Is China following the East Asian late industrialisation model of capability development? Evidence from cases over the last 15 years

The transfer of technology to China, especially in the manufacturing sector, is considered to be a major contributor to its recent economic growth. However, we must distinguish between technology transferred by foreign companies into their wholly or majority-owned subsidiaries in China and the technology acquired by indigenous enterprises. It is only through the successful acquisition of technological capability by indigenous enterprises, many of which still remain state-owned, that China can become a really innovative and competitive economic power and not remain the world’s workshop. The authors revisited a number of state owned industrial companies in Beijing and Tianjin, initially studied during the 1990s, to assess the levels of capability attained and the role of external sources and internal efforts in developing capabilities. Chinese
SOEs, aided by internal restructuring and government policies, acquisition of foreign technology and their own efforts, appear to be broadly following the East Asian model in developing their technological competence.