Your underlying assumption is that companies where employees work more hours are more successful on the market place. I would say this is a deeply flawed assumption.
If two equally capable entities are competing, the one who puts in more time will almost always win. The Chinese may be lacking the (social and physical) infrastructure that the Europeans have a head start on for productivity, but they are catching up or have already caught up.
This probably applies less to big conglomerates who exist and will continue existing regardless of what happens (honestly most of their employees can just not show up and they will be fine), but more to technical innovation.
I can guarantee you that in general in software engineering, you will produce the same result, whether you work 30 or 40 or 60 hr a week. The productive hours will be the same as you just have so much focused hours inside of you.
Yep you are 100% correct. Most super productive software developers only really focus/work a few hours a day. Software development is about thinking not typing.
For building infrastructure or manufacturing, probably yes, but not for innovation.
Anyone being forced to work under the conditions you describe is probably too terrified to do anything more than iteratively replicate existing foreign designs.
You can't force innovation by locking people in a dungeon and screaming "INNOVATE!" at them until they succeed.
