ABSTRACT
China’s remarkable economic achievement and growing economic strength have stimulated hot debates on the Chinese model of economic development. In a geo-political context, Ramo (2004) first coined the term ‘the Beijing Consensus’ to portray a distinct Chinese model of development, alternative to the neo-liberal formula prescribed by ‘the Washington Consensus’, which had produced mixed results in the economic transformation in Eastern Europe. ‘The Beijing Consensus’ proposes three guidelines for economic development, one of which is the value of innovation. In Ramo’s discussions, this guideline actually refers to both technological/industrial innovation and constant policy experimentation. As a critic of Ramo’s work, Dirlik (2006: 2) argues ‘[w]hat he [Ramo] offers is a “Silicon Valley Model of Development” that has little to do with the national situations to which he would like to speak’. Dirlik also brings up such issues as the exploitation of China’s labour force by foreign countries and severely uneven development in both spatial and social terms as significant downsides of the Chinese development. In our opinion, innovation in China is a fast-moving target, with changing
faces and variety. Even at the onset of economic reform, China’s economic take-off did not start from scratch, hence with a great potential of leapfrogging (Brezis et al. 1993). In particular, the Chinese science and technology system formerly placed relatively great emphasis on basic research and the development of sophisticated technologies, partly because of the defence race and China’s self-dependence strategy in the Cold War period. This together with speedy economic development and such a strategy as that of ‘market for technology’ over the last three decades may facilitate China becoming a fertile ground for innovation. So far, the fruit of China’s economic development also has enabled some proportion of the Chinese population to consume state-ofthe-art products and services. This may help to explain China’s fast surge in high-speed railway deployment and challenging technological frontiers, even with an intention to export, despite some doubt and controversies. In addition, unlike its Asian preceding economies, for example South Korea, Singapore and Taiwan, China is definitely not dwarfed by size of market, at least in
terms of market potential. As discussed in this chapter, even China’s severe uneven development in both spatial and social terms can be leveraged to generate bottom of the pyramid (BOP) innovation (Prahalad 2005) and ‘good-enough’ innovation (Christensen et al. 2001; Gadiesh et al. 2007). On the one hand, with accumulated economic strength over the last few dec-
ades, China is intentionally marching towards becoming a regional technological superpower (Sigurdson 2005). This quest for technological leadership is often associated with championing the value of indigenous innovation and industrial standards (Suttmeier and Yao 2004). Such an indigenous industrial standard as TD-SCDMA (time-division synchronous code division multiple access) for the third-generation mobile phone (3G) has indeed been approved by the International Telecommunication Union (ITU) and actively promoted by the Chinese government and China’s flagship firms. However, questions remain as to whether TD-SCDMA will become an industrial standard within a ‘walled garden’1 or one with wide international acceptance. On the other hand, China has also impressed the world with its progressive
development in ‘shanzhai’ (also called guerrilla) handsets, despite some controversy. The rapid development of shanzhai handsets has brought about the progressive expansion of China’s mobile communications market and an army of local handset producers that have gained a strong market foothold, against leading international branded firms. In addition, this development has much to do with the role played by the diverse demand from the grassroots and the cross-strait innovation network, involving Taiwanese firms such as MediaTek, a leading IC (integrated circuit) design house. In other words, the rise and development of the shanzhai handset sector has marked a sharp contrast with the Chinese top-down approach to indigenous innovations and industrial standards, which often involves generous government support and a few national champions. Wikipedia (2010) has described shanzhai mobile (cell) phones as follows:
Shanzhai refers to Chinese imitation and pirated brands and goods, particularly electronics … The use of shanzhai became popular with the outstanding sale performance of shanzhai cell phones. According to Gartner’s data, 1.15 billion cell phones were sold worldwide in 2007, and according to data provided by the Chinese government, 150 million Shanzhai cell phones were sold in the same year, thus making up more than one tenth of the global sales … The market for Shanzhai cell phones is not only in China, but also in the surrounding developing countries in Asia, and Third World countries in Africa and Latin America. The outstanding sales performance of Shanzhai cell phones is usually attributed to their low price, multifunctional performance and imitations of trendy cell phone design … Shanzhai cell phones can be sold at very low prices compared to normal cell phones. On average, the imitations sell at retailers at about $US100-$US150, while production costs are about $US20.
