Chapter 4: Research and Technological Mastery in the Corporate Sector
1 RENOVATING THE R&D STRUCTURES The success of the national programmes should be judged by the extent to which the enterprise sector is beneﬁting and involved in R&D. China has initiated a number of national programmes in basic research and in technological development but they are still poorly linked to the country’s economic development, and continued institutional changes are needed. The ongoing transformation of the state-owned enterprises poses a great challenge as the companies did not need to make any major investments in R&D to survive. They are now being forced to engage in R&D to secure their future since China joined the WTO in 2001. Thus the competitive climate has to be strengthened and the Ministry of Science and Technology (MOST) will need to modify policies to boost R&D spending such as tax incentives, and to expand programmes for small and medium-sized enterprises (SMEs). In the meantime advanced production sites in China depend heavily on foreign direct investment (FDI) where foreign companies provide much of the needed technology, and this is poorly integrated with the rest of the economy. This situation also explains the desire of Chinese companies to engage in major mergers with foreign companies, which was exempliﬁed in late December 2004 by the agreement between Lenovo and IBM to take over the American PC division. Today there are many indications that manufacturers in China are starting to realize clearly the possibilities of moving beyond cost advantage and copying capability and...
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