Technology leadership versus competence leadership: An analysis of national competitiveness and resilience

Technology leadership vs. competence leadership: How sustainable dominance really arises

The global economic landscape is characterized by intense competition, with nations and companies vying for technological supremacy. Leadership in specific technology fields—so-called "technology leadership"—is often seen as the primary indicator of strength and future viability. Examples such as China's dominance in photovoltaic (PV) manufacturing or industrial robot installations seem to support this assumption. However, the underlying thesis of this report, prompted by the observation of specific national dominance, is that technology leadership in defined sectors is not necessarily synonymous with deeply entrenched, broad-based national "competence leadership.".

This article aims to define and differentiate the concepts of technological and competence leadership. Using China's case studies in photovoltaics and robotics, the drivers and nature of these specific technological leaderships are analyzed. Building on this, the article examines the extent to which this dominance is based on a comprehensive national competence base and what implications this has for long-term competitiveness and economic resilience. The analysis is based on the evaluation of industry data, policy documents, academic research, and expert reports.

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Conceptualizing leadership: Technology vs. competence

To examine the central question, a clear conceptual delimitation is necessary. In particular, the terms competitiveness, technological leadership, and competence leadership must be defined and related to one another.

Definition of national competitiveness

The concept of national competitiveness is multifaceted and is not used uniformly in economic literature and political discourse. Definitions range from the ability to achieve a high level of income and employment on a sustainable basis, to securing a high standard of living for the population compared to other countries, to creating a favorable environment for productive businesses through institutions and political measures. From a business perspective, competitiveness means generating profits in the long term and maintaining or expanding market share.

The competitiveness of a nation or company comprises various components. It encompasses the ability to assert itself against market partners (vertical), competitors (horizontal), and external threats (lateral). Key factors influencing national competitiveness are diverse and, in addition to price aspects such as exchange rates and unit labor costs, increasingly include non-price factors. These include, in particular, productivity growth, innovation capacity, the quality of infrastructure, the level of education, the effectiveness of institutions, and legal certainty. Modern approaches broaden the concept to include aspects such as environmental and climate protection as well as quality of life, thus going beyond purely economic measures such as gross domestic product ("Beyond-GDP").

The differing definitions of competitiveness already reflect a potential tension. Metrics that focus on immediate economic outcomes such as income or market share could favor nations that exhibit strong technological leadership in currently dominant sectors. Definitions that emphasize sustainable well-being, institutional quality, or broad innovation capacity, on the other hand, correlate more strongly with the concept of competence leadership. The choice of definition thus implicitly shapes the evaluation of different leadership models.

Definition of technological leadership (sector-specific dominance)

In the context of this report, technological leadership is primarily understood as achieving a dominant global position in the production, deployment, or market share of a specific technology or industrial sector. Examples include China's leading role in the manufacture of photovoltaic modules or in the installation of industrial robots.

This type of leadership is often driven by specific factors:

• Targeted industrial policy: Government strategies, subsidies, favorable loans and the creation of domestic demand can massively promote the development of dominant industries.
• Economies of scale: High investments in production capacities enable mass production and significant cost advantages.
• Cost leadership: Aggressive cost reduction strategies, often supported by favorable energy prices or labor costs, can drive out competitors.
• Technology acquisition and adaptation: Acquiring key technologies through licenses, purchasing production facilities, or recruiting talent can enable entry and rapid advancement.
• Large domestic market: A large domestic market can serve as a basis for scaling and testing before addressing the global market.

However, such sector-focused technological leadership also carries potential risks and limitations. It can be based on temporary advantages (e.g., subsidies, specific regional cost structures), lead to global overcapacities, and mask a dependence on imported key components or basic research and development (R&D) in other countries. This form of leadership could therefore be less resilient to technological disruptions, geopolitical tensions, or the loss of specific advantages.

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Definition of competence leadership (broad-based capability)

In contrast, competence leadership describes a deep, broad, and resilient national capacity for innovation across various fields. It is rooted in a strong National Innovation System (NIS). An NIS comprises the network of institutions in the public and private sectors (businesses, universities, research institutes, government agencies) whose activities and interactions initiate, import, modify, and disseminate new technologies.

The central pillars of competence leadership are:

• Human capital: A high level of education, qualified professionals, lifelong learning systems, and the ability to develop, attract, and retain talent are fundamental. Investments in human capital directly influence innovation and resilience.
• R&D ecosystem: Strong public and private investment in R&D, excellent research institutions, effective cooperation between industry and science, and capacities for basic and applied research are crucial.
• Institutional framework conditions: These include innovation-friendly policies, effective governance, strong protection of intellectual property, access to financing (e.g. venture capital) and a high-performing infrastructure (digital, physical).
• Corporate skills: Strong management and organizational skills within companies, including technical, cognitive, interpersonal and results-oriented leadership skills, as well as the ability to integrate and successfully commercialize innovations.

Competence leadership implies adaptability, the ability not only to generate new knowledge but also to absorb and apply it, as well as sustainable innovation potential. This contributes significantly to long-term economic resilience. It is about the ability to be and remain innovative across waves of technological change.

Interaction and divergence

Technological leadership can certainly arise from competence leadership, for example, when a strong R&D base leads to a technological breakthrough that is then successfully scaled commercially. However, the analysis of case studies, particularly those of China, suggests that technological leadership can also be achieved through other means—such as strategic industrial policy, massive scaling, and technology acquisition—without necessarily reflecting deep, broad competence across the entire national innovation system.

It is also important to distinguish the definition of technological leadership used here (national sector dominance) from the academic definition of "technology leadership." The latter often refers to the ability of individuals or organizations to effectively lead people in a technological context. This type of leadership requires a combination of sound technical expertise and broader leadership skills (communication, strategic thinking, change management).

The analysis of China's rise in photovoltaics and robotics focuses primarily on national sector dominance, achieved largely through economies of scale and industrial policy. A central question of this report is whether this sector dominance also leads to a deepening of underlying competencies, including technological leadership skills, or whether a gap remains between market dominance and fundamental competence. This potential discrepancy is a key aspect of the debate.

Key differences: Technology leadership vs. Competence leadership

Key differences: Technology leadership vs. competence leadership – Image Xpert.Digital

Technology leadership and competence leadership differ in several key aspects. While technology leadership aims for a dominant global position in the production, deployment, or market share of a specific technology sector, competence leadership focuses on deep, broad, and resilient national innovation capabilities across multiple fields, supported by a strong national innovation system (NIS). Key drivers of technology leadership include targeted industrial policy, economies of scale, cost leadership, technology acquisition or adoption, and a large domestic market. In contrast, the drivers of competence leadership are based on strong human capital, a high level of R&D, effective institutions, strong corporate skills, and a functioning NIS.

Typical metrics for measuring technological leadership include market share and production volume within the sector, as well as export data. For competence leadership, R&D intensity, patent quality, publication output, the number of STEM graduates, availability of venture capital, and innovation indices are used. The core strengths of technological leadership lie in rapid market penetration, cost advantages, and targeted resource utilization, while competence leadership excels through adaptability, diversification, and sustainable innovation potential.

However, each model has potential weaknesses: Technological leadership is often dependent on specific policies and costs, susceptible to technological leaps, and can generate potential overcapacity. Competency leadership, on the other hand, develops specialized dominance more slowly, is vulnerable to the "valley of death" commercialization gap, and requires long-term investments. With regard to resilience, technological leadership is considered potentially less resilient due to its narrow specialization and dependencies, while competency leadership promises greater resilience through adaptability, diversification, and the ability to continuously innovate.

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China's technological leadership in photovoltaics (PV): An in-depth analysis

China's rise to global leadership in the PV industry is a striking example of achieving technological leadership in a strategically important sector. This dominance extends across the entire value chain.

Mapping dominance along the value chain

The global PV manufacturing landscape has shifted dramatically over the past decade, away from Europe, Japan, and the US and toward China. Current data confirms China's overwhelming market share, exceeding 80% across all key manufacturing stages—polysilicon, ingots, wafers, cells, and modules. For upstream, capital-intensive stages like wafers and polysilicon, experts predict a rise to nearly 95% in the near future. This dominance is underpinned by massive investment: Since 2011, China has invested over US$50 billion in new PV production capacity, ten times more than Europe. China is home not only to the world's largest PV factories but also to the top ten suppliers of PV manufacturing equipment. This manufacturing power is also reflected in trade: PV products are a significant export for China, with exports exceeding US$30 billion in 2021.

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Driver analysis

Several factors have enabled this unprecedented dominance:

Industrial policy

The Chinese government has identified the photovoltaic (PV) industry as a strategic sector and has massively promoted it. This has included subsidies (e.g., the “Golden Sun Demonstration Project” after the 2011 crisis), feed-in tariffs to stimulate domestic demand, favorable loans from state-owned banks, and advantageous electricity tariffs in production hubs like Xinjiang and Jiangsu. Policy has evolved from an initial focus on export promotion by subnational governments to stronger central government coordination for shaping the domestic market and addressing overcapacity.

Economies of scale & costs

The enormous investments enabled the construction of gigantic factories and thus the realization of significant economies of scale. This, combined with lower costs for energy (especially in coal-mining regions), labor, and investment, led to a drastic reduction in production costs and established China as the most cost-effective production location worldwide. In 2023, module costs in China fell by 42%, further extending its cost advantage over India, the USA, and Europe.

Supply chain integration

Leading Chinese PV companies have successfully pursued vertical integration strategies, meaning they are active at multiple stages of the value chain. This increases cost efficiency and allows them to better absorb fluctuations in individual segments. Furthermore, the geographical concentration of production—upstream stages in regions with inexpensive energy, downstream stages closer to ports—promotes cost efficiency.

Technology Acquisition & Innovation

China's entry into PV production was largely achieved through the acquisition of technologies, particularly the purchase of turnkey production lines and the recruitment of foreign-trained Chinese specialists and managers. China succeeded in acquiring and mastering production technologies without itself being a major user of PV systems. However, a shift towards greater domestic innovation has since occurred. Chinese companies are investing in R&D to increase cell efficiency (from approximately 16% to over 22%), reduce material consumption (silicon, silver), and develop and scale new technologies such as TOPCon (Tunnel Oxide Passivated Contact) and Back Contact (BC).

Competency assessment

Analysis of the drivers suggests that China's technological leadership in the PV sector was primarily achieved through a strategically oriented industrial policy, massive production scaling, and aggressive cost reduction. Initially, the technology was acquired and adapted rather than originally developed. The innovation activities visible today appear to be a consequence of established market power and production capacities rather than their initial driving force. This supports the interpretation of a model that relies on "deployment first, innovate later" to achieve sector leadership.

However, this model also harbors specific vulnerabilities. The dependence on low electricity prices in certain regions creates susceptibility to changes in energy policy or cost increases. The strong geographical concentration of production increases risks from local disruptions (natural disasters, etc.). Another significant problem is the tendency toward global overcapacity resulting from massive expansion in China. This overcapacity leads to price erosion, margin pressure, and potential consolidation or even bankruptcies within the industry. These factors raise questions about the long-term resilience and sustainability of this specific technology leadership model and support the assumption that such leadership may be more fragile than one based on broader competencies.

China PV Dominance & Drivers (as of approx. 2023/2024)

China PV Dominance & Drivers (as of approx. 2023/2024) – Image: Xpert.Digital

China dominates the global photovoltaic value chain with market shares exceeding 80% across all key stages. In the polysilicon sector, its share is projected to rise from over 80% to nearly 95%, driven primarily by favorable energy prices, economies of scale, and cost leadership in regions like Xinjiang and Jiangsu. For ingots and wafers, the current share is also over 80%, with a similar forecast of reaching 95%, supported by industrial policy, technological advancements, and cost efficiency. The market share for solar cells was approximately 92% in 2023, fueled by vertical integration, technological leadership (e.g., TOPCon, PERC), and cost leadership. In the solar module sector, China currently holds a share of around 85%, aided by brand recognition, efficient logistics management, and low production costs. Solar glass is a particularly strong segment, where China is projected to dominate with a 93% market share in 2023. Despite a slight projected decline to 90% by 2025, Chinese manufacturers benefit from competitive advantages such as low energy costs, raw materials and labor, as well as massive capacity expansions and price advantages.

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China's technological leadership in robotics: Scaling and strategy

Similar to the PV sector, China has also built up a remarkable technological leadership in the field of industrial robotics, which, however, is primarily manifested in the breadth of applications and market size.

Mapping dominance in deployment and market

For years, China has been by far the world's largest market for industrial robots. In 2022, 290,258 new units were installed there, representing 52% of the global market. This trend continued in 2023, with China again accounting for over 50% of global demand. The operational stock of industrial robots in China has surpassed 1.5 million units – a figure unmatched worldwide.

Particularly striking is the high adoption rate, even when considering lower labor costs compared to industrialized countries like the USA. Studies indicate that in 2021, China achieved 12 times the robot adoption rate in manufacturing that would have been expected based on wage levels. At the same time, domestic robot manufacturers are rapidly gaining ground. Their share of annual domestic installations rose from 30% in 2020 to 47% in 2023.

Driver analysis

This development is not a coincidence, but the result of a concerted strategy and specific market conditions:

Industrial Strategy ('Made in China 2025'): Robotics was identified as one of ten key industries in the 2015-launched 'Made in China 2025' (MIC 2025) strategy. Its objectives include the comprehensive modernization of Chinese industry, increasing the domestic share of core components (target: 70% by 2025), reducing dependence on foreign technology, and ultimately achieving global leadership in high-tech manufacturing. Subsequent five-year plans reaffirmed these ambitions, including the goal of global leadership in robotics and the development of highly skilled professionals.

Government support: The strategy is accompanied by massive financial support. This includes government-backed venture capital funds with target volumes of up to 1 trillion yuan (approximately USD 138 billion), as well as extensive subsidies at the national and provincial levels to promote the use of robots and automation technology.

Market demand & scaling: The huge domestic market, particularly in sectors such as electronics manufacturing (where almost two-thirds of industrial robots were installed in 2023) and automotive manufacturing, creates enormous demand and allows domestic suppliers to achieve economies of scale.

Cost competitiveness: Through localized supply chains and production scaling, Chinese robots are becoming increasingly cheaper than imported alternatives.

Competency assessment

Despite impressive market and adoption figures, China's technological leadership in robotics shows clear signs of incomplete competence leadership:

Dependence on core components: A critical weakness remains the strong dependence on foreign suppliers for technologically sophisticated core components such as precision gearboxes (reducers), controllers, servo motors, and increasingly, AI chips. These components account for a significant portion of robot costs (up to 70%) and are often still technologically dominated by Japanese, German, or Swiss companies. Although domestic suppliers are also developing in this area, this dependence remains a strategic vulnerability, particularly in the context of geopolitical tensions and technology export controls.

Innovation character (“Fast Follower”): International assessments, such as those of the ITIF, characterize Chinese robot manufacturers in many areas as “fast followers” ​​who catch up technologically and primarily compete on the basis of cost and scale, rather than consistently being at the forefront of fundamental innovation.

Skills Gap: The rapid spread of robots and automation exceeds the availability of skilled workers who can operate, maintain, integrate, and further develop these systems. Although the government is investing heavily in retraining and further education programs, this skills gap represents a barrier to transformation and could limit future productivity gains and leaps in innovation. The coexistence of world-leading adoption rates and significant skills gaps vividly illustrates the potential divergence between the use of technology (technology leadership in adoption) and the development of the necessary human skills base (skills leadership).

Future ambitions: China is investing heavily in future fields such as humanoid robots and the integration of artificial intelligence, and is building up domestic expertise in components. This demonstrates a clear intention to transform its existing technological leadership into broader competence leadership.

In summary, China's current leadership in robotics is primarily characterized by application and market size, driven by ambitious industrial policies and government support. However, its continued reliance on foreign core technologies and visible skills gaps suggest that this market leadership does not yet equate to complete competence leadership across the entire technological spectrum.

China Robotics Dominance & Drivers (as of approx. 2023)

China Robotics Dominance & Drivers (as of approx. 2023) – Image: Xpert.Digital

China is striving for dominance in robotics, with various drivers and metrics illustrating its progress. Its global installation share exceeds 50% (e.g., 52% in 2022, 51% in 2023), supported by the "Made in China 2025" industrial policy, government subsidies, and strong domestic demand in the electronics and automotive sectors. The operational stock surpassed 1.7 million units by the end of 2023, driven by years of high installation rates and economies of scale. The domestic market share of domestic suppliers increased from 30% in 2020 to 47% in 2023, thanks to government support, cost competitiveness, and growing technological expertise. The adoption rate, measured against the US wage-adjusted rate, is remarkably high, reaching approximately twelve times its expected value in 2021. This is attributable to aggressive government incentives and a strategic focus on automation. Nevertheless, there is a high dependence on imported core components such as gearboxes, controllers, servos, and AI chips, which account for approximately 70% of costs. This indicates a technological lag in certain high-end areas compared to international specialists. At the same time, a significant skills gap is evident – ​​despite substantial investments in (re)training, there is a shortage of skilled workers for operation, maintenance, and innovation. Rapid technological advancements exceed the adaptability of the education system, while demographic change exacerbates the challenge.

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The foundation: National competence, innovation systems and resilience

Following the analysis of China's specific technological leadership in PV and robotics, the report now turns to the question of the broader foundation of national strength: competence leadership, anchored in effective National Innovation Systems (NIS) and their importance for economic resilience.

The pillars of competence leadership

As already outlined in section 2.3, competence leadership is based on a well-functioning National Innovation System (NIS). This system is more than the sum of its parts; it is the network of public and private actors—businesses, universities, research institutions, financial institutions, government agencies—and their interactions that create, disseminate, and apply new knowledge. The effectiveness of this system significantly determines a nation's innovation performance.

Key elements of a strong NIS and thus of competence leadership are:

Investment in research and development (R&D): Sustainable public and private investment in R&D is a necessary foundation. The public sector plays a critical role, particularly in financing basic research and research addressing societal challenges, often through research funding organizations and direct institutional support. The business sector is the main driver of R&D in many OECD countries. However, what matters is not only the level of expenditure, but also the efficiency of the system in translating R&D into innovation.

Human capital and education: Knowledge embodied in people (“human capital”) is a key resource. A high-quality education system at all levels, lifelong learning programs, and the ability to train and attract skilled professionals are essential. The exchange of knowledge through the mobility of skilled workers is an important mechanism within the National Intelligence System (NIS). Investments in human capital have a direct positive impact on the innovative capacity and resilience of businesses and economies.

Framework conditions and institutions: These include innovation-friendly policies, effective governance, strong protection of intellectual property, access to finance (especially venture capital for start-ups), a modern infrastructure (physical and digital), and a culture that promotes innovation and entrepreneurship.

Measuring deeper competence and innovation potential

Solely looking at market shares in individual sectors is insufficient to capture a nation's true, profound leadership in a given field. A more comprehensive assessment requires considering a broader range of indicators that reflect the health and performance of the entire non-essential services (NIS).

Relevant indicators include, among others:

Input indicators: R&D intensity (total R&D expenditure as a percentage of GDP – GERD/GDP), share of corporate R&D (BERD), share of university R&D (HERD), number and quality of STEM graduates (Science, Technology, Engineering, Mathematics), availability of venture capital.

Activity and output indicators: number and quality of patent applications (e.g. PCT applications, citation rates), number and impact of scientific publications in key fields, number of technology-based business start-ups, collaborations between companies and research institutions.

Impact indicators: Share of high-tech exports in total exports or GDP, share of knowledge-intensive employment, productivity growth, sales of new products, digital skills of the population.

Holistic indices: Rankings in established innovation indices such as the WIPO Global Innovation Index (GII) or the European Innovation Scoreboard (EIS), which combine a variety of indicators.

The necessity of such a multidimensional approach becomes clear when considering the complexity of innovation systems. Focusing solely on output metrics like market share can mask underlying weaknesses in the competence base. For example, a country may perform very well in innovation rankings (indicating a strong competence base) but still lack broad market leadership in many high-tech sectors, as the example of Switzerland demonstrates. This underscores the need to consider inputs, processes, and diverse outputs to differentiate between technological and competence leadership.

Combining competence and resilience

A broad and deep national competence base is an essential prerequisite for economic resilience. Resilience describes the ability of a system (in this case, an economy) to withstand shocks, adapt, and potentially even evolve in a transformative way. The link between competence leadership and resilience arises from several aspects:

Adaptability: A strong NIS with well-trained professionals and flexible institutions enables an economy to react more quickly to technological disruptions, market changes, or external shocks and to seize new opportunities. The ability to absorb and apply knowledge is crucial here.

Diversification: High technological and economic complexity, often resulting from a broad competence base, leads to a more diversified economic structure. This reduces vulnerability to crises in individual sectors. However, it should be noted that excessive, disjointed complexity can also negatively impact the efficiency of factor allocation and diminish resilience.

Continuous innovation: Competence leadership is the driving force behind continuous innovation. This enables an economy to move up the value chain, tap into new sources of growth, and secure its long-term competitiveness.

In contrast, close, possibly strategically achieved, technological leadership entails specific resilience risks:

Technological lock-in: Focusing on a dominant technology can lead to disruptive new approaches being overlooked or adapted too late.

Supply chain risks: A high dependence on imported key components or raw materials creates vulnerabilities, as is clearly demonstrated in the case of China's robotics core components.

Policy and cost dependency: If leadership is heavily dependent on specific subsidies, favorable energy prices, or other government measures, their elimination or change can quickly undermine the competitive position.

Underinvestment in fundamentals: An excessive focus on short-term market leadership can lead to a neglect of long-term basic research and broad technology development, making future innovation leaps more difficult.

The analysis thus suggests that economic resilience is strongly correlated with the characteristics of competence leadership: adaptability, diversification through broad capabilities, and the potential for continuous innovation stemming from a robust NIS and a strong human capital base. This contrasts with technology leadership models, which may be optimized for current market dominance but lack the underlying breadth and depth for long-term adaptability. China's specific dependencies (e.g., energy costs in PV production, core components in robotics) illustrate the potential vulnerabilities of its technology leadership-oriented model.

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Comparative perspectives on innovation and leadership models

To further illustrate the differences between technological and competence leadership, it is worthwhile to look at the innovation models of other leading industrial nations such as Germany, Japan and Switzerland in comparison to China.

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Germany: Established expertise in transition

Germany traditionally possesses a strong industrial base of expertise, particularly in automotive manufacturing, built on excellent engineering knowledge, high product quality, and productivity. R&D spending is high, with a significant share allocated to industry (BERD). However, the challenges lie in adapting these established strengths to the “dual transformation”—digitalization and decarbonization. High energy costs, bureaucratic hurdles, and a growing shortage of skilled workers are impacting competitiveness. In key future sectors such as battery cell manufacturing and highly automated driving, Germany risks falling behind global competitors like China. Germany’s strategic response consists of massive investment plans in R&D and modern production facilities to strive for a leading role in digital and climate-neutral products and to improve its location factors. Germany’s model thus represents deep industrial expertise that now faces a profound transformation process.

Japan: Strategic ruptures and remaining strengths

Japan's relative decline in importance in the semiconductor and electronics industry since the late 1980s is attributed less to a fundamental lack of technical expertise and more to strategic missteps. These include adhering to the integrated manufacturing model (IDM) in a globalizing industry with horizontal division of labor (TSMC's foundry model), a hesitant industrial restructuring, and a belated focus on software development. External factors such as the 1986 US-Japan Semiconductor Agreement and the appreciation of the yen also played a role.

However, Japan retains global strengths in specific niches of the value chain, such as semiconductor materials, manufacturing equipment, and high-end electronic components. Current efforts aim for a “semiconductor renaissance,” driven by government strategies and international collaborations (e.g., with TSMC), but face challenges such as a shortage of skilled workers and high costs. The example of Japan illustrates how strategic decisions can influence and even undermine competence-based leadership.

Switzerland: High innovation capacity, focused market leadership

For years, Switzerland has consistently ranked among the top countries in global innovation rankings such as the GII and EIS. This position is based on excellent framework conditions: a first-class education system at all levels, lifelong learning programs, and the ability to train and attract qualified professionals are essential. The exchange of knowledge through the mobility of skilled workers is a key mechanism within the National Innovation Strategy (NIS). Investments in human capital have a direct positive impact on the innovative capacity and resilience of companies and economies.

Despite this fundamental strength, Switzerland does not exhibit dominant market leadership in all sectors. Exports of medium- and high-tech products are below the EU average. Potential for improvement is also seen in the innovation activity of SMEs, risk appetite, the start-up culture, and the level of digitalization. Instead, Switzerland excels in specific, highly profitable niches such as life sciences/pharmaceuticals, financial technology (especially crypto/blockchain), biotechnology, precision instruments, and potentially drone technology. Switzerland thus embodies a model of competence leadership based on strong fundamentals, leading to high overall innovation capacity and selective excellence, but not necessarily to broad sector dominance in mass markets.

Synthesis of the models

The comparison reveals different national innovation paths. Germany stands for profound industrial expertise that must adapt to new realities. Japan shows how strategic decisions can influence leadership despite existing technical capabilities. Switzerland demonstrates how strong foundations (education, research, institutions) can lead to high innovation capacity and niche leadership without necessarily striving for broad market shares.

China's model examined here (focusing on photovoltaics and robotics) appears different. It prioritizes industrial policy-driven scaling and rapid market penetration in strategically selected sectors. In doing so, it may accept a narrower technological breadth or dependencies on core components in the short term in order to quickly achieve visible technological leadership. This comparative analysis underscores that there is no single path to "leadership" and that the nature of this leadership—whether primarily technology- or competence-based—varies significantly.

Comparative indicators of national innovation systems (selection)

Comparative indicators of national innovation systems (selection) – Image: Xpert.Digital

Comparative indicators of national innovation systems reveal interesting country-specific differences. In China, research and development intensity (GERD % GDP) was 2.43% between 2021 and 2023, in Germany 3.13%, in Japan 3.30%, in Switzerland approximately 3.15%, and in the USA 3.46%. For corporate R&D (BERD % GERD), China reached 76.9%, Germany 66.9%, Japan 78.6%, Switzerland approximately 70%, and the USA 77.6%. Higher education research (HERD % GERD) was significantly lower in China at 7.8% than in Germany (18.3%), Japan (11.9%), Switzerland (approximately 27%), and the USA (10.4%). The indicator for STEM graduates is very high in absolute terms in China, high in Germany, medium-high in Japan, also high per capita in Switzerland, and high in the USA.

Regarding high-tech exports, China showed a high and increasing share, Germany a high share with a strong automotive industry, Japan a medium level, Switzerland below the EU average, and the USA also a high share. In the Global Innovation Index (GII) for 2024, the countries ranked as follows: China 11th, Germany 9th, Japan 13th, Switzerland 1st, and the USA 3rd. In the European Innovation Scoreboard (EIS), Germany achieved 116.4% of the EU average (Strong Innovator), Switzerland an impressive 138.4% (Leader), while no data was available for China, Japan, and the USA.

The strengths of the individual countries showed clear differences: China scored points with its scalability, deployment speed, focus on industrial policy, and its large market. Germany impressed with its engineering expertise, industrial R&D, quality, and strong SMEs. Japan demonstrated strengths in materials and plant engineering, components, and process optimization. Switzerland stood out with top performance in education, research, human capital, institutional stability, and niche excellence. The USA, on the other hand, distinguished itself particularly through basic research, venture capital, a strong start-up ecosystem, and expertise in software and digital platforms.

Weaknesses in the innovation systems also became clearly apparent. China faced a dependence on core components, a lack of specific capabilities, limited innovation breadth, and partially inefficient commercialization. Germany suffered from high energy costs, bureaucracy, a slowed pace of transformation in digitalization and sustainability, and demographic challenges. Japan exhibited deficits in strategic agility, a historically low focus on software, and demographic problems. Switzerland showed weaknesses particularly in broad commercialization and a sometimes lower appetite for risk, as well as in the scaling of startups. The USA struggled with social inequality, partially inadequate infrastructure, societal polarization, and a historical gap in medium-term research and development.

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Synthesis and strategic implications

The analysis of the concepts of technological and competence leadership, as well as the case studies of China and other industrialized nations, allows for a synthesis of the results and the derivation of strategic considerations.

Reassessment of the core issue

The study confirms the central thesis: China's impressive technological leadership in sectors such as photovoltaics and robotics is real and has been achieved primarily through a consistent industrial strategy, massive scaling, and effective technology deployment. At the same time, however, the continued dependence on foreign core components (particularly in robotics) and emerging skills gaps indicate that this sectoral dominance does not yet fully correspond to deep, broadly established competence leadership.

The initial assumption is thus supported: technological leadership based primarily on such factors can be decoupled from a comprehensive national competence base and is potentially less resilient. While China undoubtedly strengthens its overall innovation capabilities, the model in the sectors studied appears to be more geared towards establishing facts on the ground through rapid market dominance, from which further competence can then be built.

Strategic considerations for national competitiveness

The different national models illustrate a strategic field of tension:

Targeted technological leadership can enable rapid success in strategically important sectors and secure market share. However, risks lie in potential dependencies, lack of breadth, and reduced adaptability to paradigm shifts.

Broad competence leadership: This approach relies on long-term investments in education, research, and institutions. It fosters resilience and adaptability but may lead to visible market leadership in specific sectors more slowly. There is a risk that excellent research will not be effectively translated into marketable products and services (the “Valley of Death” problem).

The challenge for nations lies in finding a balance. Neither a purely input-oriented approach (high R&D spending without effective implementation) nor a sole focus on a few sectors appears to be an optimal long-term strategy. Crucial is the functioning of the entire national innovation system – the ability to effectively leverage investments in knowledge and human capital through strong links between research, development, financing, production, and the market. High spending alone does not guarantee success if systemic connections are weak or commercialization stalls.

Implications for policy

The analysis has several implications for political decision-makers:

Holistic assessment: National strength should not be measured solely by market shares in individual sectors. More comprehensive indicators are needed that capture the depth, breadth, and resilience of the national competence base (e.g., the health of the NIS, the quality of human capital, the diversity of the R&D landscape, and adaptability indicators).

Systemic support: Policy should not only promote inputs (R&D budgets, university places), but also specifically strengthen connections within the NIS: cooperation between science and industry, technology transfer, access to venture capital, creation of test markets and real-world laboratories.

Technology and skills diffusion: In addition to the creation of new technologies, their effective adoption and diffusion across the economy is crucial for productivity gains and competitiveness.

Proactive skills management: Technological change and automation require a continuous adaptation of qualifications. Policymakers and businesses must proactively invest in education, training, and retraining to avoid skills gaps and fully exploit the potential of new technologies.

Balancing focus and breadth: A strategic focus on key technologies can be beneficial, but it must not lead to the neglect of fundamental skills. Long-term investments in education and broad-based (basic) research remain essential for future adaptability.

National resilience through competence leadership: a success factor for global competition

Technological leadership and skills leadership are distinct concepts with different drivers and implications for national resilience. While sector-specific dominance can be achieved relatively quickly through strategic focus and scaling, as the example of China demonstrates, long-term, resilient competitiveness likely relies on cultivating a deep and broad national skills base. Understanding these dynamics is of crucial strategic importance for political and economic actors in an era of rapid technological change and intense global competition. The ability not only to develop or deploy technologies, but also to create an ecosystem that enables continuous innovation, adaptation, and knowledge application, is increasingly becoming the decisive factor for the prosperity of nations.

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