The Weakness of China’s National Champions
This chapter examines China’s large IT industry firms backed and even created by the state in its bid to create a Chinese equivalent of the very large firms in Japan and Korea. It argues that, with the exception of Huawei, these firms have proven to be technological paper tigers. These firms’ technological capacities suffocate in the warm embrace of the Chinese state financial system and have been unintentionally further undermined by the tremendous but nearly unconditional support through China’s state procurement system and other subsidies. The chapter focuses on two large subsectors of IT, personal computers and telecommunications equipment, and contains case studies of Lenovo and Huawei. The chapter argues that Huawei is the exception among China’s state-favored firms in escaping the blandishments of state favor to pursue international markets and upgrading.
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