Catching-up and Leapfrogging in Key Manufacturing Sectors

Chapter 6 assesses China’s catching-up and leapfrogging in key manufacturing sectors compared with the Korean experience. It explains the varying records of market catch-up by referring to diverse aspects of technological and market regimes, such as modularity, degrees of embodied technical change, tacitness of knowledge, knowledge accessibility, and frequency of innovations. Easy access to foreign technologies from developed countries (mobile phones vs. semiconductors), high degree of modularity (mobile phones vs. automobiles and semiconductors), and frequent changes in the generations of technologies or short cycle times of technologies (mobile phones and telecommunications systems vs. automobiles) generally help latecomers catch up. More importantly, sectors with a high degree of tacit knowledge (e.g., automobiles) tend to show a slower speed of catch-up than the manufacturers of telecommunications equipment with a high degree of explicit knowledge. Whether markets feature segmentation (or the existence of low-end niche segments for Chinese latecomers) seems to play an important role in the market regimes. Chinese firms manage to achieve initial success from a low-end market in segmented market conditions (e.g., telecommunications equipment and mobile phones) or markets protected by the government (e.g., telecommunications equipment). Conversely, they face high entry barriers in markets with no such segmentation (e.g., memory chips), which is one of the reasons for their slow progress in the memory chip sector (see also Chapter 4). These cases also suggest that technological regimes are not the only paramount determining factor; the outcomes are affected by the roles of actors, including firms and governments.