China’s Competitive Complementarity: Cross-Border Innovation in Asian ICT

A socialist market economy with Chinese characteristics stands alone among post-socialist economies in both profile and performance. A “coordinated market economy”, the Party-state remains deeply involved. The state plays a major role in designing credible protections for intellectual property, insuring a position in global knowledge flows critical for innovation. I examine the interplay of corporatist industry associations and China’s entrepreneurial state supporting an open innovation that can sustain growth in regional cross-border ICT production networks with Japan.

Open innovation appears critical for tapping innovation opportunities in global value chains (GVCs). A complementarity in technology between home firm and suppliers abroad helps insure effective collaboration in a production chain, despite different levels of technological sophistication. At the same time comparable institutions for property protection are necessary to insure against leakage of proprietary process and production technologies.

I argue that a coordinated business-state strategy in China has fostered a competitive complementarity of production and protection networks between the two nations. A coordinated advance in value-added production, supported by investment in local R&D facilities, tracks congruence in upgrading technology. A similar chronology of institutional efforts by the State Intellectual Property Office (SIPO), and the Japan Intellectual Property Office to coordinate property protections highlights institutional complementarity.

Evolving or "competitive" complementarity in IPR policy and practice parallels product complementary. The study sheds light on the institutional underpinnings of complementarities in regional innovation systems between an advanced liberal and a socialist market economy. This strategy helps refine emerging theories of the entrepreneurial state for the Asian context, particularly of business-state relations in cross-border knowledge exchange with developing economies. It likewise extends understanding of development patterns within GVCs. Finally, it extends the Comparative Capitalism literature with a sector-specific case study of knowledge protections between coordinated market economies.