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doi:10.1016/j.te
Abbreviation:
Packet Radio S
TACS, Total A
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Technovation 28 (2008) 327–334
www.elsevier.com/locate/technovation
Technological capability development in China’s mobile phone industry
Jun Jina,�, Maximilian von Zedtwitzb
aResearch Centre for Science, Technology, and Education Policy, Zhejiang University, Zheda Road 38, 310027 Hangzhou, ChinabDepartment of Innovation and Entrepreneurship, Research Center for Technological Innovation, School of Economics and Management, Tsinghua University,
100084 Beijing, PR China
Abstract
The development of technological capability (TC) is critical for manufacturing firms in high-tech industries. Kim’s [1980. Stages of
development of industrial technology in a developing country: a model. Research Policy 9, 254–277] model of acquisition, assimilation,
and improvement is widely accepted to explain TC development in developing economies. However, some R&D practices we observed in
Chinese manufacturing companies appear to be in disagreement with Kim’s model. Based on four in-depth cases studies set in China’s
mobile phone industry, we hypothesize (a) a complementary stage in Kim’s model, and (b) those stages can be traversed concurrently.
r 2007 Elsevier Ltd. All rights reserved.
Keywords: Technological capability; Kim’s model; Mobile phone industry; Four-stage model; R&D; Innovation
1. Introduction
Technological capability (TC) plays a strategic role inthe competitive advantage of firms, industries, and evencountries (Lall, 1990). For this reason, it has become afocus of attention not only among academics, but alsoamong business managers and government officials,particularly in developing economies (Lall, 1990; Miyazaki,1995; Kim, 1997). There is extensive research on thedevelopment of TC in newly industrialized economies(NIEs) and emerging NIEs (e.g., Malaysia and Thailand)(see e.g., Lall, 1990; Kim, 1997), most of which focusing onheavy and chemical technology (HCT) industries or labor-intensive industries (see e.g., Lee et al., 1988; Kumar et al.,1999; Lee, 2001).
e front matter r 2007 Elsevier Ltd. All rights reserved.
chnovation.2007.06.003
CDMA, Code Division Multiple Access; GPRS, General
ervice; GSM, Global System for Mobile Communication;
ccess Communication System; TD-SCDMA, Time
ronous Code Division Multiple Access; WCDMA, Wide-
ision Multiple Access
ing author. Tel.: +86571 87 95 38 80;
95 15 99.
esses: [email protected], [email protected] (J. Jin),
ard.edu (M. von Zedtwitz).
Very little research has been done in this respect oninformation and communication technologies (ICT), eventhough they are crucial in the development of companiesand national economies. It has been frequently argued thatthe development of ICT allows technology leapfrogging indeveloping countries (e.g., Perez, 1988; Lee and Lim, 2001).As we will see later, ICT are not just being imported in theirmature stage without adaptation or modification, and hencethis import does not seem to follow Kim’s (1980) modelwhereby it is supposed to progress from the acquisition andassimilation of mature technologies before moving to theimprovement of growing or emerging technologies. Specifi-cally, Kim’s model stipulates separate stages and a lineartransition through these stages, which is in disagreementwith empirical observation in China as well as research ondomestic technological capabilities (e.g., Gao, 2003).Can we modify Kim’s TC model to fit TC development
in fast emerging economies? Since previous research onthis topic is limited and available observations stillrather unstructured, we decided to elaborate this researchquestion first with in-depth cases study research to developa sharper understanding of the potential divergence ofempirical practice from Kim’s model. The goal of ourpaper is thus to develop a working model for furtherresearch on the basis of well-founded observations.
ARTICLE IN PRESSJ. Jin, M. von Zedtwitz / Technovation 28 (2008) 327–334328
2. Literature review
2.1. Technological capability
The definition of TC varies in perspective, dependingon the aims of researchers. Lall (1990, p. 17) definesTC in a narrow sense as the capability to execute alltechnical functions entailed in operating, improving,and modernizing firm’s productive facilities. Kim (1997,p. 4) points out that in developing countries ‘‘TC’’could be used interchangeably with ‘‘absorptive capacity’’(Cohen and Levinthal, 1990), i.e., absorbing existingknowledge, assimilating it, and in turn generating newknowledge.
In this paper, we define TC as the capability to makeeffective use of technical knowledge and skills, not only inan effort to improve and develop products and processes,but also to improve existing technology and to generatenew knowledge and skills in response to the competitivebusiness environment.
2.2. The development process of technological capability
The study of TC development is extensive and empiri-cally oriented. A wide range of research on TC develop-ment process in NIEs (e.g., Westphal et al., 1985; Leeet al., 1988; Lall, 1990, 1993; OECD, 1994; Kim, 1980,1999; Kumar et al., 1999; Kim and Nelson, 2000) arguesthat the TC development process in NIEs follows threesteps:
1.
Domestic firms transfer mature technology from multi-national companies (MNCs).2.
Next, they absorb the transferred technology and diffusethe technology within the firm and in the industry, evenin the whole economy.3.
Eventually, these firms innovate and develop their own,new technologies.Kim (1980) developed a three-stage model of acquisition,assimilation, and improvement of technology, whichextended Utterback and Abernathy’s (1975) model inadvanced countries to describe the TC developmentprocess in developing countries.
To summarize, Kim’s theory of the TC developmentprocess is as follows:
�
In developing countries, the state of TC develops firstfrom mature technology to growing technology, andlater from growing to emerging technology. � Most firms in these countries remain at the stage ofmature technology, few reach the emerging technologystage.
� There are clear and discernible boundaries between thedifferent three stages.
� The TC must develop from one stage to the next, stepby step.
�
The main R&D activities of firms in developingcountries are acquisition and assimilation of maturetechnologies, not development of new technologies.More research in developing countries supports Kim’smodel that after firms have transferred and adopted maturetechnologies, they make no or only little technologyimprovement (Dahlman et al., 1987; Lall, 1987, 1990).Moreover, the TC development of firms generally followsthe three-stage model, moving from acquisition to assim-ilation and finally to improvement (or innovation). Otherresearchers examined firms in Korea, such as Samsung, toprovide further evidences for this TC development process(e.g., Kim, 1997, 1999; Lee, 2001).The success of this model has led to confidence in the
assumption that the development of TC follows similarrules in other emerging economies, even though thesecountries may be fundamentally different from the originalcountries of research. Among one of the first to questionKim’s validity in China is Gao (2003) who found that(1) TC development in telecommunication equipmentmanufacturing firms in China did not follow Kim’s model,and that (2) these firms did research to improve maturetechnologies. Gao’s study suggests that firms that deviatedfrom the assumed way of TC development, i.e., started todevelop their own proprietary technology early, improvedtheir TC more effectively than firms that followed thetraditional paradigm (Kim’s model). Given this corrobor-ating work, we felt more confident in examining andrevising Kim’s three-stage model, and to focus on one ofthe fastest-developing industries in China.
3. Research methodology
Since we were driven by a theoretical research questionbased on a patchwork of empirical observations, wedecided to develop our concept first by means of an in-depth investigation and a multi-case study. The caseresearch was designed to avail us with a critical review ofKim’s model, and to develop hypotheses that could be usedfor subsequent validating quantitative research. We focuson the TC development process of four Chinese mobilephone manufacturers that were able to develop their TCrapidly and progress from 1G to 3G mobile phonetechnologies (see the Appendix for an overview of themobile phone industry and its underlying technologies inChina).To protect their identity, the four companies are labeled
A, B, C, and D. They are leading Chinese mobile phonemanufacturers and fall into two categories: telecommuni-cation systems and equipment manufacturers (CompaniesA, B, and D), and commercial products marketing firms(Company C).Before conducting the interviews, we collected secondary
data from books, newspapers, press releases, websites, etc.,to familiarize ourselves with the firms and the industry. Weconducted 25 interviews face-to-face or over the telephone.
ARTICLE IN PRESSJ. Jin, M. von Zedtwitz / Technovation 28 (2008) 327–334 329
The interviewees included senior managers, middle man-agers, and senior engineers. Each interview lasted between90 and 150min. We continued to collect secondary data,including information published on related websites andinterviews with external academic experts, to maximize thevalidity and reliability of case studies according to thetheory stipulated by Yin (1989).
Based on our definition of TC ‘‘to make effective use oftechnical knowledge and skills’’, we evaluated it by (1) theshare of market to present the change of productioncapability; (2) the change of R&D fields, such asdeveloping from assimilation mature technology to invest-ment in emerging technology; and (3) the usage level ofindigenous IPRs in a product. Patents and publicationswere not used as a measurement because Chinese firmshave until recently rarely applied for patents and are stillrestricted in their publications.
4. TC development of four firms
The history of 1G mobile technology in China is veryshort and lasts from 1990 to 1997 only. In the four firms,only Company A produced 1G mobile phones. CompanyA imported 1G mobile phone production lines at thebeginning of 1990s, assembled imported parts and soldforeign branded 1G mobile phones. Their development of1G mobile phone failed because of the organization reformof cooperative institutes and shortages of independentdevelopment capabilities.
The development of GSM mobile phones in Chinastarted in the mid-1990s, when Company A imported aturnkey-plant to assemble foreign branded 2G mobilephones. Its joint venture (JV) with a US-American MNCproduced the same brand but relatively more modern stylesof 2G mobile phones, too.1 Through sending employees tostudy in foreign countries and intensive internal on-sitetraining, Company A assimilated the transferred 2Gtechnology. With the help of its R&D center in the USA,it produced its first set of 2G mobile phones with 50% ofindigenous IPRs in 1998. Later, Company A produced itsown branded 2G mobile phones.
In contrast, Companies B and C lacked basic mobilephone production capabilities when they decided tomanufacture them. They imported production lines andassembled imported parts even though they sold 2G mobilephones under their own brands. With its extensive R&Dexperience and strong telecommunication R&D capabilityacquired through its production and development oftelecommunication switching equipment, Company Breorganized its R&D team to develop 2G mobile phonetechnologies and products while assimilating the trans-
1At first, the JV was set up to produce CDMA equipment. But the
Chinese government did not open the CDMAmarket as initially expected.
The JV had to produce 2G mobile phones much later than Company A.
At the time of writing, this JV produces foreign brand of 2.5G mobile
phones and 2.5G mobile equipment.
ferred technology to improve their own productioncapability. Company C gradually improved its develop-ment capability and production capability through internallearning, cooperating with the foreign partner (e.g., sendingemployees to train in the foreign company), recruitingengineers and last but not least, acquiring a Chinesetelecommunication institute to strengthen its own R&Dgroup.Company D had a JV with a foreign manufacturer when
it entered the mobile phone industry. However, becausethis JV operated independently, it could not take advan-tage of the knowledge gained in the JV to improve itsindigenous production capability. Therefore, Company Dhad to build an R&D center in the USA, and it imported aproduction line to produce its own brand 2G mobilephones.A common feature with all four firms is that while they
were producing 2G mobile phones, they all have invested inthe development of 2.5G mobile phone technologies. Theybuilt 2.5G R&D centers, recruited professional 2.5Gexpertise and started to cooperate with other organizationsin anticipation of the 2.5G market to prepare for theirproduction of 2.5G mobile phones. Company B, inparticular, conducted its R&D in 2.5G technology,particularly the 2.5G switch equipment, as early as 1995,even before it started to produce 2G mobile phones.Furthermore, since 2002 Chinese firms invest in the R&Dof 3G mobile phones and joined the 3G Forum toparticipate in the development of this new market,including standards to be developed. In particular,the important contribution of the 3G Forum is onTD-SCDMA technology, in competition to the other twointernational telecommunication standards. Table 1 sum-marizes the technological activities of the various firmsunder study.It should be also noted that the four firms produced a
small part of 2G and 2.5G mobile phones through OBM2
in an effort to catch up even faster in this market.In sum, when the four firms moved into mobile phone
manufacturing, they lacked the necessary productiontechnology. Hence, they acquired the production technol-ogy from MNCs through importing production lines orsetting up JVs. Then they assimilated and improved thetransferred technology, and developed new products andtechnologies through their intensive internal efforts andcooperation with others. Firms advanced from being anOEM or an OBM (assembling imported parts and sellingunder own brands) to an ODM. While Companies A, B, C,and D were all producing 2G (mature technology) and2.5G (growing technology) mobile phones, they also putheavy investment into R&D on 2G, 2.5G, and 3Gconcurrently. 2G, 2.5G, and 3G mobile technologies nowexist concurrently in China.
2OEM: original equipment manufacture; OBM: own brand manufac-
ture; ODM: own design manufacture.
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Table 1
Technological activities of case study firms A, B, C, and D during different generations of technologies
Technology Company A Company B Company C Company D
1G Turnkey-plant imported (OEM)
and assimilateda– – –
2G OEM and JV to acquire and
assimilate to become OBM; R&D to
become ODM
Turnkey-plant imported
(OBM) and assimilated;
R&D at the same time
Turnkey-plant imported
(OBM) and assimilated;
later R&D
JV to acquire and
assimilate to become
OBM; later R&D to
become ODM
2.5G Cooperate on R&D, with concurrent acquisition and assimilation
3G Cooperate with others on R&D
aCompany ‘A’ tried to cooperate with an institute to develop 1G technology, but it failed because of the reconstruction of the institute.
J. Jin, M. von Zedtwitz / Technovation 28 (2008) 327–334330
5. Discussion
5.1. Hypotheses
In the case of Company A, the development of 1G and2G technologies followed the technology trajectory ofacquisition, assimilation and development. However, thefact that Company A attempted to invest in R&D of TACSmobile phones contradicts Kim’s theory (1980) and Lall’sstudies (1990) that firms in developing countries do notneed to research and develop mature technology, but itsupports Gao’s (2003) claim that firms in developingcountries investing in mature technology improve theeffectiveness of their TC.
Company B acquired, assimilated and developed 2Gmobile phone technology concurrently rather than con-secutively. Even though the firm lacked 2G productiontechnology, Company B had strong telecommunicationR&D capability to help assimilate 2G production techno-logy and develop new 2G products in a short time. Inaddition, these mobile phone manufacturers conductedR&D and production concurrently on mature (2G),growing (2.5G), and emerging (3G) technologies. Forinstance, the four firms started to invest substantially in2.5G technology development while still developing andproducing 2G mobile phones. Obviously, these findingscontradict Kim’s theory regarding the sequence of devel-opment of TC. In addition, these results support previousresearch on leapfrogging (e.g., Perez, 1988; Lee and Lim,2001), which also happens during the catch up process ofdeveloping countries. Nevertheless, the results of leapfrog-ging under concurrent technology stage development donot fully support Lee and Lim’s (2001) distinct leapfrogprocesses.
We hypothesize that this concurrent pursuit of differenttechnologies is a consequence of the incentives of theindustrial policies and national development policies (e.g.,mobile phone industry as a development priority; firmsencouraged to invest and catch up MNCs in emergingtechnologies) as well as of the competitive nature of themobile phone industry itself (e.g., fast developing of mobilephone technologies; rapid changes of attracting models andappearance design in the mobile phone market).
With respect to 2G technologies, all four firms acquiredthem from MNCs through the importation of productionline or through JVs, then assimilated and developed theirown GSM technologies. Concurrently and independently,they developed new 2G mobile phones with indigenousIPRs or through OBM. Therefore, even though thedevelopment of 2G technologies followed Kim’s technol-ogy trajectory, all stages were taking place at the sametime. This result again challenges Kim’s theory of distinctstages, but here we hypothesize that this behavior is a resultof the successive generations that are occurring in parallelwithin the worldwide mobile phone industry. This paralleldevelopment has forced firms to acquire and assimilate thetransferred technology and, at the same time, invest in thedevelopment of new technology.Interviews with managers reveal that two factors
encouraged firms to invest in a mature technology: first,the desire to improve their existing TC by expanding theapplication of the mature technology and second, thethought that the transferred mature technology was anadvanced technology to adopt.
5.2. Four stage of technological capability process
Given the findings from our case studies, we believe thatKim’s three-stage model should be refined. Based on ournotion of receding technologies and using product life cycletheory (Vernon, 1966) as a reference, we propose a fourthstage to complement the three stages identified by Kim(1980). We define the recessive stage as the stage oftechnology obsolescence in advanced countries.In Fig. 1, T1, T2, T3, T4 denote sequential installments
of consecutive technology paradigms. For instance, thiscan mean (1) different generations of a same category oftechnologies, developing from the 1st generation to the 4thgeneration; or (2) different phases of a same set oftechnologies depending on the nature of technology. Inour mobile phone cases, 1G mobile phone technology isrepresented by T1, 2G by T2, 2.5G by T3, and 3G by T4.These four generation technologies are all wireless (andincreasingly digital) telecommunication technologies. As apart of ICT, the mobile phone technologies are advancingto the next generation only in part based on the earlier
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Fig. 1. Four stages of TC development. Note: T1, 1st generation technology; T2, 2nd generation technology; T3, 3rd generation technology; and T4, 4th
generation technology.
J. Jin, M. von Zedtwitz / Technovation 28 (2008) 327–334 331
generation3 rather than just improving on the samegeneration.
To explain the technologies T1 to T4 in Fig. 1 astechnologies of incremental generations, consider dynamicrandom access memory (D-RAM) technology. TheD-RAM development experience (Lee and Lim, 2001)suggests that firms in Korea competed with those inadvanced countries from 1M D-RAM technologies to 4Mto 16M, and then to 64M, before at last they succeeded incatching up with the world standard. The 1M to 64MD-RAM technologies are different phases of a same set oftechnologies.
Every generation or phase of technology undergoes fourstages, transitioning through emerging, growing, mature
3The various mobile telecommunication generations differ significantly
technologically. For instance, 1G is based on analogue technology, while
2G and higher technologies are based on digital technologies. 2.5G
technology introduced a revolutionary packet-switching design. 3G is
based on totally different network layer architecture. See also the
Appendix.
and receding. In our revised model, it is possible for fourdifferent generations or phases of technologies to beco-existing at different stages (see the gray-shaded areain Fig. 1). Fig. 1 illustrates that in advanced countries,technology life cycles are relatively distinct (upper part ofthe figure). Firms in developing countries acquire, assim-ilate, and then improve, foreign technologies in order ofmaturity: first technologies that are already in a recessivephase; then mature technologies and finally growingtechnologies, though not all activities happen at therecessive stage. In the fourth stage, domestic firmsthemselves develop their own indigenous technologies afterthey have reached the international level of technologicalcapabilities. Since technologies are changing fast, differentgenerations/stages of technologies can coincide. As firmsmay not have undertaken much R&D to create theseco-existing technologies, they concurrently import andassimilate them; therefore the boundaries among thevarious stages of technology acquisition collapse and thestages become interlaced. For instance, the four case firms
ARTICLE IN PRESSJ. Jin, M. von Zedtwitz / Technovation 28 (2008) 327–334332
imported production lines and assembled components toproduce 2G and 2.5G mobile phones at first (see summaryin Table 1). They made efforts (by, e.g., conductingextensive technology training, building up R&D centerson mobile phone technologies, and cooperating withinstitutions and foreign giants) to assimilate the importedtechnologies and provide products with differentiatedfeatures from assembled products with own brands(such as, excellent interface design). In addition, firmsinvested heavily in R&D on 2G to 3G mobile phonetechnologies to improve the products (e.g., Chinese dis-plays), even engaged in the development of next-generationstandards.
National policy and industry build-up sometimes en-courage domestic firms to acquire and assimilate atechnology in the mature and recessive stages. Dubbed‘‘forerunners’’, these firms acquire size and market sharequickly, but ultimately rest their success on obsoletetechnology without much of a chance to build sources ofcompetitive advantage. Take TACS mobile phone techno-logy as an example. When China’s government allowedthe import of TACS technology as an advanced andstandard mobile phone technology in effort to cultivate theemerging mobile phone industry in China, it was arecessive technology in the mobile phone industry4 world-wide. In the four firms, only Company A produced TACSmobile phones. Despite the recessive status of TACStechnology in advanced countries, Company A attemptedto develop indigenous TACS products. Within less than adecade, GSM become the focus of Chinese mobile phoneindustry, and the whole TACS market, including the TACSservice, was terminated in China in 1997 (even before mostfirms entered into the Chinese mobile phone market).Nevertheless, the experience with TACS helped CompanyA to improve their market experience in the mobile phoneindustry and generate production and quality managementskills in mobile phone technologies as the basic TC to speedup the acquisition and assimilation of GSM technologies.(Luckily for Company A, principal difference betweenTACS and GSM production technologies was to be foundonly in test and examination equipment and technologies.)More importantly, the import of the recessive 1G mobilephone technology contributed to the creation of Chinesemobile phone market. For this reason, the recessive stageshould be introduced as an extension of Kim’s model as anecessary stage at least in fast developing countries,particularly when these countries attempt to incubate a
4According to the characteristics of technology in the mobile phone
industry, the emerging stage is defined as the period in which a technology
is new and there is (are) no one/several standard(s) accepted by all
countries. In addition, the emerging technology is only adopted in several
countries and at the early stage of commercialization. The commercial
result is uncertain. The growing stage is the period when a technology is
diffusing, there is (are) technology standard(s) and the commercialization
proceeds smoothly, but the dominant technology is not public. The mature
stage is the period that the commercialization of a technology succeeds
and most technology is public.
new technology market and a new industry. However, asthis may not always lead to a successful base of competitiveadvantage (much of Company’s A assimilation effort wasmisspent), the assimilation activity of recessive technology(see box of T1 Assimilation in Fig. 1) is shown as a dashed-line box only.
6. Conclusions
With the global diffusion of ICT and business valuechains, the life cycles of many technologies are gettingshorter. Firms in developing countries acquire technologiesat various stages, even mature and receding technologiesconsidered obsolete in advanced countries, and start toinvest in growing and emerging technologies while theyassimilate mature technology.Based on TC development in China’s mobile phone
industry, we extended Kim’s three-stage TC developmentmodel to four stages, adding a complementary stage ofrecessive technology. Based on the four-stage model, weobserved that:
1.
The boundaries among the different stages are fuzzierthan predicted by Kim: firms in developing countriesconcurrent acquire, and assimilate mature, growing andemerging technologies.2.
Firms in developing countries may concurrently investin R&D of mature, growing and emerging technology.This four-stage model provides new insights in techno-logy management in China in particular, and developingcountries in general. It suggests that technology managersshould employ different methods to manage differentphases of technologies. In addition, managers in advancedand developing countries alike need to balance the effort ininvestment and IPRs management in different phases oftechnologies, particularly technologies belonging to dis-tinct phases but developing concurrently. Furthermore,the four-stage model indicates that firms in developingcountries have many opportunities in growing and emer-ging technologies to develop TC as a basis for collabora-tion and competition with MNCs. MNCs should considerestablishing technology-related subsidiaries (technologylistening posts, R&D units, etc.) in such fast developingcountries in order to keep abreast of emerging competitorsand technology advances early, and also to be able to seizeany opportunities of building future collaboration partnersor key suppliers.As this paper is based on four cases, the generalization of
research results is limited. Thus, further research andinvestigation (with more cases or quantitative research) isnecessary to validate the proposed model in this paper. Inaddition, similar research needs to be conducted in otherdeveloping countries to formulate more general proposi-tions and perhaps refine the new four-stage model of TCdevelopment.
ARTICLE IN PRESSJ. Jin, M. von Zedtwitz / Technovation 28 (2008) 327–334 333
Appendix. China’s mobile phone industry
In less than two decades, China’s mobile phone industryhas undergone four generations of mobile phone techno-logies, from analog to digital mobile phone technology.The 1st generation (1G) mobile phone technology, TotalAccess Communication System (TACS), is an analogtechnology. The other three generations mobile phonetechnologies are digital technologies. Their main differenceis in the bandwidth used and the coding technique. Thebandwidth of 2nd generation (2G), such as Global Systemfor Mobile Communication (GSM) is the narrowest. Thebandwidth of the 2.5th generation (2.5G), such as CodeDivision Multiple Access (CDMA) and General PacketRadio Service (GPRS) is wider than that of 2G, butnarrower than that of the 3rd generation (3G). 3G systemsinclude CDMA2000, Wideband Code Division MultipleAccess (WCDMA), and Time Division-Synchronous CodeDivision Multiple Access (TD-SCDMA).
The Chinese mobile phone market has grown fastsince 1995, from 3.63 million users in 1995 to morethan 460 million users in 2006 (Fig. 2). China has becomethe largest mobile phone manufacturing base in the
Fig. 2. Development of mobile phon
world, such as half of mobile phone outputs in 2006 inworld from China.Attracted by the high profit and low competition in the
Chinese mobile phone industry, at the end of 1990s manyChinese domestic firms were drawn into producing GSMmobile phones. The number of mobile phone manufac-turers in China grew from five firms in 1997 to 37 firmswith more than 200 manufacturing sites in 2004. Inaddition, China’s domestic mobile phone manufacturerswere growing fast, holding over 40% of the Chinese marketin 2004, up from 0% before 1999.China produced 1G TACS mobile phones from the early
1990s. However, TACS usage declined soon and all TACSsystems were closed down in 1997. TACS existed in Chinafor a few years only. Chinese firms started to produce GSMmobile phones in 1996. Until 1999, China produced allmobile phones under foreign brand labels. With theintensive R&D efforts and learning from assemblingimported parts, domestic Chinese firms developed andproduced mobile phones with indigenous intellectualproperty rights (IPRs) technologies after 1999.IPRs of Chinese firms are mainly focusing on the applied
level of chip technologies, such as software design and new
e market in China (1995–2006).
ARTICLE IN PRESSJ. Jin, M. von Zedtwitz / Technovation 28 (2008) 327–334334
function development. Although much is reinvested inR&D of key chip technologies, it is proven to be hard forChinese firms to master and develop the core technology ofmobile phone chips, which is held by no more than fiveMNCs worldwide.
In 2001, China opened the 2.5G mobile phone market(CDMA and GPRS), and 2.5G mobile phone technologyand products became the investment focus of Chinese firms.In order to narrow the technology gap with advancedcountries and improve the competitive competence of Chinain the future, the Chinese Government also encouragedinvestment in 3G technology, an emerging worldwidetelecommunication standard. With the support from theChinese Government and in alliance with Siemens, DTTCorporation (also known as Datang) eventually proposed aTD-SCDMA standard, which became one of three ap-proved 3G standards in the world. As it is expected that allthree standards will be used, Chinese firms collaborate withlocal and foreign firms for all standards of 3G mobile phonetechnologies and products.
By late 2006, Chinese firms not only produced GSM,CDMA, and GPRS mobile phones but also investedheavily in R&D in these 2G and 2.5G mobile phonetechnologies and products, as well as 3G mobile phonetechnologies and products.
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