In the longer term, however, the key to China ’s technological potential will lie in its ability to develop its own high-level research and development capacity. Because China ’s growth has hitherto relied overwhelmingly on imported technologies, only 0.03 per cent of Chinese firms own the intellectual property rights of their core technologies. Moreover, Chinese companies spend on average only 0.56 per cent of turnover on research and development, and even in large firms this only rises to 0.71 per cent. [517] However, enormous efforts are being made to change this state of affairs, with the aim of increasing R & D spending from $24.6 billion (1.23 per cent of GDP) in 2004, to $45 billion (2 per cent of GDP) in 2010, and $113 billion (2.5 per cent of GDP) in 2020. [518] Considerable progress has already been made in a very short space of time. China has become a major player in the production of scientific papers, its contribution rising from around 2 per cent of world share in 1995 to 6.5 per cent in 2004. [519] Citation rates, although very low, are also rising exponentially. [520] The overall figures hide strengths in particular areas, most notably material science, analytical chemistry and rice genomics. A recent analysis of nanoscience publications shows that China ranked second behind only the US in 2004. [521] Not surprisingly, publications are concentrated amongst a handful of elite centres such as the Chinese Academy of Science, Beijing University and Tsinghua University (also in Beijing), which China is seeking to develop as world-class institutions. [522]
Among China ’s strengths is the fact that it possesses a large number of highly educated professionals as well as a strong educational ethos. [523] The country is now producing over 900,000 science, engineering and managerial graduates every year. In addition a significant number of Chinese students are educated at the top American universities, although a sizeable proportion choose to stay on and work in the US afterwards: Chinese, for example, account for around one-third of all professional and technical staff in Silicon Valley. [524] The Chinese government has been intensifying its efforts to persuade overseas Chinese to return home: 81 per cent of the members of the Chinese Academy of Sciences and 54 per cent of the Chinese Academy of Engineering are now returned overseas scholars. [525] Overall, it is estimated that around 20 per cent of Chinese professionals working overseas have now returned, thus repeating a similar pattern that occurred with earlier Korean migration. [526]
Figure 17. Lenovo commands largest share of China’s PC market.
Figure 18. Percentage of multinationals with R & D centres in various countries in 2006.
The technological picture, as in virtually every other aspect of China ’s development, is extremely uneven, combining the primitive, the low-tech, the medium-tech, and pockets of advanced, even very advanced, technology. [527] There is, however, little reason to doubt that China will scale the technological ladder. [528] This, after all, is exactly what happened with other Asian tigers, most obviously Japan, South Korea and Taiwan, all of which started on the lowest, imitative rungs, but which now possess impressive technological competence, with Japan and South Korea well in advance of most European countries. The evidence is already palpable that China is engaged in a similar process and with the same kind of remarkable speed. [529] It is an illusion to think that China will be trapped indefinitely in the foothills of technology. In time it will become a formidable technological power.
China ’s growing ability to climb the technological ladder, however, does not imply that it will be successful in building a cluster of successful international firms. Until very recently, China fared very poorly in the Fortune Top 500 global firms. Of the world’s top ten brands, only one, China Mobile, is Chinese, and of the top 100, only four are Chinese. [530] However, the picture is beginning to change. In 2006, 20 Chinese firms featured in the Fortune Top 500, by 2007 the number had risen to 24, and by 2008 to 29, including four state-owned banks, the largest construction companies and the oil giant Sinopec. This compares with 153 from the US, 64 from Japan, 39 from France, 37 from Germany, 34 from the UK, and 15 from South Korea. Major Chinese manufacturers like Haier, Galanz and Konka, which have cornered the lion’s share of the domestic market in consumer appliances and also made serious inroads in many developing markets, however, still remain, in comparison with their American, European, Japanese and Korean competitors, very weak in terms of size, management, governance, and research and development. [531]
