The nature of innovation in emerging industries in China: an exploratory study

In China, traditional manufacturing industries have been world leaders in low-cost manufacturing for overseas multinationals. It is well-known that these “traditional industries” depend on overseas parent firms for innovation. In recent decades, China’s desire is to encourage and promote innovation-based emerging industries within its borders. By definition, “emerging industries” are composed of domestic Chinese firms without an overseas parent firm. We know very little about the innovation practices in these emerging Chinese industries; we hypothesize that the innovation practices in these firms are quite different from traditional Chinese industries with overseas parents. The Kunshan region in China has attracted both traditional and emerging industries that have contributed to unparalleled economic growth in the region. This is a significantly large region with a population of 1.65 million with a regional GDP of USD 32 billion (2010). In this study, we use survey data from companies in this thriving region to compare R&D and innovation practices of the firms in the traditional and emerging industries in this region. We do not know enough about the innovation practices of emerging industrial firms in China, who may have a profound influence on the industrial China of the future much like South Korean firms such as KIA, Hyundai, Samsung, etc. The findings of this exploratory study based on data collected from the Kunshan region enables us to recommend avenues for future research.