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Can Chinese IT Firms Develop Innovative Capabilities Within Global Knowledge Networks?

                            Dieter Ernst,
East-West Center, Honolulu, Hawaii
ernstd@EastWestCenter.org
in: "China's Quest for Independent Innovation" (Marguerite Gong Hancock, Henry S. Rowen, and William F. Miller, editors), Shorenstein Asia Pacific Research Center and Brookings Institution Press, 2007

Introduction[i]
      China’s opportunities to build innovative capabilities in the IT industry differ from those faced earlier by Japan and East Asian NIEs. It has a unique combination of advantages in a booming market for electronics products and services; the world’s largest pool of low-cost and easily trainable knowledge workers[ii]; the emergence of sophisticated lead users and test-bed markets; and policy efforts to strengthen China’s innovation system. As a late-late comer, it can learn from the achievements and mistakes of earlier latecomers.
      The international environment is also dramatically different.   Most important is the expansion of global knowledge networks. They have extended beyond markets for goods and finance into markets for technology and knowledge workers (Ernst, 2006a).
      This raises two questions that are at the center of this chapter: Does integration into global knowledge networks facilitate the efforts of Chinese IT firms to develop innovative capabilities? If yes, precisely what type of capabilities are they developing?
  The findings of this chapter can be summarized as follows:
Integration into global knowledge networks exposes Chinese IT firms to leading-edge technology, “best-practice” management and sources of knowledge.
Knowledge about its own markets and production sites helps them to exploit these opportunities.
Successful Chinese firms have not attempted to compete head-on with global leaders through radical innovations. Instead, they have focused on incremental and architectural innovations that support technology... [continues]

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