Chinas Technological Capability

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Chinas Technological Capability
Asian Development Bank Institute Beijing
December 3-4

• Jon Sigurdson
• East Asian Institute, Singapore
• Stockholm School of Entrepreneurship

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Textile Industry A

• US and EU companies currently buy from about 60
  countries - might source from as few as 20 by
  2006 and less than 10 by 2010.
• China might capture some 50 per cent of the trade
  compared with presently 16 per cent.
• Many Chinese companies are already offering
  improved supply-chain management and value-added
  services in design

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Textile Industry B

• The average Chinese garment worker was paid
  1,600 in 2001, more than double his Indian
  counterpart
• Despite the Chinese workers higher pay
  productivity was significantly higher he adds
  5,000 a year in value to the garments he
  processes, compared with 2,600 by his Indian
  equivalent.
• The difference reflects Chinas greater
  investment in modern manufacturing equipment and
  in infrastructure such as transportation.

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Industrial Categories - Lall

• Resource-based industries
• Low-technology industries
• Medium-technology industries
• High-technology industries

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Three Goals of China's Science and Technology

• China aims to be one of the frontrunners among
  developing countries around 2010, to the medium
  level among world giants in science and
  technology 11 years later 2020 - and squeeze
  into the top rankings among those giants around
  2049
• Source
• Bai Chunli, Vice President of the Chinese Academy
  of Sciences Peoples Daily, November 26 2004

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Chinas First ST Strategy

• Make full use of the global innovative resources
• participate widely in bilateral, multilateral and
  global competition and cooperation
• enhance China's capability in innovation and
  industrialization level in science and
  technology.

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Chinas Second ST Strategy

• boost the foundation and vigor of science and
  technology
• improve foresight at the frontiers of basic
  research and important hi-tech fields
• enhance original scientific innovation
• prioritize information, life, material sciences
  and important interdisciplinary sciences
• realize breakthrough and leap forward in selected
  key technologies where China has a competitive
  advantage.

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Chinas Third ST Strategy

• exert special efforts to solve problems affecting
  the development of science and technology.
• strengthen the construction of the national
  innovation system
• Strengthen reform on marketization
• promote the close combination of science and
  technology, with economic and social development
  - also with national security
• Reform and develop the educational system

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Chinas Changing Universities

• 1990-95 Xiahai Go into business
• 1995-2000 Consolidation
• 2000-2005 Expansion
• 2005-2010 Upgrading quality

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Critical Mass in Technology?

• By 2014, which is 10 years away, the number of
  college graduates in China could reach 80
  million.
• At this point China could achieve sufficient
  critical mass to pose a strong challenge to its
  neighbours - the Japanese and South Koreans - in
  technological development.
• Let us assume that 20 million Chinese graduates
  in 2013 have engineering training and, among
  them, 1 are engaged in research on high-tech
  marketable products
• China would then have around 200,000 brains
  pushing that frontier

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Challenging Factors - Moreira

• Endowment
• Productivity
• Scale
• Government suppport
• Technology upgrading and frontier development

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Chinas Position in Selected Sectors

• The IT sector
• Integrated Circuits
• High-performance computers
• Aircraft
• Other sectors, e.g. biotechnology

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Integrated Circuits

• Domestic demand memories. ASICs etc. for global
  IT products
• Earlier almost total imports
• Domestic supply
• - Taiwan companies SMIC
• - Intel InfineonMotorola Matsushita, etc.
• - Chinese companies started to produce advanced
  processor chips Arca, Longxin

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High-performance Computers

• China is in late 2004 in possession of 14
  supercomputers out of a total of 500 which gives
  China a fourth ranking in the world on level of
  Germany and only behind the US, Japan and Great
  Britain.
• The Shanghai Supercomputer Center in June 2004
  assembled a machine that at the time became the
  worlds 10th fastest computer, by using more than
  2,500 chips designed and manufactured by Advanced
  Micro Devices in the US

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Supercomputer companies

• Lenovo (formerly Legend) spun-off from the
  Institute of Computing Technology (ICT) in 1981
  and entered the HPC market in 2001. ICT is one of
  major research institute of the Chinese Academy
  of Sciences
• Dawning that was spun-off from ICT in 1995 and
  the same year entered the HPC market. Development
  jointly with ICT and the Shanghai Supercomputer
  Center.
• Langchao entered the HPC market in 2002
• Galactic Computing become the recent entrant in
  the computer industry in 2004

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Chinas Aircraft Industry Aviation Industries
of China

• CAICI regional jet domestic development ARJ21
• CAICII - regional jet joint venture with Embraer
  EMB170
• Boeing and Airbus - subcontractors
• civil aviation fleet would have to add 1,400
  large jet liners by the year 2022, which if all
  are imported, as in the past, would cost in the
  region of US100 billion
• aviation industry executive declared in March
  2004 that he anticipates China's first large
  aircraft to fly by 2018

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Heterogenity - Devlin

• Shanghai
• Ningbo
• ..
• ..
• Dongguan, Guangdong
• ..

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Ningbo Moulding Industry

• Metal molding already strong is expanding into
  new product areas, attracting investments from
  Hong Kong.
• There are three molding industry centers in
  China.
• One is Shenzhen which has its focus on
  die-casting for electronics.
• The second one is Taichu in Zhejiang that is
  strong in plastics.
• The third center is Ningbo which has become
  strong in molding for the automobile sector and
  for home electric appliances.

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Ningbo Moulding cluster

• Molding industry employs some 100,000 workers.
• Expansion in Shanghai forcing an industrial
  restructuring in Ningbo.
• Private industry has played a pivotal role.
• Expanding demand from Japan, Germany and Taiwan
  has fostered a local development of the molding
  industry
• Machinery for plastics molding developed at early
  stage.
• Ningbo enterprises deliver molds for products
  that weigh only a few grams to pieces as large as
  50 kilograms
• Subsidiaries in the US, and companies from Korea
  and Japan have made investments in Ningbo.

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1. Operational clusters

• Proximity gives speed of throughput, product
  changeovers, increasingly specialized engineering
  and assembly labor.
• Operational clusters may on occasion be sources
  of new product ideas, but their principal goal is
  to achieve operational efficiencies
• Any new technologies they create are meant to
  improve production processes of supply chain
  management

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2. Technological clusters

• Technological clusters offer co-location of
  activities that lead to the recognition of new
  market opportunities, the development of new
  technologies and the design of new products.
• Such cluster change over time as new firms enter
  into the technological field and new designs
  offer or demand major changes in global
  production networks.

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