Global Manufacturing and Secondary Innovation in China. Xiaobo Wu
technological innovation. However, China’s per capita investment in science and technology is still much lower than that of the developed countries. Compared with the developed countries, China has not even reached 50% in all indicators.
The number of patent application filings is an important indicator to evaluate independent TICs of industries and companies. Table 1-8 benchmarks China’s technological innovation and technology application in 2015 against the international level. The table shows that China is at a relatively high level in technical patent filings by both resident and non-resident applicants. This shows the significant progress China has made in the TICs and technical application level over years of development. However, it is worth noting that, as shown in Diagram 1-9, although the number of patent application filings in China is large, the proportion of overseas patent applications is much lower than that of the developed countries. There is still a disadvantage of “high quantity but low quality”.
Table 1-8 Filed patent application documents in China and other countries in 201 5
| Country | Filed patent application document (piece) | |
| by residents | by non-residents | |
| China | 968,252 | 133,612 |
| US | 288,335 | 301,075 |
| Japan | 258,839 | 59,882 |
| Germany | 47,384 | 19,509 |
| UK | 14,867 | 7,934 |
| France | 14,306 | 1,994 |
| The Republic of Korea | 167,275 | 46,419 |
Data Source: World Bank.
Diagram 1-9 Application for domestic and overseas patents by Chinese residents
Data Source: State Intellectual Property Office of the P. R. China.
The proportion of high-tech industry in the manufacturing industry is an important indicator for measuring the technical level of the manufacturing industry. The development of high-tech industry has significantly driven the development of manufacturing industry. It has become an important means for developed countries to widen the gap between them and developing countries in technical level. It can be seen from Table 1-9 that the proportion of China’s high-tech product exports in its manufactured exports has reached the international advanced level, which reflects that China’s manufacturing technology has won some international recognition.
Table 1-9 High-tech exports as a percentage of manufactured exports in China and other countries in 2015 (%)
Data Source: World Bank.
The above comparison of the manufacturing technological innovation level in China and other countries produced a static analysis of China’s manufacturing technological innovation capabilities. Next, we will dynamically analyze the overall atmosphere of innovation in China and the changes in manufacturing technological innovation capabilities in perspectives of China’s total R&D investment, output of new products as a percentage of the total output value, and the export of new high-tech products. See Table 1-10 and Table 1-11.
Table 1-10 China’s R&D investment and new product output value in 2009–2014
Note: Due to the change of statistical indicators, new product output value data in 2012–2014 are replaced by new product sales revenue.
Data Source: Statistical Communiqués of the People’s Republic of China on the National Economic and Social Development, issued by China’s National Bureau of Statistics in 2009–2014; Statistics Yearbook on Science and Technology Activities of Industrial Enterprises, 2009–2014.
From the data in Table 1-10, it can be seen that in recent years, China’s R&D investment has been growing rapidly. In 2012, China’s R&D investment exceeded RMB 1 trillion yuan for the first time. R&D investment to GDP in 2013 reached an all-time high of 2.09%, indicating that China’s investment in R&D started to rank top in the world. This will certainly improve the technological innovation level of Chinese manufacturing enterprises by large margins. In addition, as companies paid more attention to product upgrades, the new product output value of Chinese manufacturing companies also stayed at a relatively high level. Despite a short-term decline in 2011, it still maintained a high-level development in the subsequent years. This also reflected that the product and process innovation capabilities of Chinese manufacturing enterprises maintained at a relatively high level.
After joining the WTO, with the improvement of technological capabilities, China’s manufacturing industry has made great progress in exporting technology-intensive products amid industrial manufactured goods. The structure of China’s industrial exports has switched to one oriented to fine machining, deep processing and high value added. The proportion of industrially manufactured goods with relatively high technological content and value added is growing. The changed structure of exported commodity has reflected the fundamental improvement in the international competitiveness of China’s industry. See Table 1-11.
Table 1-11 Export of China’s industrially manufactured goods, 2006–2015
Note: High-tech products include the products of the pharmaceutical manufacturing, aviation, spacecraft and equipment manufacturing, electronics and communications equipment manufacturing, computer and office equipment manufacturing, medical equipment and instrumentation manufacturing and information chemicals manufacturing.
Data Source: the website of China’s National Bureau of Statistics.
The above research on the competitiveness of China’s manufacturing industry shows that after a decade of rapid development, China’s manufacturing industry has made a great progress in terms of production efficiency and technological innovation capabilities. Nevertheless, there is still a big gap between China’s manufacturing industry’s development level and the international level, which is mainly reflected in the gap of the technology level of manufacturing industry. To narrow this gap, it’s necessary to fundamentally rely on the technological progress and industrial upgrading of the manufacturing industry. In the current situation, technological innovations can help improve the competitiveness of “Made in China”, gradually shifting from comparative advantage to overall competitive advantage. It can make China a real “Manufacturing Power” and is an essential condition for achieving leapfrog development of China’s economy.
1.4 Opportunities and challenges faced by China’s manufacturing industry
1.4.1 Opportunities
With the accelerated modern science and technology revolution, economies of all countries in the world are becoming more and more internationalized. Countries with different social systems and of development levels have gradually been incorporated into a unified global economy. The era of economic globalization has come. As Peter F. Drucker said in his book Managing for the Future: “In order to maintain a leadership position in any developed country, a company—however big or small—increasingly has to obtain and hold its leadership positions in all developed markets worldwide. It has to be capable of researching, designing, developing, engineering and manufacturing in every part of the developed world, while having the means to import and export from any developed country. Firms have to go transnational.”(1993: 27-28) Similarly, when global competition inevitably takes place in China’s domestic market, backward companies also have to conduct global operations and integrate global resources. While globalization brings challenges to Chinese companies, it also brings them opportunities. So, what are the opportunities