China presents us with a conundrum. How has a developing country with a spectacularly inefficient financial system, coupled with asset-destroying state-owned firms, managed to create a number of vibrant high-tech firms?
China’s domestic financial system fails most private firms by neglecting to give them sufficient support to pursue technological upgrading, even while smothering state-favored firms by providing them with too much support. Due to their foreign financing, multinational corporations suffer from neither insufficient funds nor soft budget constraints, but they are insufficiently committed to China’s development. Hybrid firms that combine ethnic Chinese management and foreign financing are the hidden dragons driving China’s technological development. They avoid the maladies of China’s domestic financial system while remaining committed to enhancing China’s domestic technological capabilities.
In sad contrast, China’s domestic firms are technological paper tigers. State efforts to build local innovation clusters and create national champions have not managed to transform these firms into drivers of technological development.
We invite Douglas B. Fuller, Professor, School of Management at Zhejiang University to discuss.
Douglas B. Fuller
Douglas B. Fuller is a professor in the Department of Innovation, Entrepreneurship and Strategy of Zhejiang University’s School of Management. He previously taught at King’s College London, Chinese University of Hong Kong and American University. His research spans the political economy of development, technology policy and strategy, and comparative capitalism with a geographic focus on East Asia. He has written Paper Tigers, Hidden Dragons: Firms and the Political Economy of China’s Technological Development (OUP 2016) in addition to two edited volumes on Hong Kong’s technology policy and technology transfer between the US, China and Taiwan and a number of academic journal articles.