Manufacturing industries have helped drive economic growth and rising living standards for nearly three centuries and continue to do so in developing economies. Building a manufacturing sector is still a necessary step in national development, raising incomes and providing the machinery, tools, and materials to build modern infrastructure and housing.

China is the largest producer nation in the global innovation for local markets segment, followed by the United States and Japan. 1 Developing economies have strengthened their positions significantly, but only three Brazil, India, and China were among the global top ten in 2010. Given the geographic constraints of the group and relatively strong GDP growth rates in developing economies, industries in the global innovation for local markets group are likely to continue growing rapidly in countries such as China and India. Opportunities will be available both to local players and to multinational companies from advanced economies whose home markets are growing at a slower rate.

Products made by the industries in the global innovation for local markets group often are assembled in the same region where they are sold. High transportation costs for many sector products industrial machinery, commodity chemicals, and other heavy, bulky, or fragile items and just-in-time delivery requirements, as in the automotive sector, dictate short distances between producers and customers. Given the geographic constraints of the group and relatively strong GDP growth rates in developing economies, industries in the global innovation for local markets group are likely to continue growing rapidly in countries such as China and India. Opportunities will be available both to local players and to multinational companies from advanced economies whose home markets are growing at a slower rate.

Innovation is the wellspring of success in the China market. There is no other path forward only fierce innovators will thrive. The China Innovation survey, now in its third year, shows that Chinese companies and multinationals alike continuously and rapidly innovate as they jockey for position. Companies continue to adapt their innovation strategies in China. Chinese companies are increasingly turning to technology to deliver first-to-market innovations, building on their historic strength in understanding and defining customer needs. Multinational corporations (MNCs) are internalizing the need for constant customer-based innovations in China.