EUbusiness - November 25 2004 - Innovation is Europe's answer to China challenge: report This year's European Competitiveness Report, published by the European Union, touched on an important global trend that threatens the major industrial nations of the Western World. According to the report, the recent trend of countries such as China, which used to focus on labor-intensive goods and low-skill industries, to now become low-cost providers in high-skilled industries, is changing the face of the global economy.

As a result, the EU has identified that if it is to compete in this changing environment, it has to do so through supporting a strong knowledge based economy in its member countries - and in specific, EU companies need to excel at innovation in order to compete.