ABSTRACT
China is on the rise. In 2007, its GDP surpassed that of Germany to become the third largest in the world, and in 2010, China overtook Japan as the world's second largest economy, challenging the dominant status of the United States. China's products, ranging from toys, shoes and clothes to TVs, DVD players and computers, are flooding the global market places. The media is rife with buzz words about China being the world's manufacturing floor. ‘Made in China’ may not be a big deal, since providing consumers with cheap, low-end Chinese products does not really challenge Western dominance in high-value-added products. However, China is not satisfied with the tag of ‘Made in China’ and in the last few years has intensified its drive towards ‘Innovated in China’, intending to compete directly with the developed countries in the high-end markets (Zhou and Wei 2011; Wu and Zhou 2012). On the other hand, the developed world has been struggling to provide more R&D funding and make their economies more innovative due largely to the recent global financial crisis; they are concerned about the competitiveness of their economies and feel threatened by the emerging power (Hout and Ghemawat 2010).
