International Business and the Entry of China into the Global Economy
New Horizons in International Business series
Edited by Robert Pearce
Chapter 3: Multinationals’ R & D in China and its Implications for China’s National System of Innovation
3. Multinationals’ R&D in China and its implications for China’s national system of innovation Si Zhang INTRODUCTION China has been bearing the title of ‘the World’s factory’ for the last three decades, while, however, the potential of the country’s ability to sustain and deepen multinational enterprises (MNEs) competitiveness, within or outside the nation, has been overlooked. The chapter seeks to examine the growing research and development (R&D) of MNEs in China, and its implications for China’s National System of Innovation (NSI), by documenting and analysing the extent and the strategic roles and motivations of these laboratories. Thus, a quite remarkable fact in the recent extensive entry of MNEs into China has been the quickness with which a majority of these firms have established R&D laboratories there. The chapter elaborates an analysis of results from a questionnaire survey conducted in 2005 to examine, firstly, the existence of MNE overseas R&D in China by the six industrial sectors involved in the survey (including automobiles, electronics and electrical equipment, food and drink, IT hardware and software, personal care and pharmaceuticals and chemicals). In the research, technology-intensive industries, such as telecommunications electronics and pharmaceuticals, tend to receive more attention and investment in R&D projects and to enjoy a rapid development in research capacity. Surprisingly, however, companies in some industries that are often considered as middle- or low-tech sectors, such as food and drink and personal care, also have R&D facilities quickly established in China. Thus one aim of...
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