to be first. Efforts center on massive computing power, advanced chips, cloud infrastructure, and top talent. It’s about winning a theoretical summit rather than widespread adoption.
China, by contrast, emphasizes practical application. Companies embed AI across industries, such as manufacturing, healthcare, materials, and pharmaceuticals. They focus on scalable adoption. Many tools are open source and affordable. They democratize AI so businesses can implement it quickly.
This approach allows China to set global standards in applied AI. While the US chases AGI, China is embedding AI everywhere, shaping real-world practices and expectations.
Trust is also a factor. Chinese businesses and consumers are generally more willing to embrace technology than their Western counterparts. Europe’s cautious approach slows adoption, limiting its ability to compete.
As one of the world’s largest AI developers, China should be part of global debates on governance, safety, and standards.
In China, the focus isn’t just on inventing AI technology. It’s on building applications that solve real problems. Proprietary breakthroughs are valuable, but the real advantage lies in how AI is applied. By making AI open-source, China has created a highly competitive market where hundreds of models compete and improve rapidly.
Open source fosters collaboration. Developers can adapt and enhance models. As a result, better applications can push improvements to the models, which in turn enable even stronger applications.
Chinese AI now matches, or even surpasses, US benchmarks in many areas. These results prove that openness doesn’t mean falling behind.
As both Max and Pascal agreed, in AI, widespread access and rapid iteration can be more valuable than keeping technology proprietary. The market itself drives innovation at an extraordinary pace.
Want to learn more about tech and innovation? The Innovantage podcast will give you a clear look at the trends that actually matter. Don’t miss our next episodes.
Pascal Coppens is a sinologist, tech entrepreneur, author, and speaker who has spent nearly four decades studying China and working between Europe, Silicon Valley, and China.
The episode explores how China really innovates, why many Western assumptions about China are outdated, and what entrepreneurs can learn from China’s fast-moving market.
No. While low-cost production still exists, China now operates across the full quality spectrum, from affordable mass-market products to premium technologies, electric vehicles, AI tools, and advanced supply chain components.
That view is outdated. China did learn heavily from the West in the past, but today many Chinese companies are major innovators, especially in areas like electric vehicles, batteries, AI, manufacturing, and consumer technology.
Chinese innovation is often driven by survival. Companies launch quickly, sell early, respond to market feedback, and improve fast. In the West, startups often spend more time refining an idea before going to market.
The Chinese MVP model focuses on building the absolute minimum needed to get the first customer. Speed, sales, and feedback come first. Deeper innovation often happens later, once the company survives initial competition.
China has a huge consumer base and a dense field of ambitious companies. When a new opportunity appears, many competitors move quickly, which forces businesses to adapt, improve, or disappear.
Many Chinese EVs are now highly competitive in quality, technology, and innovation. Brands like BYD offer both affordable and premium models, and Chinese companies also supply key components such as batteries, software, and electronics.
The US often focuses on AGI and frontier AI development. China focuses more on practical AI adoption across industries such as manufacturing, healthcare, materials, and pharmaceuticals.
Open-source AI allows more companies and developers to build, test, and improve applications quickly. This creates a highly competitive environment where practical AI tools can evolve faster.
European entrepreneurs can learn the value of speed, market feedback, adaptability, and resilience. The Chinese model shows that in fast-moving markets, execution can matter as much as the original idea.
Europe often moves more slowly because of fragmented decision-making, cautious regulation, and funding structures that spread resources too thin instead of building strong strategic ecosystems.
Not always. Both models can work. The Chinese model is especially effective in fast-moving, highly competitive markets, while the Western model can work well in industries that require precision, trust, and longer development cycles.
The biggest misconception is that China is still a cheap, low-quality copycat economy. In reality, it has become a major global innovation force with its own ecosystem, rules, and priorities.
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