China vs the World: Whose Technology Is It?


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A presentation based on the HBR article by Thomas M. Hout & Pankaj Ghemawat (December 2010).

No longer content with being the world’s factory for low-value products, China has quietly opened a new front in its campaign to regain its place as the globe’s most powerful economy: The country is on a quest for high-tech dominance.

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China vs the World: Whose Technology Is It?

  1. 1. A  presenta*on  based  on  the  HBR  ar*cle  by  Thomas  M.  Hout  &  Pankaj  Ghemawat  (December  2010)  
  2. 2. The Cold War
  3. 3. 1.  Drivers of China’s Discontent2.  China’s Plan to Win the Tech Wars3.  Three Examples (High Speed Rail,Wind Energy,Software)4.  Is Conflict Inevitable?5.  Succeeding in the New China6.  Summary & DiscussionOverview  
  4. 4. The Drivers ofChina’s Discontent
  5. 5. August. 16, 2010
  6. 6. Despite China’s huge tradesurpluses with US & W Europethe greatest profits havebeen reaped by foreigncompanies rather thanChinese companies.These foreign companies dominate China’shigh-tech industries, accounting for 85% ofthe high-tech exports in 2008.
  7. 7. To keep its economy growing at 9% andprovide jobs for the next generation ofbetter-educated workers and boostincome levels.China needed a plan…China would see a shift to countries such as  With the inevitableappreciation of thethat would eventually render China’slow-tech exports uncompetitive.  
  8. 8. China’s Plans forWinning the Tech War
  9. 9. Since 2006 the Chinese governmenthas been implementing new policiesthat seek to appropriate technologyfrom foreign multinationals in severalkey industries.
  10. 10. Air Transportation
  11. 11. Water Purification
  12. 12. Nuclear Power
  13. 13. Satellites
  14. 14. Electric Cars
  15. 15. 1.  Limit investment by foreign companies.2.  Require a high degree of local content inequipment produced in China.3.  Force the transfer of proprietary technologies fromforeign companies to their joint ventures withChina’s state-owned enterprises.Three-pronged plan to contain foreign companiesand enable Chinese companies to create advancedtechnologies:  
  16. 16. China’s Plans for Winning the Tech War:•  Increase R&D spending from 1.5% of GDP in 2006 to2.5% by 2020.•  Reduce dependence on imported technology by 30%.•  Become one of the world’s top 5 economies accordingto patents granted and scientific papers published.CHINA’S GROWING R&D
  17. 17. 1.  Offer tax incentives.2.  Increased spending in research institutions andfunding support for the development of domestictechnologies.3.  Tailored policies to favor domestic technologies.4.  Enforced Joint Ventures.The Chinese government is using 4 mechanisms toachieve these goals:  
  19. 19. The State’sStrategies
  20. 20. Example #1High Speed Rail
  21. 21. High Speed Rail
  22. 22. Example #2Wind Energy
  23. 23. Power Generation
  24. 24. Example #3Software
  25. 25. Information Technology
  26. 26. Is ConflictInevitable?
  27. 27. It depends…- US and China appear to bepragmatic and unlikely tocommit self-destructivepolicies- Structurally prone toconflict. They differradically in beliefs,expectations, and objectives- Both nations have commoninterests: developing cleanenergy, protecting theenvironment, and reining inrogue states
  28. 28. Succeeding in theNew China
  29. 29. Teaming up with Chinese companies is becomingessential to compete in emerging markets.
  30. 30. China vs The WorldDiscussion& Summary
  31. 31. •  The Chinese government is determined that Chinamaintains its position as one of the world’s leadingeconomies.•  Over the past 4 years China has quietly shiftedfrom a successful low- and middle-techmanufacturing economy to a high-tech one.•  Since 2006 the Chinese government has beenimplementing new policies to increase R&D andappropriate technology from multinationals.Summary  
  32. 32. •  Does the global realignment of business representmore threat or challenge to Western corporations?•  Is there any option for global institutions to play alarger role?•  Is China’s rise simply ‘history repeating itself’?Another ‘America’ for the 21st Century…?Discussion Topics  
  33. 33. THANKYOU!