IDEAS home Printed from https://ideas.repec.org/a/eee/asieco/v23y2012i3p270-287.html
   My bibliography  Save this article

How Chinese firms learn technology from transnational corporations: A comparison of the telecommunication and automobile industries

Author

Listed:
  • He, Xiyou
  • Mu, Qing

Abstract

China has been utilizing foreign direct investment (FDI) based on the strategy of “trading market access for technology” since 1978. However, there are differences in opinion regarding the performance of China's strategy. This paper examines the growth of technological capability of Chinese indigenous firms under a revised model of technological learning and catch-up based on research by Kim (1997) and Lee and Lim (2001). The paper investigates the process of industrial growth in China by developing the two cases of the telecommunication equipment industry and the automobile industry, and analyzes the aforementioned strategy from the viewpoint of technological learning and industrial catch-up. This study finds that knowledge was gained by leveraging China's huge market to “trade market access for technology”, and that indigenous firms must enhance the intensity of their efforts to assimilate acquired technologies so as to improve their technological capabilities. Through comparison of the two industries, we find that industrial policy regulating private firms’ market access directly affects the performance of the industrial catch-up.

Suggested Citation

  • He, Xiyou & Mu, Qing, 2012. "How Chinese firms learn technology from transnational corporations: A comparison of the telecommunication and automobile industries," Journal of Asian Economics, Elsevier, vol. 23(3), pages 270-287.
    • Handle: RePEc:eee:asieco:v:23:y:2012:i:3:p:270-287
    DOI: 10.1016/j.asieco.2011.10.004
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1049007811000923
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.asieco.2011.10.004?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Lee, Keun & Lim, Chaisung, 2001. "Technological regimes, catching-up and leapfrogging: findings from the Korean industries," Research Policy, Elsevier, vol. 30(3), pages 459-483, March.
    2. Kim, Linsu, 1980. "Stages of development of industrial technology in a developing country: A model," Research Policy, Elsevier, vol. 9(3), pages 254-277, July.
    3. Xiaobai Shen, 1999. "The Chinese Road to High Technology," Palgrave Macmillan Books, Palgrave Macmillan, number 978-1-4039-0550-5.
    4. Motohashi, Kazuyuki & Yuan, Yuan, 2010. "Productivity impact of technology spillover from multinationals to local firms: Comparing China's automobile and electronics industries," Research Policy, Elsevier, vol. 39(6), pages 790-798, July.
    5. Xie, Wei & Wu, Guisheng, 2003. "Differences between learning processes in small tigers and large dragons: Learning processes of two color TV (CTV) firms within China," Research Policy, Elsevier, vol. 32(8), pages 1463-1479, September.
    6. Lin, Justin Yifu, 2003. "Development Strategy, Viability, and Economic Convergence," Economic Development and Cultural Change, University of Chicago Press, vol. 51(2), pages 276-308, January.
    7. Girma, Sourafel & Gong, Yundan & Görg, Holger, 2009. "What Determines Innovation Activity in Chinese State-owned Enterprises? The Role of Foreign Direct Investment," World Development, Elsevier, vol. 37(4), pages 866-873, April.
    8. Breschi, Stefano & Malerba, Franco & Orsenigo, Luigi, 2000. "Technological Regimes and Schumpeterian Patterns of Innovation," Economic Journal, Royal Economic Society, vol. 110(463), pages 388-410, April.
    9. Brandt, Loren & Thun, Eric, 2010. "The Fight for the Middle: Upgrading, Competition, and Industrial Development in China," World Development, Elsevier, vol. 38(11), pages 1555-1574, November.
    10. Mu, Qing & Lee, Keun, 2005. "Knowledge diffusion, market segmentation and technological catch-up: The case of the telecommunication industry in China," Research Policy, Elsevier, vol. 34(6), pages 759-783, August.
    11. Cohen, Wesley M & Levinthal, Daniel A, 1989. "Innovation and Learning: The Two Faces of R&D," Economic Journal, Royal Economic Society, vol. 99(397), pages 569-596, September.
    12. Choi, Suk Bong & Lee, Soo Hee & Williams, Christopher, 2011. "Ownership and firm innovation in a transition economy: Evidence from China," Research Policy, Elsevier, vol. 40(3), pages 441-452, April.
    13. Cheung Kui-yin & Lin, Ping, 2004. "Spillover effects of FDI on innovation in China: Evidence from the provincial data," China Economic Review, Elsevier, vol. 15(1), pages 25-44.
    14. Furong Jin & Keun Lee & Yee‐Kyoung Kim, 2008. "Changing Engines of Growth in China: From Exports, FDI and Marketization to Innovation and Exports," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 16(2), pages 31-49, March.
    15. Lin, Justin Yifu, 2003. "Development Strategy, Viability, and Economic Convergence," Economic Development and Cultural Change, University of Chicago Press, vol. 51(2), pages 276-308, January.
    16. Lee, Keun, 2005. "Making a Technological Catch-up: Barriers and Opportunities," MPRA Paper 109776, University Library of Munich, Germany.
    17. Liu, Xielin & White, Steven, 2001. "Comparing innovation systems: a framework and application to China's transitional context," Research Policy, Elsevier, vol. 30(7), pages 1091-1114, August.
    18. Guan, Jian Cheng & Yam, Richard C.M. & Mok, Chiu Kam & Ma, Ning, 2006. "A study of the relationship between competitiveness and technological innovation capability based on DEA models," European Journal of Operational Research, Elsevier, vol. 170(3), pages 971-986, May.
    19. Dobson, Wendy & Safarian, A.E., 2008. "The transition from imitation to innovation: An enquiry into China's evolving institutions and firm capabilities," Journal of Asian Economics, Elsevier, vol. 19(4), pages 301-311, August.
    20. Lin, Ping & Liu, Zhuomin & Zhang, Yifan, 2009. "Do Chinese domestic firms benefit from FDI inflow?: Evidence of horizontal and vertical spillovers," China Economic Review, Elsevier, vol. 20(4), pages 677-691, December.
    21. Pavitt, Keith, 1984. "Sectoral patterns of technical change: Towards a taxonomy and a theory," Research Policy, Elsevier, vol. 13(6), pages 343-373, December.
    22. Lemoine, Francoise & Unal-Kesenci, Deniz, 2004. "Assembly Trade and Technology Transfer: The Case of China," World Development, Elsevier, vol. 32(5), pages 829-850, May.
    23. Lai, Mingyong & Peng, Shuijun & BAO, Qun, 2006. "Technology spillovers, absorptive capacity and economic growth," China Economic Review, Elsevier, vol. 17(3), pages 300-320.
    24. Keun Lee & Mansoo Jee & Jong-Hak Eun, 2011. "Assessing China's Economic Catch-Up at the Firm Level and Beyond: Washington Consensus, East Asian Consensus and the Beijing Model," Industry and Innovation, Taylor & Francis Journals, vol. 18(5), pages 487-507.
    25. Liu, Xiaohui & Buck, Trevor, 2007. "Innovation performance and channels for international technology spillovers: Evidence from Chinese high-tech industries," Research Policy, Elsevier, vol. 36(3), pages 355-366, April.
    26. Harwit, Eric, 2008. "China's Telecommunications Revolution," OUP Catalogue, Oxford University Press, number 9780199233748, Decembrie.
    27. Bin, Guo, 2008. "Technology acquisition channels and industry performance: An industry-level analysis of Chinese large- and medium-size manufacturing enterprises," Research Policy, Elsevier, vol. 37(2), pages 194-209, March.
    28. Liu, Xiaohui & Zou, Huan, 2008. "The impact of greenfield FDI and mergers and acquisitions on innovation in Chinese high-tech industries," Journal of World Business, Elsevier, vol. 43(3), pages 352-364, July.
    29. Xu, Bin, 2000. "Multinational enterprises, technology diffusion, and host country productivity growth," Journal of Development Economics, Elsevier, vol. 62(2), pages 477-493, August.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Nimisha Pandey & Heleen de Coninck & Ambuj D Sagar, 2022. "Beyond technology transfer: Innovation cooperation to advance sustainable development in developing countries," Wiley Interdisciplinary Reviews: Energy and Environment, Wiley Blackwell, vol. 11(2), March.
    2. Ramani, Shyama V. & Urias, Eduardo, 2018. "When access to drugs meets catch-up: Insights from the use of CL threats to improve access to ARV drugs in Brazil," Research Policy, Elsevier, vol. 47(8), pages 1538-1552.
    3. Saranga, Haritha & Schotter, Andreas P.J. & Mudambi, Ram, 2019. "The double helix effect: Catch-up and local-foreign co-evolution in the Indian and Chinese automotive industries," International Business Review, Elsevier, vol. 28(5), pages 1-1.
    4. Cooke, Fang Lee & Wu, Gang & Zhou, Jing & Zhong, Chong & Wang, Jue, 2018. "Acquiring global footprints: Internationalization strategy of Chinese multinational enterprises and human resource implications," Journal of Business Research, Elsevier, vol. 93(C), pages 184-201.
    5. Jianlong Wu & Zhongji Yang & Xiaobo Hu & Hongqi Wang & Jing Huang, 2018. "Exploring Driving Forces of Sustainable Development of China’s New Energy Vehicle Industry: An Analysis from the Perspective of an Innovation Ecosystem," Sustainability, MDPI, vol. 10(12), pages 1-24, December.
    6. Han Huang & Jie Xiong & Junfang Zhang, 2021. "Windows of Opportunity in the CoPS’s Catch-Up Process: A Case Study of China’s High-Speed Train Industry," Sustainability, MDPI, vol. 13(4), pages 1-16, February.
    7. Rai, Varun & Funkhouser, Erik, 2015. "Emerging insights on the dynamic drivers of international low-carbon technology transfer," Renewable and Sustainable Energy Reviews, Elsevier, vol. 49(C), pages 350-364.
    8. Ulas Emiroglu, 2015. "Catch-up with Generative State: Lessons from Chinese Telecom Equipment Industry," STPS Working Papers 1503, STPS - Science and Technology Policy Studies Center, Middle East Technical University, revised Dec 2015.
    9. Minaee, Mohammadreza & Elahi, Shaban & Majidpour, Mehdi & Manteghi, Manoochehr, 2021. "Lessons learned from an unsuccessful “catching-up” in the automobile industry of Iran," Technology in Society, Elsevier, vol. 66(C).
    10. Zhang, Jian & Vialle, Pierre, 2014. "An event-based analysis of Huawei's strategic path and style," 25th European Regional ITS Conference, Brussels 2014 101379, International Telecommunications Society (ITS).
    11. Hübler, Michael, 2015. "Labor mobility and technology diffusion: A new concept and its application to rural Southeast Asia," Journal of Asian Economics, Elsevier, vol. 39(C), pages 137-151.
    12. Rituparna Kaushik & Sourabh Bikas Paul, 2021. "Strategic Interactions, Bargaining Power and Stability of Joint Venture in an Emerging Nation," Journal of Industry, Competition and Trade, Springer, vol. 21(4), pages 543-564, December.
    13. Wei‐Kang Wang & Wen‐Min Lu & Irene Wei Kiong Ting & Hui‐Ru Kao, 2020. "Asset‐light strategy, managerial ability, and corporate performance of the Asian telecommunications industry," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 41(8), pages 1568-1579, December.
    14. Lei Guo & Marina Yue Zhang & Mark Dodgson & David Gann & Hong Cai, 2019. "Seizing windows of opportunity by using technology-building and market-seeking strategies in tandem: Huawei’s sustained catch-up in the global market," Asia Pacific Journal of Management, Springer, vol. 36(3), pages 849-879, September.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Mu, Qing & Lee, Keun, 2005. "Knowledge diffusion, market segmentation and technological catch-up: The case of the telecommunication industry in China," Research Policy, Elsevier, vol. 34(6), pages 759-783, August.
    2. Liu, Xiaohui & Hodgkinson, Ian R. & Chuang, Fu-Mei, 2014. "Foreign competition, domestic knowledge base and innovation activities: Evidence from Chinese high-tech industries," Research Policy, Elsevier, vol. 43(2), pages 414-422.
    3. Jason Li-Ying & Yuandi Wang & Søren Salomo & Wim Vanhaverbeke, 2013. "Have Chinese firms learned from their prior technology in-licensing? An analysis based on patent citations," Scientometrics, Springer;Akadémiai Kiadó, vol. 95(1), pages 183-195, April.
    4. Minaee, Mohammadreza & Elahi, Shaban & Majidpour, Mehdi & Manteghi, Manoochehr, 2021. "Lessons learned from an unsuccessful “catching-up” in the automobile industry of Iran," Technology in Society, Elsevier, vol. 66(C).
    5. Tianjiao Xia & Xiaohui Liu, 2017. "Foreign competition, domestic competition and innovation in Chinese private high-tech new ventures," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 48(6), pages 716-739, August.
    6. Ju, Xiaosheng & Jiang, Shengjun & Zhao, Qifeng, 2023. "Innovation effects of academic executives: Evidence from China," Research Policy, Elsevier, vol. 52(3).
    7. Majidpour, Mehdi, 2017. "International technology transfer and the dynamics of complementarity: A new approach," Technological Forecasting and Social Change, Elsevier, vol. 122(C), pages 196-206.
    8. Fulvio Castellacci, 2007. "Technological regimes and sectoral differences in productivity growth ," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 16(6), pages 1105-1145, December.
    9. Li, Xibao, 2011. "Sources of External Technology, Absorptive Capacity, and Innovation Capability in Chinese State-Owned High-Tech Enterprises," World Development, Elsevier, vol. 39(7), pages 1240-1248, July.
    10. Sungho Rho & Keun Lee & Seong Hee Kim, 2015. "Limited Catch-up in China’s Semiconductor Industry: A Sectoral Innovation System Perspective," Millennial Asia, , vol. 6(2), pages 147-175, October.
    11. Giorgio Prodi & Francesco Nicolli & Federico Frattini, 2020. "Embeddedness and local patterns of innovation: evidence from Chinese prefectural cities," Economic Complexity and Evolution, in: Andreas Pyka & Keun Lee (ed.), Innovation, Catch-up and Sustainable Development, pages 283-307, Springer.
    12. Costantini, Valeria & Liberati, Paolo, 2014. "Technology transfer, institutions and development," Technological Forecasting and Social Change, Elsevier, vol. 88(C), pages 26-48.
    13. Zhang, Gupeng & Zhou, Jianghua, 2016. "The effects of forward and reverse engineering on firm innovation performance in the stages of technology catch-up: An empirical study of China," Technological Forecasting and Social Change, Elsevier, vol. 104(C), pages 212-222.
    14. Qiang Li & Jing-Jing Guo & Wei Liu & Xiao-Guang Yue & Nelson Duarte & Carla Pereira, 2020. "How Knowledge Acquisition Diversity Affects Innovation Performance during the Technological Catch-Up in Emerging Economies: A Moderated Inverse U-Shape Relationship," Sustainability, MDPI, vol. 12(3), pages 1-19, January.
    15. Yuandi Wang & Nadine Roijakkers & Wim Vanhaverbeke, 2014. "How fast do Chinese firms learn and catch up? Evidence from patent citations," Scientometrics, Springer;Akadémiai Kiadó, vol. 98(1), pages 743-761, January.
    16. Nnaemeka Vincent Emodi & Girish Panchakshara Murthy & Chinenye Comfort Emodi & Adaeze Saratu Augusta Emodi, 2017. "Factors Influencing Innovation and Industrial Performance in Chinese Manufacturing Industry," International Journal of Innovation and Technology Management (IJITM), World Scientific Publishing Co. Pte. Ltd., vol. 14(06), pages 1-32, December.
    17. Gupeng Zhang & Hongbo Duan & Jianghua Zhou, 2016. "Investigating determinants of inter-regional technology transfer in China: a network analysis with provincial patent data," Review of Managerial Science, Springer, vol. 10(2), pages 345-364, March.
    18. Suk Choi & Christopher Williams, 2014. "The impact of innovation intensity, scope, and spillovers on sales growth in Chinese firms," Asia Pacific Journal of Management, Springer, vol. 31(1), pages 25-46, March.
    19. Lei Guo & Marina Yue Zhang & Mark Dodgson & David Gann & Hong Cai, 2019. "Seizing windows of opportunity by using technology-building and market-seeking strategies in tandem: Huawei’s sustained catch-up in the global market," Asia Pacific Journal of Management, Springer, vol. 36(3), pages 849-879, September.
    20. Yi Qu & Yingqi Wei, 2017. "The Role of Domestic Institutions and FDI on Innovation—Evidence from Chinese Firms," Asian Economic Papers, MIT Press, vol. 16(2), pages 55-76, Summer.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:asieco:v:23:y:2012:i:3:p:270-287. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/asieco .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.