Chapter 9: How Low- and Medium-technology Industries in Developing Countries Compete with Multinationals: Lessons from China’s Home Electronics Sector
Guo Yung-Hsing INTRODUCTION 1. In the 1990s, after a dozen years of struggling and developing, brands of Chinese firms finally started selling to their own advantage. Indigenous home electronics firms, in particular, now have not only their own well-known brands, they have also honorably pushed multinationals to the margins of the Chinese market. (Dong Ming-Zhu, 2000, p. 220)1 The home electronics industry covers a diversity of technological activities – ranging from simple assembly to extremely sophisticated manufacturing – which could provide indigenous firms, especially those in developing countries, with low entry costs and substantial opportunities for upgrading technologically (Perez, 1985). However, when an indigenous firm is forced to compete with multinational firms which have the advantage of better technology, capital, productive efficiency and management skills, newly established local firms will often fail, as Lowe and Kenney (1999) have discussed using Mexico as an illustration. But, as Dong Ming-Zhu has suggested in the quotation at the beginning of this chapter, the development of China’s home electronics industry has had a different scenario in that local firms have totally displaced foreign subsidiaries in the domestic market. In China, home electronics has emerged as one of the most successful industries since the late 1970s, when the government began to adopt a series of more liberal industrial policies. Before the 1980s, the electric fan was the only mass-produced item, but within twenty years China had become the largest producer of home electronics goods in the world and indigenous firms were the most important manufacturers (Japan...
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