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By Stephen Shih

As China’s economic growth decelerates, multinationals in China are looking to innovation for the next wave of growth. More than 90 percent of member companies in this year’s Business Climate Survey say that innovation is important for their company’s future growth in China. Additionally, 68 percent say that development and innovation give them a competitive advantage over their domestic competitors. As China increasingly encourages domestic innovation, AmCham China member companies will need to make sure their innovation muscles are strong.

Bain and Company research identifies five capabilities that companies need to achieve their innovation goals. The first is to define an innovation strategy, with specific and credible goals and clear investment priorities. The second is to build an organization that supports innovation. Third, companies need processes from generating ideas to developing ideas into business concepts. Fourth, executives must closely manage the innovation portfolio. And finally, it’s critical to have in place capabilities to rapidly scale the new business concepts that have been developed.

Companies that strengthen these muscles can position themselves to be innovation leaders in China, and can create strong opportunities for growth in China.

Stephen Shih is a Parter at Bain and Company, the co-authors of the 2016 Business Climate Survey. This story is part of a series of spotlights on key findings in the survey. See past editions on internet controls and moving capacity outside of China.