Government, Finance, Scientific and Technological Aspects of Chinese National Innovation System - Case Study Example

2200-word report Table of Contents Table of Contents 2 Introduction 3 Feature of the business environment of China 3 Defining National Innovation System 4 Government component of Chinese NIS 5 Finance component of Chinese NIS 6 Scientific and technological aspect of Chinese NIS 7 Industry Component of China’s NIS 9 Conclusion 10 Reference 12 Introduction The world of 21st century is living in a highly connected environment, where rapid change and tremendous development is powered by the fast diffusion of various global trends. With the opening up of various economies in the last couple of decades, there has been a significant change in regards to the market dynamics that exists in business places around the world. The high penetration of internet resulted in the evolution of a global marketplace, where the flow and access of information is easy. This has resulted in an increase in competition in the marketplace. As a result, companies in an attempt to develop significant business advantage has focused in a great way in generating value for the customers. This has resulted in high focus on innovation. For this project, the focus is on China. This particular study will elaborately cover the description of National innovation system of China and its multiple features and related aspects like the government, finance, scientific and technological factors etc. Feature of the business environment of China It is of considerable importance to state with slowdown gripping the industrial and production based sectors in most of the developing economies, a large part of the developed Western world are looking forward to attaining growth by entering in to business in China. Talking about the business environment, in China, it can be said with there will be a steady transition of the Chinese economy into consumption oriented one. This will promote a new kind of consumer growth from the region, who will be highly demanding and will have widely varying consumption patterns. Talking with evidence of substantial data, it has been found that the rising incomes of the Chinese middle class will transform China in to the world’s largest consumer market by the year 2025 (Farell & et.al, 2006). Hence, the market of china has immense attractiveness for multiple global businesses, which will be looking forward to capitalize on the unlimited growth prospects of the region (Booz & Co, 2013). However, talking on the aspects of political influence in the business scenario of China, focus has to be given to the fact of existence of multiple barriers that has been developed for various foreign firms that are looking forward to enter the Chinese markets. The foreign firms often face discrimination in the bidding process for various big order contracts. Also there are considerable amount of challenges in regards to acquisition of various tough licenses, which makes the business environment a little hostile towards the foreign firms looking forward to doing business in China (Ellis, 2013). Defining National Innovation System With the evolution of competition in the marketplaces around the globe, the marketplace all over the world has become highly hostile in nature The companies, located in both the developing as well as the developed economies have realized that in order to develop a significant amount of competitive advantage, it is very important to inculcate innovation in their business processes. Companies all over the world has developed this notion, that to develop a competitive advantage in today’s challenging business scenario, it is very important to differentiate their product and service offering with regards to their competitors. This has resulted in the growing focus on innovation. Talking about the National Innovation Systems, it can be said that it is an upshot of a decade of academic natured research and intense policy based analysis (OECD, 2002, p. 3 ). It can be said that the National Innovation System, is an initiative of the OECD. It is of high importance to state that the National Innovation System is an outcome of dual track policy development. It can be said that the first track comprised of a general analysis of various countries around the globe, while the other track comprised of a more detailed and in-depth analysis of various specific factors that are observed through the conduction o f intense research of various focus groups. Talking in more details, it can be said that the general analysis stage of the multi-tiered NIS project comprises of basic comparison of various quantitative indicators and information of country based profiles. It also comprises of generation of various reports in regards to knowledge flows as well as various innovative processes. Talking about the in-depth analysis through various focus group interviews, it can be said that the target was to extract data from various innovative firms as well as their networks and management of their critical resources (OECD, 1999, p. 13). Government component of Chinese NIS It is highly interesting to mention that for the purpose of promoting growth and development by implementing innovation in various stages, it can be said that the government is looking forward to develop and implement a wide range of policies. Talking on this note, it can be said that china has taken considerable steps to promote indigenous kind of an innovation. China has developed a Medium to Long Term Plan (MLP) for the development of science and technology. The MLP policy designed by the Chinese government is the upshot of an extended policy making process that was initiated with the introduction and accession to the World Trade Centre in the year 2003. While discussing the prime focus of the policy, it needs to be highlighted that the policy aimed to develop China in to a society powered by innovation based development. The policy development is also focused on positioning China as one of the prominent global leader in the arena of science and technology. The MLP plan of the government has various specific objectives that need to be achieved by the year 2020. One of the primary objectives comprised of increasing the total research and development based investment up to around 2.5 % of the total GDP. Another objective highlighted the increased focus of the government to increase the level of technological contribution to over 60% in the total economic growth of the nation. The policy also has the objective of reducing the dependence level on foreign technology to around 30 percent. The MLP plan of the Chinese government is also looking forward to promoting itself as one of the leading countries, which has the largest number of patent right holding citizens. It is of significant importance to mention the fact that the various political leaders of China are actively making their own contributions for successful fulfilment of the MLP, which is a part of the national innovation plan (US International Trade Commission, n.d., 5-2, and 5-3) Finance component of Chinese NIS It is of significant importance to state that the government outlined policy of China for promoting innovation backed growth needs significant amount of financial investments and capital injections from various agencies of private as well as government nature. Talking on these lines, it needs to be mentioned that the Republic of China is on an introspecting mode for the purpose of generating funding for the NIS. The MLP plan developed by the Chinese policy makers outlines the process of streamlining around 2.5% of the GDP to fund research and development for innovation purposes. Also, it needs to be mentioned that China is focusing on the process of developing a funding structure for the NIS, while working in close collaboration with the World Bank (United Nations, 2002, p. 45). It is of high importance to mention the fact that the Chinese policy makers are increasingly focusing on the process of building up university backed research and development to develop potential and talent to fuel its long term national innovation plan (Goransson, 2011, p. 145). Source: Xue, 2006, p. 14 Scientific and technological aspect of Chinese NIS The National Innovation System outlined by the policy makers of China to promote innovation sponsored growth and development of the economy as well as the nation has seriously considered the contribution arising from the scientific and technology related research and development. Talking in a more elaborate manner, it is important to mention the fact that a panel of around 2000 experts designed and outlined an effective scientific and technological (S&T) plan whose main focus is to enhance the capability of innovation. The focus is also centred on the fact of promoting economic growth and social development while using scientific research as a medium. The guiding principles of China’s expert designed S&T plan comprises of sponsoring home grown innovation, spearheading development while focusing on attaining breakthrough progress in innovation. Talking more about the currently existing S&T plan, it can be said that the expenditure of China in the arena of research and development has already crossed an estimate of around 460 billion Yuan (Wang, n.d., p. 46-47) Source: Wang, n.d., p. 51 Talking in a little descriptive manner, about the national research and development plan, which is a part of the National Innovation System of China, it can be said the plan is divided into two broad categories. The first category represents the Major Special S&T Projects, while the other category represents National S&T programs (Wang, n.d., p. 52). It is of utmost importance to mention the fact that while designing the S&T policy, the policymakers of China concentrated on the process of developing a high pool of vital human resource. As a result, an essential part of the S&T plan also comprises of seeking a global pool of experts while at the same time developing Chinese higher education to develop inward human resource talent (OECD, 2007, p. 9, 51). It needs to be mentioned that for the purpose of attaining rapid progress in the objectives related to the S&T plan of China, the government has focused on providing significant encouragement to the process of formation and development of collaboration and partnership between higher educational institutions and industry based enterprises who are shouldering the responsibility of implementing the S&T plan in to reality (Goransson, 2011, p. 149). Industry Component of China’s NIS The industry forms a vital component for the National innovation system in China. It is of significant importance to mention the fact that the industry plays a very critical and important role for the purpose implementing innovation driven process in increasing the product and output of the economy. Talking on this note, it can be said that the industry efforts to act as the bedrock of innovation based process to boost the economic output will automatically lead to the process of increasing the contribution of the overall innovation powered development in the growth of the national GDP. It is relevant to mention that in the recent times, there has been a significant change in the process of conduction of operations by the commercial and industrial sector of the country because of the increased implementation of the NIS. As of the more recent times, the industry in an attempt to develop a significant competitive advantage for the purpose of responding to competition from the rivals has focused on the process of implementing innovative processes developed by various higher education organizations, who are working in perfectly synchronized collaboration with the industry (Baskaran & Muchie, 2006, p. 86). It also has to be said that the industrial sector of China is trying to attract significant amount of foreign investment in the form of FDI for the purpose of development of highly innovative technologies, and industrial process (Boeing and Sandner, n.d., p. 10). Conclusion It is of significant interest to mention the fact that the business environment of China provides a unique arena of mixed growth and development. There is no point in ignoring the fact that China is supposed to attain a massive growth of consumer demand of diversified nature over the next couple of years. Also because of the rising nature of complex kind of consumer demand, the market of China has high attractiveness for various multinational firms and enterprises located in the foreign land. It has to be said that the foreign based firms are increasingly focusing on the process to attain future business growth by capitalizing on the opportunity provided by China, because of the steady decline in growth prospects in the business environment of the developed countries. For the purpose of promoting growth of the national industrial sector, the country of China is to some extent concerned with the protecting the internal competition existing within the country in regards to various industrial sectors. For the purpose of limiting the effects of the foreign firms in regards to the level of industrial competition existing within the country of China, it can be said that the government of China has developed a number of barriers, which makes conduction of business by firms increasingly difficult. It also needs to be said in these regards that the business environment of China is more focused on promoting inward growth and development. Hence, in a more simplified manner, it can be said that China is focusing on attaining indigenous innovation, which will power economic growth of the nation. Talking about the National Innovation System that has been developed by the Chinese policy makers it has been found that the government is taking active measures to promote internal growth and development by designing various entrepreneurship and innovation friendly policies. While talking in a little elaborate nature, it can be said that the various aspects of the national innovation system which comprises of the government factor, finance factor, industry factor as well as the development factor related to science and technology are highly conducive for promoting growth and development of the business and industries located within the country of China. Reference Farell, D. and et.al, 2006. From made in China to sold in China: The rise of the Chinese urban consumer. [Online] Available at: http://www.mckinsey.com/insights/mgi/research/urbanization/from_made_in_china_to_sold_in_china [Accessed 28 Feb 2013] Booz & Co, 2013. Competitive China. [Online] Available at: http://www.booz.com/global/home/what-we-think/the_china_strategy/competitive_china [Accessed 28 Feb 2013] US International Trade Commission, n.d. China: Intellectual Property Infringement, Indigenous Innovation Policies, and Frameworks for Measuring the Effects on the U.S. Economy. Washington: Dane Publications. Baskaran, A., & Muchie, M., 2006. Bridging the Digital Divide: Innovation Systems for Ict in Brazil, China, India, Thailand and Southern Africa. London: Adonis & Abbey Publishers Ltd. Goransson, B., 2011. Universities In Transition: The Changing Role and Challenges for Academic Institutions. New York: Springer OECD, 2007. OECD Reviews of Innovation Policy CHINA [Pdf] Available at: http://www.oecd.org/science/inno//39177453.pdf United Nations, 2002. Finance for Sustainable Development: Testing New Policy Approaches : Proceedings of the 5th Expert Group Meeting on Finance for Sustainable Development, Nairobi, Kenya, 1-4 December 1999. United Nations. OECD, 2002. Dynamising National Innovation Systems. France: OECD. OECD, 1999. Managing National Innovation Systems. France: OECD. Ellis, C.D., 2013. China’s Current Business Environment: It’s Not Tough, Just Comply. [Online] Available at: http://www.china-briefing.com/news/2013/01/04/chinas-current-business-environment-its-not-tough-just-comply.html [Accessed 28 Feb 2013] Xue, L., 2006. Universities in China’s National Innovation System. China: Tsinghua University Wang, Y., n.d. CHINA’S NATIONAL INNOVATION SYSTEM AND INNOVATION POLICY . [Online] Available at: http://nis.apctt.org/PDF/CSNWorkshop_Report_P2S2_Wang.pdf Boeing, P. and Sandner, P., n.d. The Innovative Performance of China’s National Innovation System. [Online] Available at: http://www.frankfurt-school.de/clicnetclm/fileDownload.do?goid=000000275822AB4 Read More