By Ma Jun & Ma Xiaobai, DRC

2017-5-2

The government needs to encourage and guide private capital to make investment in emerging industries, flesh out the tax system to implement employee stock ownership plans (ESOP), enhance the commercialization of research and development deliverables, consummate the company law to expand the enterprise innovation space, and improve supervision of the industry to promote fair competition between the old and new forms of businesses.

The new mechanism for the rapid growth of innovative enterprises can be summarized as follows. 1. Venture capital makes input for the development of innovative enterprises to help innovative enterprises overcome the difficult transformation from technical invention to commercial application. 2. The basic condition for the rapid growth of innovative enterprises rests on the rapid expansion of the users, which is particularly the case with Internet companies. As long as they can attract users, there is a chance to get profit. 3. The growth of users and the expansion of the enterprises depend on the creativity of the enterprises. 4. Innovative enterprises grow in strength through acquisition of the same trade.

The reasons for the rapid growth of innovative enterprises are as follows. 1. The swift advance of technological drive has given impetus to the rapid development of innovative enterprises, which can bring great competitive advantages for innovative enterprises. 2. The advance of globalization has channeled global capital into innovation-driven leading enterprises. 3. The scale economies and network effects have led to the result of winner-takes-all.

To foster a strong innovation ecosystem, we need to take the following measures. 1. We need to encourage and guide social capital to invest in emerging industries. 2. We need to flesh out tax system, implement employee stock ownership plans and enhance the commercialization of research and development results. 3. We need to consummate the company law to provide more space for the innovation of enterprises. 4. We need to improve the supervision of the industry and establish a market environment with fair competition.