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Technological Innovation:Experience and Inspiration from Sample Enterprises
Jul 18,2007
Zhang Zhengjun & Chen Xiaohong
In this article, we select 11 sample enterprises to analyze their innovation effort and experience and put forward some suggestions.
I. Basic Information about Sample Enterprises
The 11 enterprises are distributed in the sectors of power generating equipment, pharmacy, electronics, information technology and iron and steel. Most of them are large enterprises, with various types of ownership. Specifically, they comprise two private enterprises, four state-owned enterprises and five listed companies (see table 1).
Table 1 Basic Information about Sample Enterprises
|
Name |
Core business |
Ownership |
Sales revenue (2005) |
Sector |
Status |
|
Dongfang Electric |
●Making equipment for hydro and thermal power generation ●Making equipment for nuclear power generation and new energies ●Making equipment for automatic power control and undertaking engineering contracting for power stations |
State-owned, having two listed subsidiaries |
RMB 18.1 billion
|
Power generating equipment |
●One of China's three leading power generating equipment makers ●Ranking first in terms of power generating equipment production in recent years ●Internationally advanced in design and production in several areas |
|
Double- Crane |
●Making medicines (for major infusion, cardiovascular diseases, endocrine diseases and anti-infectious diseases) and trading in medicines |
Stockholding, listed |
RMB 4.7 Billion
|
Chemical pharmacy |
●Ranking ninth among China's top 10 drug makers in 2005 |
|
Anbote |
●Making antibody for genetic-engineered guided tumour treatment |
Private, formerly genetics laboratory of Chinese Academy of Sciences |
Zero, having no product sales |
Biological pharmacy |
●China's leading enterprise in research on genetic-engineered antibodies ●Having developed five genetic-engineered antibodies for guided tumor treatment ●Being in investing period and working hard to present new drugs as early as possible |
|
Vimicro |
●Developing, designing and industrializing multimedia chips (digital and multimedia) |
Stockholding, Nasdaq listed |
RMB 769 million
|
Integrated circuit |
●Possessing world-class core technologies ●Its digital multimedia chips account for over 60% of global market of computer image input chips |
|
Hisense |
●Making TV and other black and white household appliances ●Making IT and communications terminals |
State-owned, having one listed subsidiary |
RMB 33.4 billion |
Electronic information |
●Ranking seventh among China's top 100 electronic information enterprises and leader in household appliances and flat-screen television |
|
Haier |
●Making refrigerators, air-conditioners, washing machines, water heaters and other white household appliances and TV and other black household appliances. ●Making computers, cell phones and other ICT products and conducting home integration |
State-owned, having one listed subsidiary |
RMB104.9 billion
|
Electronic Information |
●Ranking second among China's top 100 electronic information enterprises and fourth among world's white appliance makers ●Ranking first nationally in nine products and third internationally in three products |
|
TCL |
●Multimedia electronics (color television), mobile communications (cell phone) and digital electronics (computer) ●Air-conditioner and other white household appliances, core components (modules, chips, displays, power sources), and lighting equipment |
Stockholding, Listed |
RMB 52.1 billion , with over 50% from overseas operations |
Electronic Information |
●Ranking fourth among China's top 100 electronic information enterprises and first in terms of global television sales ●Having established business framework for global market and internationalized R&D, production and sales |
|
BOE |
●Liquid crystal displays and color kinescopes ●Color displays and fluorescent digital displays |
Stockholding, listed |
RMB 54.8 billion
|
Electronic Information |
●Ranking third among China's top 100 electronic information enterprises ●Ranking first in China and ninth in world in terms of TFT-LCD production ●Ranking first in world in terms of display production and fifth in world in terms of mobile display systems |
|
Huawei |
●Mobile communications (including 3G) and data transmission ●Optic-fiber networks, fixed communications, software and terminals |
Private |
RMB 45.3 billion
|
Information and Communications |
●One of China's largest communications equipment makers ●Ranking first in China in terms of patent applications ●Ranking among world's first camp in 3G sector |
|
Zhongxing |
●Program-controlled switchboards ●Communications systems and equipment |
Stockholding, listed |
RMB 21.6 billion
|
Information and Communications |
●One of China's largest communications equipment makers ●Ranking among world's top 100 IT enterprises ●World leader in CDMA2000、GoTa and other products |
|
Baosteel |
●Iron and steel production (predominantly plate products and secondarily rod products) ●Trade processing service, iron ore mining, finance and information |
State-owned, having one listed subsidiary |
RMB 176.1 billion
|
Iron and steel |
●Largest and highest in China in terms of scales, product variety, technological contents and added values, with steel production more than doubling that of China's second largest steel producer |
II. Five Modes of Corporate Innovation
1. Classification of modes of corporate innovation based on input-output relations
Corporate technological innovation is an activity in which enterprises invest knowledge, capital, human resources and other factors to create new products, new technologies or new customers. Technological knowledge input can come from endogenous and exogenous sources. endogenous source refers to the technological knowledge owned by enterprises through independent research and development, while exogenous source refers to the technological knowledge acquired by enterprises through import, acquisition and other methods. Innovations can be product-oriented, technology-oriented and market-oriented based on the results of innovation and can be revolutionary and reformative based on the degree of innovation. Based on the difference in the input factors and output results of corporate technological innovation, the technological innovations of the 11 sample enterprises can be divided into five modes (see Table 2).
Table 2 Main Modes of Corporate Technological Innovation
The mode of original innovation means the enterprises can independently develop original core technologies. For example, Vimicro has independently developed and possessed several world-class multimedia core technologies and Anbote has possessed world-class R&D capacities and several international patents.
The mode of catching-up and surpassing innovation can ensure the enterprises rapidly enhance their technological capacities though they are not necessarily the creators of core technologies, but the enterprises preliminarily have the development capacities, their overall technological capacities have reached the levels of first-rate enterprises, and they have begun to have major original innovations. Huawei and Zhongxing began their operations in the 1980s by producing small user switchboards. They have realized technological catch-up and surpassing by seizing the opportunities arising from the transition of mobile communications technology from first generation to third generation. For the enterprises employing the modes of original innovation and catching-up and surpassing innovation, an important basis of their core competitiveness is that they have fairly strong technological capacities.
The mode of partial innovation means the enterprises acquire key technologies from external sources. Due to the technology capacity gap with the leading enterprises, they only conduct reformative innovations. Innovations of this nature could be either product-oriented or technology-oriented. Dongfang Electric has for long imported key technologies and conducted partial innovations. By so doing, it has seized the opportunities to participate in major markets and has actively carried out technological assimilation and re-creation. Its proprietary technologies in several areas have reached the world's advanced levels. Hisense, TCL, Baosteel and Double-Crane have all carried out product-oriented or technology-oriented innovations after importing production lines and acquiring assemble technologies and capacities. Their products sell better, their production and technological costs are lower and the quality and standard of their products are higher. After forming certain technological and financial strength, they began to gradually carry out more advanced technological innovations.
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