An examination of China's evolution in manufacturing and innovation since 1978

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An examination of China's evolution in manufacturing and innovation since 1978

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Abstract

Since 1978, Chinese manufacturing industries have experienced remarkable growth and dramatic change. China is now the third largest manufacturing country in the world. Moreover, China is becoming more increasingly innovative with its own products and services. Yet, there is much to learn about China's economic and industrial transformation. The purpose of our paper is to examine China's historical changes from having a highly-centralized, planned economy to having a market-based system. We also offer several insights regarding the ongoing evolution of Chinese manufacturing, as this transformation process continues. In addition, we shed new light on innovation theory and practice as China becomes increasingly capable as an innovator in our emerging global economy.

Innovation is at the center of the industrial evolutionary process. It is vital for industry success and sustainability (Nevens, Summe and Uttal, 1990; Zahra, Nash and Bickford, 1994; Sadowski and Ruth, 1999). The link between innovation and industrial evolution has been analyzed from several perspectives (Rothwell, 1992; Smeds and Boer, 2004; Brenner, 2005; Scott, 2006; Muscio, 2006). One lens focuses on the interrelation of market structure and/or firm size and technological change (Audretsch, 1995; Guihon, 2001).

Key words: Chinese manufacturing industry; system innovation; technology innovation; production-trading organization systems

Abstract
Introduction
Research methods
A brief history of Chinese manufacturing evolution
1. Development since 1978
2. Background
3. Developmental processes
System innovation in enterprises
Technological innovation activities
Production system innovation
1. Product series phase, based on industry clustering
2. Firms' division of labor and manufacturing industry integration phase
3. Industry modularization phase based on global product production and transaction
4. Industry network connection phase based on globalization and modern technologies
Summary and recommendations for future research
Conclusions
References

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[...] As the Chinese market becomes a significant part of the world market, it turns into an alternative for Chinese manufacturing industry to leverage international technology resources to boost its development and competency advance Developmental Processes Based on market competition status and the innovation behavior of enterprises, Chinese manufacturing industry development can be divided into three stages since China began to reform and open up to the world: manufacturing production restructuring, and primary product producing and processing; rapid development of manufacturing industry, and corporations' governance establishment; and the product innovation and upgrading of the manufacturing industries. [...]

[...] The lessons drawn from China's experiences can contribute to the empirical support for innovation theory and innovation practice in manufacturing development in an emerging global economy Research Methods Given the fact that little research has been done on the complex innovation processes of Chinese manufacturing, coupled with the uniqueness of development, reform and openness to the world economy during its transition since 1978, our exploratory research is mainly based on qualitative methodology, with results from government documents and/or statistic year books, official Chinese databases, Internet sites, personal observation, along with extensive interviews. [...]

[...] Development of Chinese manufacturing industry and innovation pattern. Studies in Science of Science (in Chinese). 2006(2), pp 202-206. Guo Ke-sha. On Chinese Manufacturing and a World Manufacturing Center. China Opening Herald (in Chinese). 2006(2), pp 29-32. Hennry W. Chesbrough. Open Innovation. Harvard Business School Press (2003), pp ix-x. J. Abegglen and G. Stalk. Kaisha, the Japanese Corporation. Basic Books, New York, NY (1985), pp 146. J.A. Schumpeter. The Theory of Economic Development. Harvard University Press (1949), pp 64-66. Jin Bei. [...]

[...] While technology innovation can improve product features, reduce cost, and create an essential production technological condition for the development of manufacturing enterprises, the benefits of technology innovation are affected by the strength of enterprises and their business environment. The technological innovation also demands large investments and a significant time commitment. In a changeable market and global economy, local and national networking as well as global linkages is very important (Eradin and Amatli-Koroglu, 2005). There is a higher rate of process innovation and more cooperation in emerging local industry clusters (Brenner, 2005). [...]

[...] Table 4 The Evolution of Production System Innovation: Manufacturing Industry Integration Phase Industry Integration Late 1990s Direct and sharp competition; Different firms focus on their dominant resource-based business activities, resulting in larger margins Factor integration and resource cooperation through division of labor and markets Industry competence advance, collaboration between large and small firms in the different level of output, production-transaction system re-organized by functions; Textile, dress, and electronic industries at Wenzhou begin to operate special functional activities using division of labor and by focusing on dominant-resources Phases Time Causes Main Features Results & Cases 6.3 Industry Modularization Phase Based on Global Product Production and Transaction Since China became a WTO member in 2001, transnational enterprises have enlarged their investment and sped up their manufacturing activities transfer to China. [...]

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