Zhou Qiren data map. On June 8, 2024, the Hongfan Institute of Law and Economics held a seminar in Beijing with the theme of "Coase on the Integration of Law and Economics". Zhou Qiren, professor at the National School of Development of Peking University; Deng Feng, professor at Peking University Law School; Feng Xingyuan, researcher at the Institute of Rural Development, Chinese Academy of Social Sciences; Shi Yupeng, professor at the School of Economics, Central University of Finance and Economics; Ren Zeyu, associate professor of the Institute of Law and Economics of China University of Political Science and Law, delivered a lecture, and Wang Yong, director of the Hongfan Institute of Law and Economics, presided over the seminar. This article is based on the actual record, with deletions and corrections, without personal confirmation, and the title is added to this article.
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Zhou Qiren: From the perspective of Coase thought, the current road of enterprise innovation
In 2017, I did a survey in the Pearl River Delta to look at enterprises, especially private enterprises. Looking at a problem, a lot of difficulties have been found at that time, although there is no epidemic in the past three years, and there is no Trump tossing. Talk to a lot of companies about why it's getting harder and harder.
Analyzing the two main problems, one is that the pattern of global competition has changed. Then I drew something like a sandwich, and the sandwich was on top of the developed economies represented by the United States. Although there are all kinds of problems and a lot of troubles, from the perspective of competition, it has killer features, it has original things, it has originality, and this uniqueness is welcomed by consumers around the world.
The deepest memory is 2008, when the financial crisis occurred in the United States, but that year Apple's product could make consumers around the world queue up all night to buy it, which is rarely the case with Chinese companies. American things are expensive, but they are unique, and they lead the way in consumption.
What did China rely on? As soon as the door is opened, it becomes a competitive one, although things are not made well, many people will not make them, and once they will make them, they can imitate them in the future, and the learning cost is relatively low, and you will have a foothold in the market.
The new situation is that a number of open countries have emerged from behind, India opened up 10 years later than China, and Vietnam was reformed and opened up in 88. Because it was originally closed, once opened, its original cost was very low, so sandwiches are Chinese enterprises and industries sandwiched in the middle, and there is not much originality, and the cost is not the most significant and advantageous, and it is uncomfortable here. So to break through is to be surrounded by something, surrounded by the competitive pattern.
The problem of these studies is how to highlight it, because it is really uncomfortable, because if you are unique, you are not afraid of high wages, and you are not afraid of high factor prices. A lot of things, Apple is expensive, but he sells well all over the world. If you don't have originality, but you cost (leading). Because these are two things, market competition, either different, or cost leading.
After 40 years of rapid growth, China is caught in the middle, and this is how the breakthrough theory came about. At that time, I didn't know, at that time I didn't directly say that I could go out to build a factory, there was no such form at that time, although some companies have done it, it became a problem at that time, it was not up to the sky, and the bottom had left the ground, not the lowest cost, there was no originality above, how to fight, and which direction to work hard for the enterprise, which is the topic of the investigation.
If I sit in the room, I really don't have a solution. I believe in a truth, as long as the problem is true, some people will be uncomfortable, and some people will act if they are uncomfortable, this is the truth I believe. The question is whether we can see if there are any of these behaviors that are forced out of discomfort that can help others in terms of information.
In fact, it's not just the breakthrough of Chinese entrepreneurs, you look at the industry, we always talk about the world's factory, this concept is not very accurate. If the world factory, why don't the British do the world factory in the UK, isn't it very good for him to produce and sell to the world, the problem is that this kind of thing can't be done to a certain extent. One reason why a lot of freight comes and can't be sold is that the peasants here don't have much purchasing power, and the small traders and peasants here don't have the purchasing power to buy the current industrial products, so he must let the latecomers complete industrialization.
I have studied the countryside for many years, and this is the characteristic of the peasants, who are busy with the farm for only a few days, and then the seeds have to be turned into crops and grain by basking in the sun. When people bask in the sun, they also bask in the sun, and then they engage in some side hustles and raise chickens and ducks, so the total income, continuous income growth is low.
The biggest problem of the industrial revolution is continuity, he mass production, why did we go to the countryside at that time and heard about the recruitment of workers, why was the difference? It's continuous, I work all the time from morning to night, and I worked 12 hours in my early years, and I was happy because I was paid every hour. When the peasants have income for a few days, the difference is big, so industrialization will definitely come out, it must go from Britain to Germany, to the United States, to Japan, to South Korea, to Southeast Asia, and then we have the Yangtze River Delta and the Pearl River Delta, and now it includes Southeast Asia, including India, including Dubai, including Africa, which is very logical.
But there's one thing in this process that Mr. Coase has studied, that you have to go there, but there will be friction in the middle, there will be obstacles, it won't flow in a straight line. He was going around and around, and he was going around and around. We also studied how to make it turn a little less and flow a little smoother, and the breakthrough is from these directions, and I have been studying this topic for several years, and I still have a lot of gains.
Data map of Coase's later years
There are a lot of great things to create in the face of uncomfortable situations, and it is important to go out on the one hand, and it is also very important to improve your creative ability in the same place. There are very few original Chinese companies, but there are.
At that time, I went to see a company in Shandong, called Sailun, which made tires, and finally dug up a good scientist. Then the company combined with him, and finally invented what was called "liquid gold". Internationally, France is now the global top of the tire industry. So the problems he solves are not something that he has figured out by experience, he has scientific principles behind him.
If we don't investigate, we don't know, it's a very complicated thing, you see you want to be comfortable, why not use wood as a wheel? Not comfortable. However, if you want to be comfortable, the friction will be greater, the energy consumption will be larger, and the speed will be slower. Okay, you have to increase the speed, after the speed is increased, after the friction is reduced, you are easy to brake the car, so it has a contradictory combination between the three variables, and the tire needs to improve all three variables at the same time, which is a very content thing.
As a result, he invited this scientist, in Germany, which was originally famous for China's chemical industry, to visit France, and Germany robbed him, and finally the United States robbed him. In the end, the company in Shandong snatched him back from the United States, retired and came back to set up a research institute for him here, and developed one, it is not a formula, it is a process, and the "liquid gold" formed in the process is now recognized by the world, and the price of this thing in the market is also good, which is a way to break through.
Because when he completes this world-leading innovation, our wage costs are still lower than those in developed countries. To add it up, although we are more expensive than Vietnam and more expensive than India, if your stuff is good and our added value is high, you are still competitive.
This experience should be learned by many Chinese companies, because of the late-mover advantage, you always copy homework faster, and the Jews are picking difficult things to do. The problem we roll up is because everyone picks easy things to do, and the easier things we do, the more impossible they can't do, and the difficult things are easy to do, and this philosophy is very important. Like a good company, I go to see it, and that's the attitude. In my opinion, this is a confidence to break through, and it represents a breakthrough direction, and more companies are doing this. I need to face problems, research experience, and if you ask me about my breakthrough, I just don't have a lot of knowledge.
There is nothing ready-made, it is all difficult, it is found that it does not work, and then the conditions are created, and the reform comes like this. If reality exists, there is no need, these problems are gone. Having enough pressure is a necessary condition, but there must be sufficient conditions, there must be a subject, and there must be an artificial response to these pressures.
There is no predetermined success or failure here, it must be successful, and it must not be successful. As far as I know, Silicon Valley is like a semiconductor in the United States, but in fact, it is also formed in international competition. You see the Soviet Union's pressure on American science and technology back then, it was a national system, and the Soviet Union went up first, which put great pressure on the United States, so after the United States reacted to this thing, American science and technology generally improved.
The second innovation is Japan. Japan once went ahead of the United States in precision manufacturing and semiconductor applications, and the United States later reacted to this, and there is a very important response, that is, an institutional response. He's just a very famous piece of legislation, and it's also a point for us to go to investigate, and he's called the Bayh-Dole Act, and two senators have introduced a bill. In fact, many institutions in China have studied this bill, and we have also tried to learn it in terms of policy and law, and it is still in the process of being processed.
What does Bayh-Dole mean? That is, if the United States used to use federal money, or state financial money to fund basic research, then it used to be from the whole people, and it must be open to the public that anyone can use it, and this has been done in the past, but under the pressure of competition in Japan, it has found that it is not enough, because after you make basic research, it will be turned into an industry, and there are still many levels in the middle, and if there is no further incentive mechanism in the middle, it will not automatically be converted into technology, patents, and products, and there is a big gap in the middle.
And Japan took the lead in this field back then, because you can see the technical principles of scientists all over the world publishing papers, but how to turn a paper into a real technology patent, there are many complicated cards in the middle. And then the Senate made a proposal under pressure from Japan, and what was it?
All the federal and state public funds are the results of this basic research, because the specific undertaking units of this results are universities, research institutes or national laboratories, and the first step is to recognize that they are the ownership of these universities and research institutes, although I applied for federal money, but the basic knowledge that I have generated with my scientists is the ownership of the university, and the ownership is transferred directly from the federation to the university, which is the first step. You can transfer it after you get it, you can transfer it if it's your stuff, you can't transfer the intellectual property rights of the federation. So later on, universities set up research transformation offices to help university professors turn basic research into market and applied things.
Because as soon as you transform in this way, the capital will come in, and after you come in, the transfer office of the university will be divided with scientists and graduate students, and part of it will go to the university's scientific research funds, and part of it will go to the team. This approach made the technological progress of the United States, especially the basic science, which was originally relatively strong, and the transformation from basic science to industrial application also became particularly strong, and it was very important that the things owned by the federal government and the whole people were recognized as their universities.
The first is to focus on basic research, and the second is to place great emphasis on translation. China has always attached great importance to basic research, and although its national strength is limited, you can see that the importance attached to basic research by generations of leaders has been consistent. Although our capital is not big enough, we can increase the cost, but the bigger problem is how to transform, 3,000 universities, academies of sciences, scientific research systems, the basic research generated every day, how to transform it into industry and application, this has done a lot of promotion.
We have also passed the Chinese-style so-called Bayh-Dole Act, and now as far as I know, there is a big step forward, which is to create this condition. The best test is Southwest Jiaotong University, in Chengdu. The university was first founded in Tangshan, the site of China's first railway, where all the disciplines of rail transit in China were first established. Later, due to the war, it moved to the mainland, so Tangshan College was moved to Chengdu and became China's Southwest Jiaotong University in Chengdu. If you think that China's current high-speed railways, railways, and subways, in fact, they require a lot of knowledge, and there are a lot of basic research that can be transformed into productivity.
For example, how many times a day the Shanghai subway brakes, the brakes can generate electricity, and the energy of the brakes can be used to generate electricity, if you don't push this thing further, the university professor will not care if he sends a paper, and I will not care if they submit a paper for their country's research fund, and I will not care if they win the award.
As I understand it, according to Coase's theory, the first task of the state is to properly demarcate rights. It is the primary duty of the State to draw a clear contract between the protection of rights and the protection of the constraints between them. This cannot be done by anarchy. Especially in the high-end field. When you go to China, the problem is even bigger, saying that Peking University and Tsinghua University are both state-owned, and the Academy of Sciences is national, whose results are you producing in the Academy of Sciences? Theoretically, they are all state-owned assets. Therefore, in our Invention Patent Law, there was a distinction between service inventions and non-service inventions, which means that you use public resources to produce the results in the laboratory of the university, but you may also go home and have an idea, so the distinction is made between service inventions and non-service inventions.
Coase: I read him talk about the market of ideas, and the first question I asked was that because the mainstream opinion in the United States is that because the commodity market has fraud, monopoly, and market failure, it should first intervene legally, administratively, morally, and politically. But when it comes to the realm of speech, it should be subject to the First Amendment, free speech. Coase actually asked this question at the earliest, and he thought that it was no different, that it was the same as the ordinary commodity market, that there was the same coefficient of friction, that there would be various results, that there would be different institutional arrangements, and that there was no so-called freedom that was completely free from constraints, which was my original understanding, but when the market of ideas arrived in China, it became the emancipation of the mind. The same approach should be used to study these two seemingly different markets.
By now, because economic growth is now driven by knowledge, material things are becoming less and less important, in fact, a lot of matter is created by ideas, so it will become more and more important to study the order of the market of ideas, power, the rules of the game and how they can evolve.
You look at the experience, I think in practice I still found some good ways, to Huawei, to Xiaomi, to the United States, to all the head companies There is a phenomenon, he tells you the global layout of his R&D center. At that time, Huawei had a very beautiful academy of sciences in Shenzhen, and the small trains were connected together, imitating Europe, and it was built beautifully, which was the base camp of his research and development. However, its research and development is by no means in Shenzhen alone. Global layout, you see that he used this algorithm at the same time 5G, 4G, and 3G in many places in Europe, and the space for mature markets is very limited, you can't say that I can hang 5G base stations in other cities, and it is impossible to hang 4G base stations, and you condense it into one, which is a big challenge at this time. The solution to this problem is a mathematician in Moscow, and this person will not be recruited by you to Shenzhen, and finally set up the R&D center in Moscow. Finally, like mining, if there is the most powerful mind in any field, the R&D center will be set there, and now some excellent companies in the industry are doing this, not exactly in one place.
Li Shufu is now working with many investment funds in Sweden and Gothenburg to build an innovation base here, beyond the scope of automobiles, and the future of automobiles will not be completely driven by automotive technology, it has a lot of cross-border technologies. This phenomenon is a good phenomenon, and then it is very interesting for you to look at it, and it is very interesting for me to observe it, so that a lot of problems that we have discussed a lot, how he solves them, he solves them in this way.
But this problem is solved, and this is the solution. One is to transform a place into the most ideal R&D center, or the most ideal marketplace of ideas, and there is a place where the earth is very big, in fact, China's progress, many people say that it is local government competition, this is not accurate, why should local governments compete? Because the enterprise will run, the enterprise will not run the competition, right? Just close the door and clean up. He will run, you will improve, you will improve, and if you improve, the company will pick the best place to go. Why run? Because the cost of solving the problem in this place was too high, I had to go.
So I communicate with entrepreneurs, and I often say that this is the ancient culture of China, Meng's mother moved three times, and the children's friends were not good. Because he had to find a good friend in the local area, it was too difficult, so I changed places, and if he was not satisfied, he would change places. In fact, this is a very good way to optimize for major countries and for the era of globalization, including environmental optimization and institutional optimization. This is where I see the marketplace of ideas developing.
Each place is different, Gothenburg and his two universities, I thought all the good ones were in the United States over the years, in fact, Trump's toss made the Chinese forget that in fact, there are many good places in the world, which can be well combined. Of course, whether it is to transform the local area in this way, or to move it, or to transform the local area in the process of moving, these are all options, and they may create an environment for improvement in terms of experience, including the marketplace of ideas, which will produce this result. ■