Placing technological innovation in globalising China: Production linkage, knowledge exchange and innovative performance of the ICT industry in a developing economy

Abstract

This study critically examines the relevance of the perceived notions of localised production linkages, knowledge spillover and external technology transfer to the experiences of the growth of the ICT industry in China. The research is based on a major firm-level survey conducted in China's three most important mega urban regions-Beijing, Shanghai-Suzhou and Shenzhen-Dongguan-where the bulk of the Chinese ICT industry is located. The results of the survey showed a distinct landscape of ICT industrial production in which each of the Chinese regions has functioned as the site of capital investment from different sources for different strategic interests. Despite a marked regional variation in ownership, industrial structure, market orientation and technological investment, firms in all regions have invariably reported internal development as the main source of core technology. A negative relationship existed between the level of technological innovation and external orientation in both capital investment and export production. No evidence has been found to verify the hypothesis that a higher level of technological innovation would co-exist with stronger production linkages and knowledge exchanges with both local firms and foreign-invested enterprises. A further analysis of the firms with different technological performance has highlighted the significance of regional setting, ownership, ability of capital mobilisation and corporate strategy and management in the process of technological innovation. © 2011 Urban Studies Journal Limited.