Book Reviews
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Book reviews Foreign High-Tech R&D in China: Risks, which would have been helpful in giving us a Rewards and Implications for US-China Rela- better sense of where and how China was going tions. By Kathleen Walsh, Stimson Center, to make its impact felt. Washington, DC, 2003, xv, 141 pp. pdf file, Walsh makes a major contribution in alerting www.stimson.org observers of the Chinese scene to the rapid growth of foreign R&D in China. While she does note that Engendered by the continued efficacy of globaliza- the growth of foreign R&D in the PRC is not tion as a key enabling factor, China is steadily necessarily unique in the context of larger global emerging as an increasingly key player in the economic and technological trends, she points out international technology system. A combination that there are several unique characteristics to the of steady investment in domestic science and tech- Chinese situation, including the place of Beijing nology modernization and expanded foreign invest- accession to the WTO that has opened the market ment into higher value added manufacturing and and given foreign firms greater confidence in the R&D have clearly enhanced the PRC’s technologi- Chinese situation. All too often, China is seen as cal trajectory. There is little doubt that given the just another developing country or a huge menace size of its domestic market and its steadily improv- and potential international beˆtenoire–whenin ing technological prowess, China will assume a reality the situation is far more complex. Through- critical role in the playing out of global competition out the book, Walsh tries to ground her analysis in and have a substantial impact on the pace and hard data so that the reader can walk away with a direction of international scientific progress. more secure sense of where China is headed and It is against this backdrop that one must read how it will make its influence felt. As she indicates, Kathleen Walsh’s monograph entitled Foreign however, the rise of foreign R&D remains a High-Tech R&D in China: Risks, Rewards and relatively new phenomenon and the full extent of Implications for US-China Relations. Sponsored its meaning and consequences are yet to be deter- by the Henry L. Stimson Center, a Washington mined because the data is still anecdotal. Still, the DC-based think tank concerned with national and author does do a respectable job in detailing how international security affairs, the book is based the growth of foreign R&D might affect China’s primarily on fieldwork conducted by the author in commercial and military position. I say ‘might’ China, Hong Kong, and the USA during 2002. because even the author notes that current infor- Along with the information gathered from her mation about the workings of the Chinese defence interviews, Walsh relies largely on secondary ma- technology establishment remains scant at best. terials from the Western press and scholarly The book’s major conclusions fall into two literature on China. The 2002 time period was categories. First, the author suggests that even an important watershed phase in terms of the after recognizing all of the technology and growth of foreign R&D in China, the main subject know-how flowing into the PRC, ‘China still of the monograph. In contrast to the manufactur- hasalongwaytoprogressbeforeachieving ing focus of most foreign investment prior to this parity with the S&T capabilities of most indus- period, from 2002 and beyond, numerous foreign trialized economies or before reaching its goal firms began a steady series of initiatives aimed at of implementing a ‘‘national system of innova- plugging into China’s key technological assets – tion’’.’ The major areas of immediate benefit the large pool of Chinese engineering and techni- appear to be in the telecommunications and cal talent, which now includes a growing number information-technology sectors, both of which of PRC returnees who have decided to ‘reverse the have been given a high priority by the Chinese brain drain’ of the prior two decades and secure government because of their commercial, devel- employment back home in China. The book does opment, and defence significance. And second, not spend much time evaluating the actual size or Walsh indicates that given the potential com- quality of this apparent strategic asset for China, mercial and defence implications tied to the R&D Management 34, 4, 2004. r Blackwell Publishing Ltd, 2004. Published by Blackwell Publishing Ltd, 467 9600 Garsington Road, Oxford OX4 2DQ, UK and 350 Main Street, Malden, MA 02148, USA. Book reviews extensive growth of knowledge transfers to once was: how will Western business change China? China and other countries via the R&D chan- Today, that question has become ‘how will China nel, ‘reforms are needed to the US export con- change Western business?’ Two decades after the trol process to account for this new form of inception of the ‘open policy’, Chinese leaders are international high-tech trade’, especially with trying to address this issue through their growing respect to the US ‘deemed export’ rule covering focus on technical standards as the way to influence foreign R&D investments and technology trans- international markets and capture revenue streams fer outside the USA. from foreign licensing of Chinese-generated IP re: As a student of corporate strategy and global WIFI,RFID,nextgenerationDVDsystems,etc. technology management, this reviewer believes that As China grows stronger and more sophisticated in the book would have benefited from exploring, in the realm of science and technology, the major greater depth, the larger international business challenge for the USA, Japan and the EU will be ramifications of the growth of foreign R&D in to find incentives and rewards to ensure Beijing China. Winning and losing market share or estab- remains fully integrated into the rules-setting pro- lishing key market positioning in China have cesses in place in the international system. In the become important elements in the global strategy final analysis, from both a business and political of many multinational firms. To ensure success economy perspective, the key question is less one of against competitors from other countries or within whether China is pursuing a policy of ‘techno- China, many foreign firms are leveraging their nationalism’ than how evolving trends (and asso- technological advantages and are bringing to the ciated benefits) in terms of international flows of Chinese market more advanced technologies at an know-how and people will drive China to pursue a earlier point in their life cycle than heretofore has truly ‘techno-globalist’ posture. occurred in any other emerging market country The reality of current trends is that it is becoming since the end of WWII. As a result, China has less and less relevant to think in terms of what become the net recipient of both high end and Richard Nelson labelled as the ‘national system of state-of-the-art production and R&D facilities – innovation’ and more important to think in terms of thus facilitating its steadily important role in global a global system of innovation. The rapid demise of knowledge networks and the global supply chain of national systems of innovation is part and product numerous leading edge high technology companies. of the globalization process as multinational firms, There is little doubt, as Walsh indicates, that it will the major purveyors of knowledge creation and not be too long before foreign-invested R&D transfer, orchestrate an entirely new transnational centres in China as well as Chinese R&D organiza- innovation infrastructure with facilities in multiple tions both generate new innovations and associated countries tied together through an advanced infor- intellectual property that will make its way into the mation technology infrastructure. Walsh has done a USA. In this regard, the book would have benefited great service in bringing the issue of foreign R&D in from detailing two or three case studies so readers China into greater relief. In less than just two short could have gotten a better feel for exactly what years since the publication of her monograph, the types of tasks foreign firms are bringing to China. number of foreign R&D centres in the PRC has One may ask, however, if Walsh is correct in growntomorethan400,withglobalfirmssuchas seemingly emphasizing the risks and concerns of the GE, Intel and IBM leading the way. This simply growth of the technological activities in China – as supports the point that China has moved defini- opposed to the tremendous opportunities? Walsh tively from sitting on the periphery of the world of suggests that, generally speaking, many of the global business and international science & technol- foreign R&D activities in the PRC remain supple- ogy systems, and for the foreseeable future, will mental in importance – more ‘D’ than ‘R.’ But, this become only a more important factor as it brings its may be understating the strategic value in both technological weight to bear in all facets of the actual and potential terms. The integration of rapidly evolving global innovation system. Chinese scientific and technical talent into the mainstream of world science has the potential to enhance the overall rate of progress as we respond DENIS FRED SIMON to an ever growing number of bio-medical, envir- Neil D. Levin Graduate Institute of onmental, space, and other related human pro- International Relations and Commerce blems. On the commercial side, the key question State University of New York 468 R&D Management 34, 4, 2004 r Blackwell Publishing Ltd. 2004 Book reviews Review of leading Chinese journals reporting on Science of Science and Management of S&T re- R&D management and innovation ports some recent research progress in the West, highlighting Chinese solutions to real-world is- Since the middle of the 1980s, Chinese research on sues.