Technology Entrepreneurship: of China - Case Study Example

Running Head: Technology Entrepreneurship Technology Entrepreneurship: A Case Study of China Name Institution Date Technology Entrepreneurship Introduction The fast emerging developments in high technology ventures has significantly influenced the world’s social and economic developments throughout the globe. A major contribution of high technology ventures is in the emergency and growth of technology entrepreneurship. In this regard, technology entrepreneurship is the process by which trade is enable through the application of high technology devices such as internet, causing changes in the economy system, through innovation generated to improve economic opportunities that add value to the society. For China in particular, high technology ventures have resulted to economic transformation (Haiyang, 2006). Different opportunities have proved beneficial for China in exploring the new economy. To begin with, the internet and its fast adoption by the citizens and the incentive provided by the government through provision of conditions that enhance development of high technology have all enhanced technology entrepreneurship in China. However, adoption of high technology in entrepreneurship has not been without challenges. This is largely attributed to the lack of financial resources, new product experience, managerial resources and inadequate environmental knowledge . the above named factors has resulted to the association of adoption of high technology with high failure rate. With the realization of the potential that China held in consumption of foreign resources and possible technological development, education of their students in areas of science and technology abroad has been highly supported. It is as a result of this that the country has been able to build capacity for technological ventures thereby overcoming the challenge posed by inadequacy in environmental and technological knowledge (Wang et al, 2011). Oversees Chinese have been seen as a backbone in the adoption of high technology and exploration of technology entrepreneurship due to the knowledge, capacity and experience they posses. This paper looks into opportunities presented in China for technology entrepreneurship, challenges faced in adoption and growth of technology entrepreneurship as well as the role played by overseas Chinese in development and success of technology entrepreneurship. Opportunities for technology entrepreneurship in China According to Sulland Wang (2005), technology entrepreneurship in China is considered to be a style of business leadership which is largely based on the process of identifying high potential as well as technology intensive activities which establishes business opportunities. For China, an attractive business opportunity comprises of a great value proposition which involve producing technically feasible products, sustainable competitive advantage and finally, a proven business model. Technological entrepreneurial across China is based either on a definable revolutionary breakthrough in technology as well as evolutionary advancement which creates relevancy in independent opportunities established corporation. The fact that the recent global recession did not affect China is a good indication of numerous opportunities that lie in China due to its engagement in technological entrepreneurship. Here, through this kind of entrepreneurship, china has been able to identify as well as reduce financial type of risks (Sull and Wang, 2005). Chen (2006) suggests that, China has emerged as a world economic super power creating various business opportunities across the country tremendous. Given a new business entry defined across the country, a new era is underway for the country high tech innovation as well as entrepreneurship. It is quite evident that transformation of china into a more innovative oriented nation is largely topping up the Chinese government agenda due to the numerous opportunities it comes with (Chen, 2006). In addition, Chinese government has inspired their own entrepreneurs by making their country a leader in high technology through the provision of a conducive environment for modernization and innovation. As a result, it has encouraged high-tech entrepreneurship and establishment of many high tech parks throughout the countryTechnological innovation across china is considered to have entrepreneurship transformation which is referred as the fundamental driving force in the entire innovation process. Across china, technological entrepreneurship has largely been demonstrated to be a key driver of an organization competitive advantage as well as a superior profitability. For instance, technological entrepreneurship across China has led to the emergence of various outsourcing activities that are related to technology parks creating ICT job shifts within the country. Initially before the country engaged in technological entrepreneurship, job were outsources from developed countries such as America to china on the basis of efficiency as well as costs saving. Today, china is enjoying various opportunities that are brought about by technological entrepreneurship where ICT jobs in the country are largely shifted on the basis of economic efficiency, location attractiveness as well as location (Chen, 2006). The government has also contributed to the growth of technology enterprise through the provision of tax incentives, relaxed laws and monetary grants. This is evident in the statement issues by the minister at the State Development Planning Commission Zeng Peiyan in early 2000. He stated that the government would be actively involved in giving guidance and encouraging private investment. This would be achieved through the elimination of all discriminatory and restrictive regulations which did not support or enhance private investment and the development of private economy (Liao & Sohmen, 2001). This was aimed at ensuring that private entrepreneurs enjoyed equal opportunities as state enterprises in terms of business import and export, taxation and land use. According to Chen et al (2006), technology entrepreneurship across china has great opportunities of establishing technology accessibility as well as ensuring that digital economy is spread across the entire country. By so doing it is quite evident that china will be able to implement clustering strategies that largely enhances economic gains for the country. Technological entrepreneurship has opportunity in rising technological jobs creating a race for best talents as well as competencies around china especially by multinational companies such as Unilever. Through technology entrepreneurship, China has a possibility to gain a competitive advantage where the country will be able to manage this new phenomenon as a fundamental for clustering strategy success (Chen et al, 2006). Djankov et al (2006) suggest that, entrepreneurs across China find the use of technology provide innovation that greatly offers improvements over various existing products provided by large organization which operates in the mainstream of a definable as well as sustaining technology. Chinese entrepreneurs have an opportunity of choosing a buyer pull strategy that is balanced with technological push through finding a replacement or a substitute product that ensures buyers’ needs are fulfilled (Djankov et al, 2006). This opportunity will provide China with optimum profits as well as revenue enhanced innovative. In addition, this opportunity will ensure that there is a production of long term core technologies competencies as well as competitive advantages which translate to long term growth and success for Chinese enterprises. Across China, technology entrepreneurship is more readily as opposed to personal services. Due to this, technological entrepreneurship has opportunities to enable China market its products as well as services to global customers. For china, this journey initialize with an idea which then culminate with a successful exit creating opportunities that have considerable variations to successful venture of growth and development. In china, entrepreneurship is considered to be an important source of the nation economic growth. Djankov et al (2006) suggest that, recent research by economists as well as management theorists indicates that high technology entrepreneurship across China creates opportunities especially in industrial development. It is quite evident that when a national is developed on an industrial level, then it acquires numerous opportunities in relation to the country’s economy transformation. Djankov et al (2006) maintain that, the internet is changing the nature of entrepreneurship in china through introducing stronger foreign involvement. This therefore indicates that Chinese entrepreneurs will continue pursuing their ambitions and dreams in establishing strong organizational structure. Further, increased technological entrepreneurship have an opportunity of creating a new pool of capital resources especially for the Chinese talent that initially was perceived to have few monetary options. According to Chen et al (2006), increased use of internet and personal computer across China have caused rapid fall of prices of technology creating opportunities that arises from decrease price of physical capital. The decrease in the price of physical capital enable Chinese entrepreneur venture in to new markets globally which are largely facilitated by the fall of technological prices. Direct access to internet across China have increased entrepreneurship through creating opportunities which make it easier to complete different tasks that are needed to highly run a business such as inventory, advertising as well as accounting. It is important to note that even with the numerous opportunities that come along with technological entrepreneurship, Chinese entrepreneurs need to balance the time spent courting China government officials with the various priorities of finding an opportunities in the market, establishing as well as gathering resources of more market based ties to widely exploit that designed opportunity. Chinese ventures into technological entrepreneurship create positive performance which creates impact in the nation low growth industries (Chen, 2006). Challenges Similar to other fields of technology, entrepreneurship in China in technology has faced various challenges. These challenges must be addressed accordingly in order to ensure the entrepreneurship technology will improve in China. Insufficient practical experience and technical knowledge has been a challenge in China. This has been because of, to some extent less deep penetration of education in technology. Technical education in recent times is said to be costly and therefore, the deserving student do not enjoy it. Of major concern is the brain drain that the country is facing now. Proficient personnel are increasingly seeking employment and new ventures from those countries that have already developed. Though individuals who move to seek education opportunities and experience oversees eventually return to their home country and contribute to technology entrepreneurship, time lost in such ventures negatively impact on the country’s economy. Insufficient social infrastructures and industrial has also challenged entrepreneurship in China. This is compared to the state of infrastructures in the United States. This has actually hindered growth in this sector (Schramm, 2006). It is important to note that the government has recognized this and it is working towards improving the states of rails, roads, ports, telecom and airports. Most parts of the country have declined R&D facilities for product development and selection. This may be because of government procedures and selection that of course require amendment. Industrial infrastructures include access to power that is a basic requirement in the industry. However, there is an increased effort in ensuring that power does not fall under the major obstacles when it comes to improving the technology. Of importance to note is the cost of power in China. One cannot help but agree to the fact as much as power is available; its high cost will continue to affect negatively the entrepreneurship technology sector. Access to financial has been a major setback in the entrepreneurship technology in China. This has been as a result of the bank interest rates that are not friendly to the deserving entrepreneurs as well as insufficient funding from the venture capital funds. These entrepreneurs are not able to finance their projects that could prove excellent in the country. Therefore, rehabilitation in the finance sector is necessary. The fact that China has been the mother of most inventions and yet lags behind in terms of development is attributed to Confucianism according to Weber (Liao & Sohmen, 2001). This is seen in that many Chinese entrepreneurs who posses relevant knowledge for invention lack the required capital to explore technology entrepreneurship. Legal issues have greatly affected the development of technology. Basically, at present the country is developing the intellectual properties laws that are meant to protect individual who are venturing in technology. Having the laws is one thing while enforcing them is the greatest challenge. In China, to date, these laws have been enforced as required (OECD, 2001). Globalization has been another setback as described by many critics. Globalization is said to increase competition from the so-called developed countries. This is a great challenge for entrepreneurship in China. However, this has declined as major markets have been created and have been described to have minimal competition especially from the developed countries that are known to produce products that are competitive because of excellent quality. Cost consideration has also affected great deal. Most traditional industries have relocated to affordable locations that have few capital plus other basic requirements. China faces shortages of energy and raw materials coupled with an increase in fatal industrial accidents. China’s economy has grown faster than its electrical grid and its generation. Demand for electricity has outstripped its supply. Competition for raw materials is increasing between countries such as Russia and the US. China’s population is the largest in the world. To meet the power and raw materials demands for the population requires massive supply of raw materials (Lemelson-MIT Program 2003). The increased rural to urban migration has reduced the countries work force in the agricultural sector. This has a negative impact on supply of raw materials for the agricultural products. China is experiencing environmental issues key among them air and water pollution. Lemelson- MIT program, (2003) reported that over eight million of Chinese rural population moves to the city annually resulting to overpopulation in urban areas. Farming land to feed the population is decreasing and the rising rate of industrial growth leads to pollution of air and water. These subject the Chinese population to significant health risks. China faces considerable environmental challenges. Emissions from the numerous industries in China have adverse effect on the environment. They have contributed to the growing problem of global warming leading to radical changes in the weather patterns of the country. China also experiences legal issues such as protection of intellectual property. The Chinese government has not been a strict defender of patents rights. Technologies and techniques imitation from other countries in china is rampant. Although the country has developed laws safeguarding on the same, implementation has not been effective. Enforcement of such laws in China has not been consistent. Intellectual property rights infringement in China jeopardizes market opportunities and therefore undermines the profitability of the firm of origin. This is because prices of the lower-cost imitations that are illegal, is lower than that of the original product. Intellectual patent is by far the most valuable asset a company holds. Many companies especially the small and medium sized companies, lack resources and necessary knowledge to protect their Intellectual property in China (McFarlan, 2008). Questions of social stability have emerged in China. Although new wealth is emerging in China, deep inequalities have emerged. The major imbalances are between the Eastern and the Western regions of the country. Rural and urban populations also experience disparities. Peaceful coexistence has been in existence since 1948 but incidents of civil unrest have grown by 400 percent. One wonders whether the building social pressures in the country can be handled without an explosion (Mcfarlan, 2008). According to Chen (2003), most local ventures in China were set up by the local government with a mandate to promote the development of targeted industries in the area. This however, comes with its share of influence and control by the government. Privatization of such ventures will lead to political fallouts by the investors that may have adverse effects on the investments. There is also a challenge of infantile nature of private investing in China. Although investment categories, behaviors and activities in the US are categorized according to transaction size, company’s maturity and the transaction, such categorizations do not exist in China. Although this provides flexibility to the company, the challenge is for the company to develop strong competencies related to a particular area of investing. Roles played by Overseas Chinese According to Long and Han (2008), radical transformation is being experienced in the global labor market as communication and transportation costs gradually fall facilitating mobility and exchange of a great deal of information. Traditionally, international migration was considered a one-way process which only benefited the recipient. However, this has changed over the years as counterparts separated by great distance can collaborate over complex tasks in real time. As a result, professionals such as engineers and scientists from developed countries prefer to settle abroad rather than remain in their home countries where professional opportunities are less attractive. While living in foreign countries these individuals do contribute to the economies of their countries by maintaining economic and professional ties. The option of becoming transnational has enabled foreign investors to maintain citizenship and residence in more than one country. China is a good example of a country where many of its citizens have moved to other countries to exploit their professional skills. Smart and Hsu (2004) assert that although such individuals do not live within China they have greatly contributed to the promotion of the technological entrepreneurship of the country. Migration of scientists and engineers to the United States Silicon Valley was quite tremendous between 1970’s and the 1990’s. Statistics indicated that more than half of these people were Indian and Chinese immigrants who had gone to the United States for further learning. They opted to apply for jobs in the Silicon Valley due to massive competition for professionals in their home countries. This is in light of the fact that China and India are technological countries. Many scholars have argued that some individuals who left China to go look for better lifestyles in foreign countries are now reversing the cycle of brain drain. They are returning home to start up new businesses while at the same time maintain professional and social ties with the foreign countries. Schlevogt (2001) states that foreign educated Chinese provide financial institutions with first-hand knowledge concerning avenues of promoting their services in the peripheral regions. In addition, they advise local policymakers on ways of promoting technological growth in other countries. They supply the country, either temporarily or permanently, with identities and worldviews which they developed out of shared educational and professional experiences. They possess adequate potential of establishing successful and sustainable local entrepreneurships and actually make strong alliances with other technical professionals, policymakers and businessmen (Smart and Hsu, 2004). Diaspora entrepreneurs are increasingly transferring market information and up-to-date technology which has facilitated establishment of local entrepreneurships and has ultimately brought a whole new revolution in the information technology in China (Ahlstrom et al, 2004). Cross regional entrepreneurs have professional networks which enable them to raise capital, identify market opportunities, build management teams and establish useful partnerships with specialized producers. Besides that, they ease information exchange and communication within networks of ethnic professionals which accelerate the process of learning about new technology, skills and sources and collaborators. Such effective communication is also essential in facilitating timely responses needed in the highly competitive technological environment. A clear drawback in technological entrepreneurship is the ability to quickly locate potential foreign partners and to maintain business team works and relationships with them considering cultural and linguistic disparities. The high-tech industry is particularly faced with this challenge due to the fact that technologies, products and markets involved in this industry are continually changing. Chinese in the Diaspora and specifically those working in the Silicon Valley possess cultural, language and technical skills in both countries which are a commanding advantage in both countries. They have created social and institutional structures which can be used by even the smallest producers to locate sustainable beneficial collaborations that cross boundaries and they also facilitate easy access to distance sources of skills, capital and markets (Ahlstrom et al, 2004). Chinese technological entrepreneurs in Silicon Valley rarely compete with U.S. established producers and instead build on improving technical and economic resources of their home country. They recognize opportunities for certain market niche in the foreign countries and mobilize unemployed Chinese in their home countries to provide software which is later supplied to the foreign corporations. In addition, they are ideally positioned to connect with international markets that buy products from their home country. This is achieved through appropriate identification of market niches and mobilization of domestic knowledge and skills to produce products relevant for the specific markets. They also devise strategies aimed at overcoming barriers that hinder technology entrepreneurs in achieving success in the global marketplace (Schlevogt, 2001). Chinese entrepreneurs in the Diaspora have adapted several strategies in solving challenges created by disadvantaged conditions found in their home country. Through experience in the foreign countries, they have learnt capabilities of negotiating rules that control and regulate multinational companies. Besides that, they can access institutions in the foreign countries not only to pursue graduate education but also to incorporate their business ideas and establish headquarters for technology companies in their home countries. They can be able to seek professional and venture capital as well as technical and managerial talent in the foreign countries and send these resources to their home countries. Transnational Chinese entrepreneurs have devoted significant effort and time to transform their domestic institutions by advising the local government on regulatory, capital markets and legal reforms. They also work closely with the government to improve domestic infrastructure such as universities, training and research institutes as well as developing information exchange forums that enhance coordination among local producers. Overseas Chinese entrepreneurs complement and differentiate foreign markets rather than compete with them. In so doing, trade wars can be avoided and the industry can obtain an advantaged global market position. Trade war was experienced in 1980’s between Japanese and US semi conductor firms that engaged in intensive competition for shares in the global for the capital-intensive commodity (Long and Han, 2008). Oversees Chinese do not only serve their country once they return home or from abroad but play contribute a lot in the ‘going out’ strategy in the leadership capacity once they return home (Wang et al, 2011).. These returnees have been seen as a major asset in the development of technology in China and economical growth since they posses knowledge from the best Universities oversees and are engaged as either trainees, interns or workers in the best companies. Valuable experiences and knowledge are thus transferred to their home country thus contributing to the speedy technological ventures and success in different inventions (Wang et al, 2011). This indicates that, oversees Chinese greatly contribute to developing China’s capacity of engaging in technological ventures and as a drive to globalization much more compared to existing indigenous Chinese firms. Conclusion In conclusion, it is evident that China is presented with numerous opportunities for development and growth of technology entrepreneurship. These opportunities will see China develop economically as a global technology resource center. However, a lot has to be done in overcoming the challenges faced in the development of technology entrepreneurship. Though oversees Chinese have been of valuable importance in China’s endeavors in high technology ventures, there is still more that is to be done to ensure that the country does not simply become a leader in developing the most critical innovations in the world, but that these inventions contribute to the growth of the economy and transformation of the country from a poverty stricken country. Whether China continues to progress smoothly towards technological modernization and innovation or not largely lies upon its political and social developments. The government has a major role to play as well in enhancing privatization and encouraging innovation. This is despite the fact that profit seeking behavior and privatization of businesses are major contradictions in an ideologically Communist state such as China. As China ups her game to compete at the global level through her Entry into the World Trade Organization, indigenous Chinese companies may be negatively impacted as international players enter the market. This calls for a change of strategy by indigenous firms so as to reap the advantage of globalization. Though much has been explored on the development of high technology and its application in technology entrepreneurship in China, a lot of research is yet to be done on the strategies applied by China in catching up with foreign firms in terms of technological advancements. In addition, investigation on the challenges posed by social cultural factors must be looked into as this may be a major contributor of China lagging behind in poverty eradication despite her technological advancement. Addressing such matters would see the country reap the full advantages that come with high technology and innovation. References Ahlstrom, D., Young, M., Chan, E. and Bruton, G.(2004) ‘Facing Constraints to Growth? Overseas Chinese Entrepreneurs and Traditional Business Practices in East Asia’, Asia Pacific Journal of Management, 21 (3), 263-285. Chen, G., Li, J. and Matlay, H. (2006). ‘Who are the Chinese Private Entrepreneurs? A Study of Entrepreneurial Attributes and Business Governance’, Journal of Small Business and Enterprise Development, 13 (2), 148-160 Chen, J. (2003). The role of venture capital in China’s technology entrepreneurship development. Dissertation, Massachusetts Institute of Technology. Chen, J. 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