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The Role of SMEs and Clusters in the National Innovation Syst
ems in ChinaYuan CHENG and Jian GAO
School of Economics and ManagementTsinghua University
Beijing 100084P.R.China
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Outline
• Introduction
• Manufacturing Clusters
• Cluster in High-tech or science park
• Policy implication
• Summary
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A. IntroductionChina used to be a country which only large
and medium sized SOEs were legal to operate. SME was marginal to China.
The transition period means giving SME or private company rights to develop, from a role of filling the gap left by SOE to an important GDP and employment contributor.
SMEs have gone through a rapid development and SME is one of the important actors in national system of innovation now.
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Geographical locations of SME
• SMEs have a strong geographical orientation: boomed in areas where the role of SOE is limited and where there is strong base of human resources.
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And Current Landscape ICT Industry
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The standards of China's small and medium-sized
Industry Index Unitmedium-
sizedSmall-sized
Manufacturing
Number of employees number 300-2000 Less than 300
Sales ten thousand CNY 3000-30000 Less than 3000
Total assets ten thousand CNY 4000-40000 Less than 4000
Construction
Number of employees number 600-3000 Less than 600
Sales ten thousand CNY 3000-30000 Less than 3000
Total assets ten thousand CNY 4000-40000 Less than 4000
WholesaleNumber of employees number 100-200 Less than 100
Sales ten thousand CNY 3000-30000 Less than 3000
RetailNumber of employees number 100-500 Less than 100
Sales ten thousand CNY 1000-15000 Less than 1000
TransportationNumber of employees number 500-3000 Less than 500
Sales ten thousand CNY 3000-30000 Less than 3000
PostalNumber of employees number 400-1000 Less than 400
Sales ten thousand CNY 3000-30000 Less than 3000
Accommodation and Food &
Beverage
Number of employees number 400-800 Less than 400
Sales ten thousand CNY 3000-15000 Less than 3000
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Focus of the research
This study is mainly on industrial clusters, analysis the manufacturing industry clusters and innovation clusters.
Cluster analysis is used to analyze the interaction of knowledge flows in national innovation system between different
agencies. Cluster in traditional industryCluster in high-tech industry
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B. Manufacturing ClustersTVE used to be the first wave of SME when C
hina said good by to SOE dominated system. Those TVEs usually operated in manufacturing industry. some of them born in forms of cluster, specialized in one product.
SME in traditional industry take advantage of cluster.
Cluster advantage in south of China: Entrepreneurship spirit, low tech, labor intensiv
e, industry with low entry barrier, geography brand rather than company brand, large marketing network, processing innovation.
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Geographical locations of SME and cluster In China, the Pearl River Delta and Yangtze
River Delta are the two most important economic zones for SME, FDI and cluster.
the Pearl River Delta and Yangtze River Delta have won the honor of "world plant“
There are many low tech and high-tech clusters in south of China.
Those two regions are more liberal for private investment and FDI.
SME have gradually acquired equal market access, finance and other resources in these two regions
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Pearl River Delta Economic Zone
Pearl River Delta Economic Zone is located in the northern part of Hong Kong, composed of nine cities. Its area is 24,437 square kilometers.
Its production comprised from baby products to power tools and high-tech products
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GDP over the years the Pearl River Delta Region
Unit: hundred million
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Investment in fixed assets over the years of the Pearl River Delta
Unit: hundred million
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Exports over the years of the Pearl River Delta
Unit: 100 million U.S. dollars
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The characteristics of the Pearl River Delta
Economic development relies heavily on labor-intensive industries.
Economic development has benefited from the economic interaction between Hong Kong, Taiwan and Guangdong.
The Pearl River Delta's manufacturing are in the bottom of the value chain in the division of labor and cooperation in global value chain.
There are rich ICT components clusters in Perl River Delta.
Attracting huge population of mobile famers as their main work force
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Yangtze River Deltas
Yangtze River Delta region belongs to China's eastern coastal area.
Yangtze River Delta Area, is defined as the city belt composed of 16 cities on the fan-shaped alluvial plain with Shanghai as their core of production.
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GDP of Yangtze River Delta region over the years
Unit: hundred million
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Investment in fixed assets over the years of the Yangtze River
Unit: hundred million
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Exports over the years of the Pearl River Delta
Unit: 100 million U.S. dollars
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The characteristics of the Yangtze River Delta
Coordination and cooperation between cities are the driving force of economic development of Yangtze River Delta.
Yangtze River Delta enjoys a unique advantage in high-quality human resources.
Strong manufacturing capability around Shanghai
Good infrastructure for manufacturingAttracting large multinationals
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Clusters in Zheijiang
产业部门 典型专业化产业区hanzhou Electronics,
pharmacy, garments, software
杭州旅游汽配城、萧山衙前化纤业;新塘羽绒业、南洋制伞业;女装业
Ninbo garments、 machinery, Petrolane
县服装产业、蔺草加工、横街水表及配件、姜山燃气灶具、咸祥金融箱柜;余姚模具城、玩具城、塑料城、汽车配件 ]水暖设备、电动工具
xiaoxin Textile, dyeing, chemicals,药、化工(如纺织印染助剂)、化纤等
绍兴县中国轻纺城;诸暨市衬衫、五金、袜业、嵊州领带城、新昌轴承、胶丸业;上虞劳保用品、伞件业;越城区家具业
jiaoxin Leather, instruments, textile
海宁皮革、经编;平湖服装、箱包;秀洲区丝织品;海盐紧固件、玩具;桐乡羊毛衫业
huzhou Textile, silk, garments,
纺织(丝绸、毛纺、印染)、服装(童装)、建材、竹编等
zhoushang
Fishery products,machines
舟山水产品中心批发市场;水产品精深加工、海洋药物、船舶修造、电器电子、玩具等,同时已经形成了螺杆、微电机、小五金和水产品加工等
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Summary of Manufacturing Clusters in China
The relatively low-end of two-triangle’s manufacturing industry, design, development and marketing network of the product are under control of international multinational corporations.
Lack of innovation ability is the bottleneck industrial clusters in China.
Low-cost advantages of China's industrial clusters which built on cheap labor costs and cheap raw materials can easily be replaced by imitation.
How can proceed from GPN to GIN is the challenge for the two most dynamic regions.
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C. High-tech SME and Clusters
High-tech SME is closely related to government R&D programs and policy.
High-tech ZoneIncubatorsUniversity Science Park
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Role of SME in NIS of China
1978 1995
Stage of plan-led model
High-tech 863 planThe Torch ProgramSpark ProgramTorch Programthe National Natural Science FoundationClimbing plan,973
Present
stage of national technology innovation system
“Strategy of Rejuvenation by Science and Education’Innovation fund for SMEKnowledge Innovation Program
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SME in high-tech industry
• SME, especially technology based firm was seen as the main innovation driver in high-tech industry.
• Learning from USA practice, introduced national S&T based SME innovation fund since 1980s.
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Spin-off and Industry-academy linkage has been promoted
• University established lots of linkages with industry:– setup spin-off companies– research grants from industry– consulting and service– training (MBA, EMBA and short term training.)
• R&D institutes – Setup spin-off companies– research grants from industry– consulting and service
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University’s spin-off
Number of spin-of
f
revenue( billion
RMB)
Profit ( billion
RMB)
净利润(亿元)
上缴税金(亿元)
对学校的回报(亿元)
1999 2137 26.7 2.2 18.04 10.96 13.92
2000 2097 36.8 3.5 28.03 18.79 8.46
2001 1993 44.8 3.1 23.98 20.09 7.78
2002 2216 53.9 2.5 18.63 25.92 7.61
2003 2447 66.8 2.8 14.73 29.40 7.74
2004 2355 80.7 4.1 23.86 38.48 8.25
资料来源 :《 2004中国高等学校校办产业统计报告》,教育部科技发展中心,中国高校校办产业协会。
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High-tech Zone is the home for technology based SME
High-tech Zone as a government infrastructure investment region is an important policy tool to attract foreign investment and creat employment.
1985 1988 2009
The first high-tech zones is established in Shenzhen
The first national-level high-tech zones, the Zhongguancun Science Park, is established in Beijing
The 53rd National Hi-Tech Industrial Development Zone was set up in Shaanxi Yangling, which is the first national agricultural high-tech park.
1997
The 56th state-level hi-tech industrial development zone is established.
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Overview of high-tech zone enterprises (2000 ~ 2007)
2000 2001 2002 2003 2004 2005 2006 2007
Enterprises 20796 24293 28338 32857 38565 41990 45828 48472
Numbers of employees 251 294 349 395 448 521 574 650
Industrial output value 7942 10117 12937 17257 22639 28958 35899 44377
Industrial added value 1979 2621 3286 4361 5542 6821 8521 10715
Gross income 9209 11928 15326 20939 27446 34416 43320 54925
Net profit 597 645 801 1129 1423 1603 2129 3159
Taxes paid 460 640 766 990 1240 1616 1977 2614
Total exports 186 227 329 510 824 1117 1361 1728
Note: the number of enterprises (Unit), numbers of employees (million people); exports (100 million U.S. dollars); the remaining items (100 million)
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Enterprise Development
Enterprises income distribution of National-level High-tech Zone countries in 2007
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Role of National High-tech Zone in China Innovation Clusters
National High-tech Zone is an important carrier to implement the strategy of independent innovation. development.
National high-tech zones achieved fruitful results in the promotion high-tech industrialization, institutional innovation, the transformation of production and the optimization the economic structure, the attraction of the talents and the provision of entrepreneurial environment.
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The development of Incubators in China
2000 2001 2002 2003 2004 2005 2006 2007
Incubators 131 280 378 431 464 534 548 614
Tenant enterprises
(10 thousand)7693 12821 20993 27285 33213 39491 41434 44750
Employees 12.88 26.36 36.34 48.25 55.24 71.70 79.00 93.00
Graduated Enterprises
2770 3994 6207 8981 11718 15815 19896 23394
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The development of Incubators in China
Graduated Enterpr i ses
0
5000
10000
15000
20000
25000
2000 2001 2002 2003 2004 2005 2006 2007
Empl oyees
0
20
40
60
80
100
2000 2001 2002 2003 2004 2005 2006 2007
Tenant enterpr i ses(10 thousand)
0
10000
20000
30000
40000
50000
2000 2001 2002 2003 2004 2005 2006 2007
I ncubators
0
100
200
300
400
500
600
700
2000 2001 2002 2003 2004 2005 2006 2007
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The role of incubators or high-tech zone to promote the SMEs to innovation
Incubator promotes the overall effects.Incubator can reduce the start-ups
costsIncubator can help enterprises obtain
external resourcesIncubator can transmit innovation and
entrepreneurial spirit
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University Science Park
In 1988, Northeastern University has established the first University Science and Technology Park in China --- Northeastern University Software Park.
On February 16, 2009, National University Science and Technology Park in China has risen to 69.
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The role of university science park to promote the SMEs to innovation Provide a source of innovation for
enterprisesThe absolute advantage of human
resources.A wealth of library and network
resources.
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Typical high-tech clusters in China
Zhongguancun Science Park establishment in 1988 in Beijing, with high-tech services as the core
Tianjin Hi-tech Zone set up in 1988 with bio-medicine and green energy as oriented industries
Wuhan East Lake High Technology Park established in 1993 with photoelectron field as the core
Shanghai Zhangjiang Hi-Tech Park established in 1992, with integrated circuits and software, bio-pharmaceutical as leading industries
Shenzhen high-tech zones with telecommunications industry as the leading
Zhengzhou High-tech Zone to with superhard material as the core industry.
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Clusters out of FDI:The eight products of Suzhou that rank No.1 in the
world (2003) Products Quantity of
outputShare of world output
Computer mouse 60 million 61%
Crystal vibrator for cell-phone
700 million 30%
LCD for cell-phone 80 million 25%
Chip resistor 10 billion > 20%
Crystal vibrator shell 100 million 22%
Computer mainboard 20 million 20%
Wimp type keyboard 0.36 million 10%
Thyristor for LCD TV 0.30 million ~ 10%
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Constraints on SMEs in China
The level of management of corporations is relatively hang behind, the shortage of talent is the biggest problem facing by SMEs.
Insufficient funds, the financing channels problem, limited venture capital and financing
Affected by the financial crisis, exports are hampered.
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Public Policy
Public policy to promote SMEs innovation and entrepreneurship. the "SME Promotion Law "promulgated and i
mplemented in 2003SMEs board in Shenzhen Stock ExchangeOver-the-counter securities trading system (th
e third board Market)
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Policy thinking
Innovation Funds develop quickly
List of Innovation Fund of National SMEs
Year Applications ApprovalsCapital( 100 millio
n)1999 3329 1089 8.16
2000 4974 872 6.59
2001 3682 1008 7.83
2002 4215 780 5.4
2003 4249 1197 6.64
2004 4925 1464 8.27
2005 5406 1552 9.88
2006 6399 1905 8.43
2007 3120 1151 9.55
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Innovation network building and support system upgrade
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D. SummarySMEs as the core element of national innovatio
n system, has played a pivotal role in in the development of our manufacturing clusters, promoting the emergence and further development and innovation of two major manufacturing clusters.
Cluster proves to be a good practice for SME.High-tech based SME was given a high priority
in promotion agenda of ChinaSME still cannot enjoy the condition as SOEs d
o. So, there are space for improving.