Rein spoke on October 20 to buyers at the Mobile Electronics Fair about his latest book “The End of Copycat China.” This follows his previous book “The End of Cheap China,” which touches on the rising living conditions for many in China, resulting in higher costs.

Rein is clearly familiar with the various stages of China’s economic development thus far, and he arrived in Hong Kong to tell show attendees that China has largely moved on from its copying phase and has moved on to a new stage of development involving business model innovation. So far, this has largely involved taking existing business models and modifying them for the Chinese market.

This approach can be seen with many successful Chinese companies, perhaps most notably Xiaomi, which recently became the third largest smartphone maker in the world by shipment numbers in the most recent quarter. This is an impressive feat for a company that has yet to officially spread beyond Asia. The company sells high-end hardware at razor thin margins, hoping to make bigger profits through the use of its services in its customized version of Android.

Rein said investment continues to be a problem in the Chinese market, however. Venture capitalists in the country have traditionally preferred companies to rely on low hanging fruit through copying what is already successful, which has reinforced the “copycat China” stereotype. This is slowly changing, according to Rein.

“When you walk around tech hubs in China right now, people are focused on creating something innovative to sell to the marketplace… They want to take the company public and make a lot of money,” he said.

This new focus on innovation has led to better intellectual property protection in China, as well, he added.

According to this model of development, China will eventually reach the final stage of technological innovation, but Rein doesn’t see that becoming widespread for another 10 to 15 years. The areas with the most potential to flourish are those that the government does not find threatening to stability, most notably in biotechnology, which Rein said has aggressive government support.