Why China cannot develop its own iPhone - Forbes


Everyone reading New York Times has probably come across a recent article that addresses a question many Americans ask, including President Obama: Why aren’t iPhones made in the US?

While this question is certainly of great importance at a time job growth in the US is slow and unemployment is hovering around 9 percent, it downplays the very fact that the iPhone is an American, not a Chinese product. This means that America, not China is the driver of innovation and job growth in the world economy.

A more interesting question that needs to be addressed is: Why can’t China develop its own iPhone?

The answer is that China lacks a very important resource that contributed to the development of the iPhone: Schumpeterian entrepreneurship—that is the discovery and exploitation of new market opportunities; the development of radically new products that make a difference in consumer lives, fostering the growth of new industries and new job opportunities at the same time.

Schumpeterian entrepreneurship is a special and peculiar resource. It cannot be purchased and acquired in the marketplace. Neither can it be imposed from above from an enlightened government bureaucracy. It must be nurtured and fostered within an environment that releases the imagination, ingenuity and creativity of the individual in “examining life,” by exploring new business concepts and ideas, creating wealth and prosperity at the same time. Entrepreneurship must be imbued in libertarian ideas and immersed in a culture that respects and rewards inventors, entrepreneurs, and pioneers.

Obviously, such an environment doesn’t exist in China. The very concept of Schumpeterian entrepreneurship doesn’t blend well with China’s culture of Confucian conformity to existing norms. Throughout the country’s history, the established order saved little respect for inventors, entrepreneurs, and business pioneers.

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