Business and technological strategies of Chinese firms in the South of China: a sociological perspective   Rigas Arvanitis...
中国很大!
广东 –  Guangdong
Guangdong represents: <ul><li>100 billion Euros GDP  ... And maybe more </li></ul><ul><li>Growth rate above 10% since 10 y...
Delta of Pearl River
An unknown before industrialisation 1988 1992
Is there a China miracle?
Industrialisation of China <ul><li>There is no  “economic miracle” but the conjunction of three waves of investment </li><...
What happened then? <ul><li>Three investment waves (Zhao Wei et Arvanitis) </li></ul><ul><ul><li>First wave 1983-86 : litt...
Piling-up of productive systems
Today: An industrial space <ul><li>Traditional SMEs are the  industrial  basis of South China </li></ul><ul><ul><li>Textil...
 
Investments
The China miracle revisited
Socio-Economic Dynamics of Guangdong development <ul><li>Creation of companies </li></ul><ul><li>Opportunistic local gouve...
1. Creation of entreprises <ul><li>Local capital, small size, numerous companies </li></ul><ul><li>No additionnal resource...
How chinese entreprises do business? <ul><li>Learning by the market,  and learning quick (copy, attention, opportunity, sp...
2. Opportunistic local governments <ul><li>Gvts want taxes with no direct participation </li></ul><ul><li>Very close links...
Industrial districts <ul><li>The new backbone of China’s industrialisation </li></ul><ul><li>Industrial clusters  around o...
3. Proximity of Hong Kong <ul><li>Transports /boats, trains, roads.../ </li></ul><ul><li>A large commercial port </li></ul...
Is South China model still efficient? <ul><li>Strong competition on prices (TVs...) </li></ul><ul><li>Regional competition...
Guangdong is an industrial space <ul><li>Guangdong and Pearl River Delta is a  unique  industrial space ( and seems to wor...
The old and the new...
Innovation policy in China <ul><li>Since 1999 at national level – a “policy” </li></ul><ul><li>In Guangdong “innovation ce...
Structural difficulties <ul><li>Too strong dependence on local conditions </li></ul><ul><li>No linkages to research center...
So what about.... <ul><li>The North-East </li></ul><ul><li>Beijing, Tianjin. </li></ul><ul><li>Shanghai.... </li></ul><ul>...
What future? <ul><li>Large regional differences, and no valid mechanism for conflict solving adapted to this new configura...
Doing business....
When doing business keep in mind <ul><li>Companies are individual constructions, and individual contacts make businesses <...
When doing business keep in mind <ul><li>Last advice: all “errors” in your behavior will always be acceptable, except one,...
Thank you!
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Business and technological strategies of Chinese firms in the South of China: a sociological perspective

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This is a presentation I did in Santa Clara Unniversity on businesses and economic growth in China. It also shares some conclusions of a multiyear research project that was done in China (2000-2004) on Chinese SMEs. Last slides are advice to people who want to make business in China.

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Business and technological strategies of Chinese firms in the South of China: a sociological perspective

  1. 1. Business and technological strategies of Chinese firms in the South of China: a sociological perspective Rigas Arvanitis IRD Centre franco-chinois de sociologie de l’industrie et des technologies
  2. 2. 中国很大!
  3. 3. 广东 – Guangdong
  4. 4. Guangdong represents: <ul><li>100 billion Euros GDP ... And maybe more </li></ul><ul><li>Growth rate above 10% since 10 years </li></ul><ul><li>36% of China’s exports from GD </li></ul><ul><li>11% of investments </li></ul><ul><li>12% of consumer sales </li></ul><ul><li>More than 11% of fiscal revenues of central state </li></ul>
  5. 5. Delta of Pearl River
  6. 6. An unknown before industrialisation 1988 1992
  7. 7. Is there a China miracle?
  8. 8. Industrialisation of China <ul><li>There is no “economic miracle” but the conjunction of three waves of investment </li></ul><ul><li>Rigas Arvanitis, Pierre Miège and Zhao Wei A Fresh Look at the Development of a Market Economy in China  China Perspectives n°48 July - August 2003 p.50 </li></ul>
  9. 9. What happened then? <ul><li>Three investment waves (Zhao Wei et Arvanitis) </li></ul><ul><ul><li>First wave 1983-86 : little capital, town and village entreprises; collective entreprises (the divine surprise) </li></ul></ul><ul><ul><li>Second wave 1986-1997 : Foreign capital mainly Hong-Kong and Taiwan </li></ul></ul><ul><ul><li>Third wave, After 1997 : more Foreign capital </li></ul></ul>
  10. 10. Piling-up of productive systems
  11. 11. Today: An industrial space <ul><li>Traditional SMEs are the industrial basis of South China </li></ul><ul><ul><li>Textiles, confection, metal products, electro-domestics </li></ul></ul><ul><li>FDI important but has little connection with local firms </li></ul><ul><li>Importance of collective entreprises </li></ul>
  12. 13. Investments
  13. 14. The China miracle revisited
  14. 15. Socio-Economic Dynamics of Guangdong development <ul><li>Creation of companies </li></ul><ul><li>Opportunistic local gouvernements </li></ul><ul><li>Geographic proximity of Hong Kong </li></ul>
  15. 16. 1. Creation of entreprises <ul><li>Local capital, small size, numerous companies </li></ul><ul><li>No additionnal resources </li></ul><ul><li>Local know-how, lack of technology </li></ul><ul><li>Collective entreprises and private entreprises </li></ul><ul><li>Many chinese cies are the outgrowth of a public company (Shuikou) or a research center (“999”, Konka, Legend ex-LeNovo) </li></ul>
  16. 17. How chinese entreprises do business? <ul><li>Learning by the market, and learning quick (copy, attention, opportunity, speed) </li></ul><ul><li>Close links with clients , mainly foreign clients -- > technology </li></ul><ul><li>Bad linkages with providers (little classic “technology transfer”) </li></ul><ul><ul><li>Different from taiwanese OEM </li></ul></ul><ul><ul><li>Different from tech zones ( SimCity ) </li></ul></ul>
  17. 18. 2. Opportunistic local governments <ul><li>Gvts want taxes with no direct participation </li></ul><ul><li>Very close links of public persons with companies </li></ul><ul><li>Support in terms of infrastructures : roads, internet, telephone, transport </li></ul><ul><li>No funding available for SMEs! </li></ul>
  18. 19. Industrial districts <ul><li>The new backbone of China’s industrialisation </li></ul><ul><li>Industrial clusters around one product </li></ul><ul><li>Official nomination of a cluster permits official support </li></ul><ul><li>Specific support for technology and infrastructure </li></ul>
  19. 20. 3. Proximity of Hong Kong <ul><li>Transports /boats, trains, roads.../ </li></ul><ul><li>A large commercial port </li></ul><ul><li>Foreign investment 45% from Hong Kong </li></ul><ul><li>Proximity continues to play an important role by obliging some comvergence of types of companies </li></ul><ul><li>Guangdong is a model difficult to copy </li></ul>
  20. 21. Is South China model still efficient? <ul><li>Strong competition on prices (TVs...) </li></ul><ul><li>Regional competition (Zhejiang, Jiangsu, Fujian, Shanghai....) </li></ul><ul><li>Limits of easy learning from the foreign client </li></ul><ul><ul><li>No innovative blue-prints </li></ul></ul><ul><ul><li>Difficulties with brands, norms and quality </li></ul></ul><ul><ul><li>Insufficient size of companies </li></ul></ul><ul><li>Convergence of the GD model to international chain-value model (Taiwan) </li></ul>
  21. 22. Guangdong is an industrial space <ul><li>Guangdong and Pearl River Delta is a unique industrial space ( and seems to work better for SMEs) </li></ul><ul><li>Companies and governement find it difficult to transform into an innovation space – or boost “innovation” </li></ul><ul><li>Guangdong does not seem easy to copy: </li></ul><ul><li>“ Hong Kong saved Guangdong and Guangdong saves China” Prof. Wu </li></ul>
  22. 23. The old and the new...
  23. 24. Innovation policy in China <ul><li>Since 1999 at national level – a “policy” </li></ul><ul><li>In Guangdong “innovation centres” and support to SMEs in industrial clusters </li></ul><ul><ul><li>Since 2000, 50 pilot units in Guangdong (8 in Nanhai) </li></ul></ul>
  24. 25. Structural difficulties <ul><li>Too strong dependence on local conditions </li></ul><ul><li>No linkages to research centers </li></ul><ul><li>Few linkages to universities </li></ul><ul><li>Rather little inter-firms linakges (the danwei effect ) </li></ul><ul><li>Industrial R&D industrielle is limited to large companies and foreign companies </li></ul>
  25. 26. So what about.... <ul><li>The North-East </li></ul><ul><li>Beijing, Tianjin. </li></ul><ul><li>Shanghai.... </li></ul><ul><li>Anywere else? The issue here is that innovation, and industrial development depends very much on local conditions. </li></ul>
  26. 27. What future? <ul><li>Large regional differences, and no valid mechanism for conflict solving adapted to this new configuration. </li></ul><ul><li>Local (regional) and National levels differences are growing. International presence (FDI, financial services,investments in strategic sector) is still a “national privilege”. </li></ul><ul><li>Local industrial capabilities will grow, clusters will consolidate and form the backbone of the Chineses economy. No room for foreign firms today in these clusters. </li></ul><ul><li>Competition between Chinese firms will become harder in particular between the true private sector and the semi-public collective sector. </li></ul>
  27. 28. Doing business....
  28. 29. When doing business keep in mind <ul><li>Companies are individual constructions, and individual contacts make businesses </li></ul><ul><li>Linkages to the (local) governement are always strong. A company is always a “political” entity. </li></ul><ul><li>Payments are difficult, money flows are always a question. </li></ul><ul><li>Restaurants are your best friend. </li></ul>
  29. 30. When doing business keep in mind <ul><li>Last advice: all “errors” in your behavior will always be acceptable, except one, make someone loose “face” </li></ul><ul><li>(humiliate him in public) </li></ul>
  30. 31. Thank you!

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