After three decades of opening and reform, China, particularly the Pearl River Delta (PRD) has attempted to change its roles in the global economy from a low-tech manufacturer to a high value-added technology-intensive producer. Previous interpretation of the PRD as a provider of low cost labour for the "global shift" of export-oriented production is no longer adequate to understand the dramatic transition in the PRD, particularly the dynamic trajectories of technological upgrading. Compared with substantial studies on the contribution of the transnational corporations (TNCs), especially Hong Kong and Taiwanese firms, little has been conducted on the rise of indigenous firms and their impacts on technological catch-up and regional transformation in the PRD. Notably, the 2008 global financial crisis has prompted timely theoretical inquiries and empirical debates on the export-oriented development which challenges conventional wisdom of technology innovation in the global era. Taking major cities in the PRD, e.g. Shenzhen and Shunde as cases, this project explores the emergence and transition of regional innovation systems (RIS) in the post-reform China.

	Prof En CHEN

	Dr Chun YANG

Through comprehensive field investigations, in-depth interviews and firm surveys, this project examines the distinctive roles of diverse actors, viz. the central and local states, TNCs, indigenous firms, universities and research institutes and their interaction with the global forces in developing the salient RIS in the PRD. Based on intensive firm-level case studies in such high-tech sectors as information and telecommunication (IT), biotechnology, optical electronics and new materials and energy, the project sheds light on how and to what extent the rise of indigenous firms from followers to the major global players in their respective sectors has brought about the transformation of the PRD. The empirical experience of the PRD exemplifies the dynamic interactions between the regional production networks dominated by TNCs and the regional innovation systems led by indigenous firms under the interplay between the global and local forces in reshaping technological catch-up and regional restructuring in the PRD. The main findings of the project are as follows –

Firstly, this project elucidates the emerging paradigm shift of technological innovation in China since the mid-2000s, characterized by a policy change from expectation of technological spillover from TNCs to an emphasis on indigenous innovation and domestic firms. Drawing upon the institutional and evolution perspective on the RIS approach, the project examines how foreign-invested and domestic firms have adjusted their innovation strategies in changing institutional environment through the cases of light-emitting diode (LED) and liquid crystal display (LCD) industries as emerging strategic industries. It argues that government policy change has resulted in the evolution of RIS in which technological upgrading of foreign-invested and domestic firms have demonstrated distinctive trajectories.

		Screenshot of Elsevier website (https://www.elsevier.com/):Yang, C., "State-led Technological Innovation of Domestic Firms in Shenzhen, China: Evidence from Liquid Crystal Display (LCD) Industry", Cities (2014), Volume 38, Pages 1-10

Secondly, the study advanced the literature on the roles of the states in technological upgrading of latecomer cities and regions. Drawing upon the strategic coupling concept of the global production networks (GPNs) framework, the project sheds light on the collective roles of various state authorities ranging from the central to provincial and municipal governments in fostering technological innovation of domestic firms through explicit coupling with global lead firms. The experience in Shenzhen indicates that indigenous innovation focused on domestic firms may unnecessarily exclude the participation of TNCs. Home appliance firms in Shunde on the western bank of PRD provides a vivid case of technological upgrading through strategic coupling of local firms in the GPNs.

		Extracted from Yang, C., "Strategic emerging industries (SEIs) designated by the Central, Guangdong Provincial and Shenzhen Municipal Governments" (2014), Page 3

Thirdly, the study extends the focal notion of GPNs perspective, i.e. strategic coupling to "de-coupling" and "re-coupling" to illustrate the interaction among technological upgrading, market reorientation and spatial relocation of TNCs in the changing context of global-local dynamics, particularly the aftermath of the global financial crisis. The project has demonstrated the changing power relations among TNCs and concerned regions with the emergence of key strategic supplier-led domestic market-oriented production networks in China.

The study enriches the empirical literature on RIS primarily dominated by the cases in the western developed countries. It demonstrates that policies and strategies for technological catch-up, indigenous innovation and regional transformation should be formulated in a holistic manner rather than (as hitherto) on a piecemeal basis in the changing era of globalization.

Dr Chun YANG
Department of Geography
Hong Kong Baptist University
chunyang@hkbu.edu.hk