Dylan Sutherland

China's Science Parks: Production Bases or a Tool for Institutional Reform?

Over a decade ago China launched a large-scale programme to develop science parks with on site business incubators. A major goal of this project was to redesign the economic architecture by creating institutions that would greatly improve the nations innovation system. Science parks, following the western model, were considered appropriate institutions. This is because they could harness Chinas many public research institutes and universities and so help promote both existing indigenous firms and emerging new technology-based private firms. Since its inception, however, the programme has evolved to serve multiple purposes, of which innovation system reform is arguably only one, minor goal. This article investigates the evolution of Chinas two-pronged strategy to develop science parks and business incubators in pursuit of institutional reform of its innovation system.

Exploring ‘onward-journey’ ODI strategies in China's private sector businesses

Are the internationalization strategies of Chinas private businesses different from those of state-owned businesses? To date, little systematic empirical research addresses this question, despite the now well-established arguments that market and institutional imperfections influence the outward foreign direct investment (ODI) of Chinas state sector MNEs. Why is so little known about private sector foreign direct investment? One important reason is that private companies have gone to considerable lengths to conceal their activities by using offshore holding companies in tax havens. This paper, using a sample of offshore listed companies that are privately controlled, investigates what we dub ‘onward-journeying’ – foreign direct investment undertaken via tax havens. In doing so it further explores the ODI strategies of some of Chinas most successful private companies.

Do China's “national team” business groups undertake strategic‐asset‐seeking OFDI?

Purpose – This paper aims to explore the contribution of Chinas largest business groups to Chinas outward foreign direct investment (OFDI), looking particularly at the question of whether they contribute to strategic‐asset‐seeking OFDI.Design/methodology/approach – It uses national‐level data and business group OFDI data to explore the sectors from which OFDI originates and destinations to which it is sent. From this conclusions are drawn as to the types of investments being made.Findings – In the national context strategic‐asset‐seeking OFDI from China has been rather limited to date. Instead, OFDI expansion still appears more closely linked to Chinas expansion as a trading nation with a natural resource deficit. Strategic‐asset‐seeking OFDI when it does take place, moreover, is orchestrated to a large extent through large state controlled business groups, as is much other OFDI.Research limitations/implications – A limitation of this research is the reliance on official data and the assumed simplifica...

The Pitfalls of Using Foreign Direct Investment Data to Measure Chinese Multinational Enterprise Activity

The growth of Chinese multinational enterprises (MNE) has stimulated great interest in their outward foreign direct investment (FDI) strategies, particularly among academics in business and management studies. To date, however, serious methodological shortcomings plague empirical studies in these disciplines. Specifically, the vital issue of how Chinese MNEs use and route FDI via tax havens and offshore financial centres is not adequately dealt with. These practices have created large geographical, industrial composition and volume biases in Chinese outward FDI data. Using a sample of 100 Chinese MNEs, we illustrate how the use of tax havens and offshore financial centres has created these biases, and examine the implications for understanding Chinese MNE activity.

China's Outward FDI and Resource-Seeking Strategy: A Case Study on Chinalco and Rio Tinto

The scale and frequency of foreign direct investment (FDI) in foreign mining companies by Chinas large state-owned enterprises (SOEs) is still not well explained by existing investment or international business theories. This paper advances and verifies two important theoretical propositions. First, the efforts of Chinas big businesses to “go global” can be thought of as being part of a national power-building globalisation strategy. Second, facilitated by extended protection from the state, reaching beyond Chinas national boundaries, Chinas large SOEs raise investment capital and take risks that their foreign competitors do not. This paper uses Chinalco as a case study to illustrate these propositions.

Chinalco and Rio Tinto: A Long March for China's National Champions

The global financial crisis has left many Western transnational corporations (TNCs) severely weakened, presenting Chinese large state-owned enterprises with an unprecedented opportunity to “go global” through acquisitions. The US

OEM-supplier relations in the global auto and components industry : is there a business revolution ?

19.5 billion deal of the Aluminium Corporation of China (Chinalco) for Rio Tinto (Rio) this year, although scrapped by Rio on 5 June 2009, serves as an interesting illustrative case in this regard. At face value, Chinalco’s pursuit of Rio, as with the China National Offshore Oil Corporation (CNOOC)’s failed bid for the big US oil company Unocal in 2005, appears to be mainly about China securing natural resources. It also, however, represents the intensifying efforts of China’s national champions to undertake their own long march to catch up with the world’s leading TNCs. Despite Chinalco’s aborted attempt, China’s desire to acquire foreign assets will not diminish; instead, its future forays may become more tactical and aggressive.1

Firm ownership, industrial structure, and regional innovation performance in China's provinces

This article describes some of the recent and profound changes witnessed in OEM-supplier relations in the auto industry. It considers different perspectives on the reasons for such change. A key question in analysis of the evolving supplier-OEM nexus relates to whether any inherent business logic underlies such change. This article argues that evidence increasingly suggests there is.

Policies to Build National Champions: China’s ‘National Team’ of Enterprise Groups

This paper uses panel data between 2000 and 2010 to explore how firm ownership and regional industrial structures contribute to regional innovation performance in Chinese provinces. Specifically, we explore how the extent of specialisation and diversification in regional industrial structures at the province level fosters both Marshall–Arrow–Romer and Jacobs spillovers, as well as how foreign and state ownership influence regional innovation. We find: (i) Chinas regional innovation systems benefit from Jacobs but not MAR externalities, with the former spurring higher quality innovation in the form of increased invention patenting; (ii) state-owned enterprises and foreign-invested enterprises advance local innovation, with the latter again fostering higher quality innovation; and (iii) a convergence towards a combination of low specialisation and high diversity in provincial industrial structure is taking place between Chinas more developed inland coastal provinces and less developed inland provinces. Implications and suggestions for policy-making and future research are discussed.

External heterogeneity and its impact on open innovation performance

By all accounts China has made outstanding economic progress since the 1980s. If China’s provinces were each considered individual nations, the twenty fastest-growing nations in the world from 1978–1995 would all be Chinese (World Bank, 1997: 2). It is sometimes argued that China’s rapid industrial development, the motor behind growth in this period, has been primarily as a result of the speedy proliferation of small enterprises. The powerful imagery of the healthy young shoots of small private enterprises pushing their way upwards in response to ‘sprinklings of market reform’ is an image that many observers hold dear. This interpretation considers China’s small enterprises the ‘foundation for recent growth’ (World Bank, 1997: 21). More recently, however, this view has been challenged by those who point out that although small enterprises have played a very important role in China’s recent industrial development, the large-scale sector, predominantly state-owned, has also been critical (Lo, 1997,1999; Nolan, 1996; Nolan and Wang, 1998). Among other things they show that the number of large and medium enterprises (LMEs) and their share of industrial output has increased significantly during the reforms. Furthermore, LMEs are found predominantly in key upstream pillar industries, often supplying smaller-scale enterprises with basic producer goods, or in industries with significant linkages. As well as this, despite being ‘parched by years of planning’, empirical evidence now also suggests LME productivity and financial performance has bettered that of the small-scale sector (Lo, 1999).