Are Chinese technology enterprises only the “hired laborers” of other countries? Does China possess high technology in a real sense? When will the country develop independent scientific and technological innovation? Those are not brand new questions. However, after the Chinese Government issued its National Guidelines on the Long- and Medium-Term Program for Science and Technology Development (2006-10), the old topic has prompted a new round of discussions.

The guidelines, issued in February, stated that in key areas that have a close bearing on the national economy and national security, the real core technology could not be bought elsewhere. In order to take the initiative in international competition, independent innovation must be promoted and it is imperative to master a set of core technologies and create a number of competent enterprises. The guidelines also pointed out that the “main body of independent innovation is the enterprises.”

In the early 1990s, the Chinese Government made a strategic decision to accelerate the development of hitech industries in order to face the challenges of a new round of technology reform. In line with the government decision, a number of hitech industry development zones were established around the nation. The new zones are based on an open environment, and mainly depend on China’s own scientific, technological and economic strength. They were established in order to transform scientific and technological achievements into practical uses to the maximum extent possible, oriented toward both domestic and overseas markets, and to develop new hitech industries.

The hitech zones provide a sound environment for the commercialization and industrialization of scientific development. A number of hitech enterprises have grown rapidly in a few years, displaying the huge potential of China’s hitech industry.

How is the development of China’s hitech enterprises going? Up to now, the administrative bodies of the national hitech industry development zones have identified 30,000 hitech companies out of the total of 45,000 enterprises in the zones. Over 3,000 companies have an annual turnover exceeding 100 million yuan, the number of foreign-funded companies (including investment from Taiwan, Hong Kong and Macao) reached 8,000, and over 4.8 million people were employed by those hitech companies at the end of last year. Each of the 53 national hitech industry development zones has shown a substantial increase in major economic indicators.

In 2005, as the number of domestic hitech enterprises with independent innovation capabilities grew rapidly, exports of hitech products with China’s independent intellectual property rights and brands surpassed $20 billion.

The major economic indicators of 53 national hitech industry development zones increased substantially last year. The total revenue reached 3.38 trillion yuan, up 634.66 billion yuan, or 23.1 percent, from the previous year; the gross industrial output value exceeded 2.84 trillion yuan, an increase of 25.4 percent year on year; the added value hit 709.27 billion yuan, a 27.98 percent increase; and tax payment was 146.73 billion yuan, up 18.37 percent.

The Ministry of Commerce recently released that last year, a total of 279 Chinese hitech companies saw their annual export volume exceed $100 million. Their total exports reached $172.82 billion, accounting for 79.2 percent of the country’s total hitech product exports.

China now has one hitech company with annual export volume exceeding $10 billion, four companies with annual exports surpassing $5 billion and 38 companies with exports of more than $1 billion.

In 2004, there was no hitech company with annual export volume exceeding $10 billion, and there were only three that had exports of over $5 billion and 30 companies that exported more than $1 billion worth of goods. In 2005, some 313 hitech companies had an import volume above $100 million and 24 saw imports exceed $1 billion, an increase of 45 and four, respectively, compared with 2004.

Apart from production-oriented companies, in recent years China’s national hitech industry development zones have emphasized developing technology service companies, which account for over 40 percent of the total.

Recently, economist Larry H.P. Lang contended that merely mentioning the number of enterprises and their turnover does not prove that the hitech zones are doing well. He said China’s hitech development methods show little concern for discipline and work procedures, and a company without discipline cannot become a Microsoft. He concluded that China does not have any proprietary high technology in a real sense, and therefore there is no true Chinese hitech enterprise. Others agree that the country has a long way to go before it can claim that it has an independent, true hitech industry.

But others argue that in terms of hitech development, China has found its own method and now enjoys an integrated system with respect to industrial policy, planning, support, branding and marketing.

A hi-tech illusion

Larry H.P. Lang (economist with the Chinese University of Hong Kong): A handful of renowned domestic hitech enterprises and sites like Tsinghua Unisplendor, Beijing Founder, Chinese Silicon Valley (actually a real estate developer) and China Datang Corp. may merely serve as teaching materials by negative example. The only one doing well is ZTE Co.