Vice-Premier Li Hsien-Nien gives Banquet in name of Premier Chou En-Lai for Madame Marcos

This article provides empirical light on the debate concerning whether manufacturing firms in China are becoming major innovators. Based on an innovation survey carried out in Jiangsu Province, the article finds that most firms engage in innovative activities but these are mainly of an incremental nature. Radical innovation, as a proportion of sales, is relatively low if compared internationally. Innovation in China is mainly to catch-up and is novel relative to the firm and the domestic market. A small proportion of innovation is new to the world. Intensity and productivity indicators suggest that small, foreign and textile firms are leading innovative efforts. Firms innovate to improve their general competitiveness, including improving product quality and extending market share, obtain income from technology and defend themselves from research and development expenditure by competitors. Innovators value significantly more than non-innovators the range of innovative objectives they seek to achieve. The main obstacles to innovation arise from technical and marketing weaknesses; the perception of these obstacles varies widely between radical innovators and non-innovators. The article concludes that while innovative activities are emerging it will still take some time for China to have a major role in the international division of innovative labour.