Challenges to Technological Capabilities of China, India, and Japan - Essay Example

Challenges to Technological Capabilities of China, India and Japan Introduction Technology provides solution to most of the challenges that exist on Earth. However, with advancement in technology, new challenges also continue to emerge. Technological development in any country is important in terms of improving the livelihood of citizens. These include possessing technological capabilities to solve healthcare issues, education, poverty, infrastructure development and food security. As emerging economies, China and India’s technological capabilities is highly depended on technology imported from western countries. This is a challenge in the sense that, importing technology seems to derail the capabilities of both countries. As such, both China and India need to invest more on R&D to compete at the same level with the developed countries in the next two decades. Conversely, while Japan’s technological capabilities are more advanced compared to China and India, Japan faces a challenge because of its protectionist policies. These policies impact negatively on Japan’s cooperation with other countries in terms of sharing knowledge. In addition, the country is faced with an aging population and thus; there is need for the country to access human capital abroad. This means that, Japan has to open up to the outside world by embracing trade liberalisation (Norma & Danny 2002, p.36). This paper examines the significant challenges faced by China, India and Japan with regard to their technological capabilities. Challenges to China’s technological capabilities As an emerging economy, the technological capability of China requires a focus on innovations. However, it is emerging that both the state and private sector is not aggressive in terms of improving innovations. A lack of a focus on basic research is an impediment to China’s technological capabilities. Most business enterprises in China do not engage in basic research, and this leads to imitation of foreign products. The country further has a weak system for managing rights related to intellectual property. This creates a situation where piracy is rampant in china, and impacts negatively on the country’s technological capabilities (Andrew 2005, p.16). On another note, since SMEs plays a critical role in advancing innovations, China faces a challenge in the sense that, their SMEs lack adequate funds and human resources to carry out large scale innovations. While China boasts of cheap labour, this is detrimental to its technology in the sense that, this leads to the production of poor quality products that is sold cheaply in the global market. As a result of the rising costs of production and labour, China has to improve on its technology in order to remain competitive in the global market. At present, the country has a challenge in terms of a limited number of talented youth required to take China’s technological capabilities to the next level. In regard to the education system, China does not focus on proactive learning and most of students tend to migrate to western countries and as such, resulting in brain drain (Ahlstrom, Nair, Young & Wang, 2006, p.4). On the other hand, because of a rapid industrial development, the country is facing health problems related to industrial pollution. For example, the rampant cases of cancer in China have been linked with industrial pollution. As a result of the numerous cases associated with industrial pollution, China’s economic development is compromised by diverting funds meant for R&D projects. This fund is mainly channelled to the health sector to treat the rising cases of cancer caused by industrial pollution. The Chinese high-tech industry also faces a challenge in the sense that fierce competition exist among companies operating in China. This leads to lack of cooperation among Chinese companies in improving their technological capabilities to compete at the same level with foreign based companies. Corruption and inefficiency within the government also impact on the development of China’s high-tech industry (Ahlstrom, Nair, Young & Wang 2006, p 6). China also faces a problem in regard to its system of innovation that results from establishing uneven institutions meant to promote innovations. Most indigenous industries in China depend on the knowledge and skills of foreigners investing in the country. The firms in China tend to group into four different categories that include; firms favoured domestically firms neglected domestically, the hybrid firms managed by foreign investors, and regular firms that are managed by foreign investors. What differentiates these firms is their source of funding and operational strategies. In this sense, firms are funded depending on their relationship with the state. This trend tends to undermine other upcoming firms with new ideas to improve the country’s technological capabilities. While the firms managed by foreign investors receive foreign funding, domestic firms often do not get assistance from the state. This further dent their chances of promoting R&D meant to improve the country’s technological capabilities (Ahlstrom, Nair, Young & Wang 2006, p.10). In the country, access to finance by domestic firms is influenced by their relationship to the state. In order for the government to assist domestic firms in improving their technology, these firms need to access financial assistance to improve their R&D capabilities. As an emerging economy, firms still have limited access to financial and other resources meant for upgrading. This is a challenge for the country in the sense that technology firms need more incentive to remain competitive in the global market (Lardy 2002, p.23). While FDI has revolutionized China’s technological capabilities, sustainability of this improvement remains a doubt. In addition, as a result of joining WTO, the country faces fierce competition from other countries. A key factor in this sense, relate to the country’s capability to establish an indigenous technology base that can sustain its competitiveness in the international market. At present, China still lack sophistication with their technology capabilities, and mostly relies on foreign knowledge to improve its technology capabilities. This explains the problems related to the price wars experienced in China’s electronics market. An example in this sense involves the existence of price wars within the television manufacturing industry. These price wars are meant to assist domestic firms access the market, where they face stiff competition from foreign competitors. The price wars; however, impacts negatively on profit margins of Chinese companies since they sell at low price because of poor quality products (Greenwood, Hercowitz & Krusell 1997, p.345). The lack of core technologies result in most of Chinese based industries producing substandard products which, when demand is low, end up selling at a lower price than anticipated. This further plays a role in the collapse of most domestic firms in China. The lack of core technologies result in China spending significant amount paying for patents and royalties, for technologies acquired from foreign companies (Denis, Cao & Richard 2007, p.77). In the past decade, various MNCs have shifted their productions to China as a result of access to cheap labour and reduced production costs. To compete at the same level with MNCs, indigenous firms need to improve on their technological capabilities. Conversely, a lack of such capabilities means that China has to pay for their acquisition of foreign technology to sustain its indigenous firms. The lack of technological capabilities exposes China to lose in terms of sales revenues. The problem of relying on foreign technology impacts on almost every sector of China’s economy. On the other hand, the high-tech industry in China can only improve by emphasising innovation. As a country, China is lagging behind in terms of technological advancement. In essence, advancement in technology is critical in improving China’s competitiveness in the global market (Denis, Cao & Richard 2007, p.82). Challenges to India’s technological capabilities As an emerging economy, India has made strides in regard to improving S&T in the past decade. This has improved the country’s knowledge base in terms of skilled manpower and innovativeness. However, as a result of globalisation and the need to safeguard intellectual property means that, India needs to continue strengthening its knowledge base. On the contrary, this is hampered by institutional gaps in regard to improving R&D. Technology is essential in terms of improving production and efficiency in a country’s industrial sector. To achieve efficiency and quality in regard to production level, countries need to adapt to the current changes in technology so as to remain competitive in the global market (Goldstein, Pinaud & Chen 2006 p.15). Similar to China, India also rely on duplicating technologies imported from abroad. These pose a challenge to India’s technological capabilities as a result of being confined to dependence on foreign technology. Further, the country’s technological capabilities also face the challenge of becoming obsolete, and are of poor quality. As a result, India faces a challenge adapting to the competitive nature of international market that is experiencing numerous changes in regard to technological advancement. As a practice, most firms in India tend to stick with medium technological capabilities which force the country to continue relying on foreign technologies. Essentially, competitiveness in regard to technological capabilities depends on a number of policy factors targeting the industry sector. India has a policy of relying on import substitution, and as a result, the country lacks the capacity to establish technological capabilities that is competitive in the international market. This further contributes to India’s lack of success with its export capabilities (Goldstein, Pinaud & Chen 2006, p.19). In addition, while the country has invested in S&T, its institutions across the country still lack the quality which puts India in a disadvantaged position when compared with industrialized nations. Further, an emphasis on only certain industries in regard to promoting R&D in India pose a challenge in terms of improving technological capabilities to all sectors that drives India’s economy. The country further faces challenge to its technological capabilities as a result of lack of adequate resources to promote R&D. On another note, the institutes that promote R&D are located far from urban canters and this slows the steady stream of professionals graduating from these institutions. The country also lacks a culture of engaging in collaborative research among various institutions, and this impact negatively in developing core technologies (Berger 2006, p.214). While India boasts of a large contingent of qualified professionals in the area of S&T, there is lack of continuity in terms of upgrading the country’s manpower skills, and this impact negatively on technological capabilities. On the other hand, continuity in advancing technological capabilities is further hampered by the lack of absorbing new graduates into the job market. As a result, the country suffers brain drain because these graduates migrate to work in the western countries (Zhan & Luo 2008, p.236). The idea of acquiring technology as a supplement domestic R&D is another challenge for India’s technological capabilities. These is because in the event that the country does not acquire imported technology, it is left with a challenge of updating an, obsolete technology (Dahlman & Utz 2005, p.103). India also faces challenges as a result of lacking supporting technologies. This increases the defect rates for products from India, compared to other developed countries such as Japan. Offshore outsourcing on the other hand, impacts on India’s technological capabilities as a result of relying on the designs and technology of foreign countries. The other problem that India faces in regard to improving its technological capabilities involves dealing with the high illiteracy rate in the country. India is among the leading countries globally, with highest rates illiterate citizens (Chandrasekar, Jayati & Anamitra 2006, p.5043). Challenges to Japan’s technological capabilities Japan as a country, has failed to create structural reforms necessary to promote a long term development. Further, Japan has ignored the need to improve competition among the indigenous industries. The country also faces challenges with its technological capabilities because of a failure to liberalise trade, practice decentralization in regard to public administration and promote foreign exchange. The technological challenges faced by Japan are further worsened by the high rate of globalisation and expansion of liquid market globally. Further, as a result of the increasing prices in regard to shares and technological advancements, Japan finds itself in a situation where it is losing manufacturing investment to other countries like China and India. Heavy regulations and the government adoption of protectionist policies also act as an impediment to the country’s technological capabilities. These policies often tend to derail restructuring of the economic indicators such as technology advancement. As a result of protectionist policies, Japan has faced constraints in terms of improved productivity regardless of a well-established manufacturing technology (Sheridan 1993, p.42). In Japan, the software industry is lagging behind, and this is contributed by ignorance in regard to the importance of establishing a software industry. The Japanese government seems reluctant in deregulating this industry as a way of fast tracking the development and use of software technology. The government by sticking on a protectionist attitude has been uncomfortable in deregulating the software industry because of the fear that the existing local media firms will lose market. On the other hand, because of the economic recession, Japan was forced to cut spending channelled for R&D. As the country tried to pick up and revamp its R&D sector, the past earthquakes has prevented the R&D progress in Japan. This has further led to the growing uncertainties in regards to Japan’s technological capabilities. The country is also in crisis, because of a diminishing labour input (Preston 2000, p.57). Japan is facing an aging population and this pose a challenge for the country’s productivity in the future. In addition, Japan has to deal with the reality of emerging economies such as South Korea and China that are quickly catching up in the global sphere of technological advancement. Japan as a country, also lacks a policy that promotes expanding S&T beyond its borders. Globalisation has contributed to the movement of human resource across international borders. However, Japan has failed to tap into this brain circulation as a way of tackling challenges to its technological capabilities. Remaining behind in the research network promoted by the brain circulation means that, the pace at which the country is updating it technology is rather, slow (Fransman 1999, p.321). The country is reluctant to open up to other emerging countries such as South Korea in regard to sharing of knowledge, which is important in improving technological capabilities of the country. The government on its part has been reluctant in establishing new and efficient institutional frameworks that can connect technology and foreign policy. Similar to India, Japan seems complacent with the need to enhance continuity in regard to innovativeness among citizens graduating from science and technology institutions. This is because bureaucracy in S&T sector is still adamant in retaining the baby boomers instead of replacing them with new graduates who are up to date with the latest technology. As a result, the country losses from the mass exodus of professionals moving to countries where their services can be appreciated (Chesbrough 2003, p.66). In addition, this is a challenge to Japan’s technological capabilities because of the brain drain effect. The country is also confined to certain sectors in terms of improving its technological capabilities. In a globalised world of technology, Japan needs to advance its technology to other areas that include medicine, agriculture and energy. It seems the focus revolves around giving priority to the manufacturing sector. However, this industry is currently facing fierce competition from the BRICS nation. As such, it is a challenge for Japan to diversify its technology to other sectors, as a way of establishing a differentiation strategy. In addition, the country has not dealt with its past history with China, and this affects its technological capabilities in terms of transfer of knowledge between the two countries. The other challenge is that most Japanese technologists tend to develop an inward attitude, and this contributes to the lack of cooperation within Japan’s science community (Tanaka & Ryo 1996, p.1010). How China, India and Japan can overcome challenges to their technological capabilities In the next two decades, these countries can overcome their challenges by mainly focusing on improving their R&D capabilities. This in particular is important for emerging economies such as India and China if they are to compete at the same level with other industrialized economies such as the U.S.A and Japan. Improving R&D require heavy investment on the part of the government. This is because, as a result of globalisation, technology continues to change rapidly, and it is important for countries to remain up to date with the latest advancements. In order for a country to be innovative, it is important for governments to emphasise on the need to improve S&T (Norma & Danny 2002, p.113). On the other hand, countries need to stop depending on foreign technology, when updating their own technology capabilities. In this sense, instead of importing technology, both China and India needs to improve cooperation in R&D with other countries. This helps in terms of sharing knowledge on how to improve their technologies. In addition, in order to prevent the mass exodus of scientist and technologies, these countries need to absorb graduates coming into the job market. This will ensure that the countries have a sufficient pool of scientist and technologist required to improve their technological capabilities. While China and India continues to attract FDI, it is important for these countries to recognize the need to improve the capabilities of indigenous firms. These firms rely heavily on the technology borrowed abroad and this affects the industries in terms of intellectual property rights (Berger 2006, p.227). Consequently, it is vital for these countries to support the R&D initiatives by SMEs as a way of improving the future of their technological capabilities. On the other hand, Japan should open up to the outside world in regard to sharing of knowledge. This would help the country to identify the areas that it is lagging behind in regard to technology advancement. The government on the other hand, needs to eliminate protectionist policies to enable Japanese firms engage in cooperation with foreign firms (Berger 2006, p.245). Globalisation has led to liberalisation of the global market and for countries to remain relevant in terms of their technological capabilities in the next two decades, knowledge sharing is essential. Countries like China and India needs to establish their S&T institution within the urban canters. This is because, as their economies continue to improve, the living standards of citizens also improve and more youth are joining S&T institutions. As such, creating these institutions in the urban centres allows for an easy flow of graduates into various home grown industries. Further, the governments of these countries need to create employment opportunity for graduates. This will help to cut on individuals leaving their countries to work abroad, where their skills are appreciated. Because these countries need to improve their technological capabilities, there is also the need to improve their human resource capabilities. On another note, with an aging population, it is important for Japan to consider accessing human capital from other countries to improve its technological capabilities (Greenwood, Hercowitz & Krusell 1997, p.356). Japan as a country, has an established R&D capabilities; however, the country needs human capital to overcome technological challenges in the next two decades. In China and India, there is need to establish policies that check on corruption. This would ensure that all indigenous firms benefit from funds created for R&D, rather than favouring domestic firms considered being politically correct. While these countries focus their technology on certain sectors, it is important that they embrace diversification if they are remaining relevant in the next two decades (Norma & Danny 2002, p.118). Conclusion While technology plays an important role in solving the exiting problems in the world, it also faces numerous challenges that require early mitigation strategies. Both developed and emerging economies need to place emphasis on R&D in their technological capabilities. This is because, technology continues to witness rapid changes and require countries to remain up to date with new advancements. This is important if countries are to survive technology wise in a rapidly changing international market. In this sense, while China and India are experiencing advancement in technology, the relevance of their capability depends on establishing institutions that promote home-grown technologies rather than relying on imported technology. Conversely, Japan has a well-established S&T community, but its survival in the next two decades depends on cooperation with other countries to gain understanding on the new developments in global technology. In essence, tackling challenges related to technology in the next two decades rely on cooperation in sharing technology between countries. 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