Based on the data from Zhongguancun area, this research paper analyzes the current situation and problems of the internationalization of technological enterprises.
By Lan Wang
International
strategy is a very hot topic today. Embedding in the global industry chain
helps enterprises better integrate resources and enhance innovation capability
especially for technological enterprises. Based on the data from Zhongguancun
area, this research paper analyzes the current situation and problems of the
internationalization of technological enterprises. And furthermore we put
forward some suggestions to improve market internationalization of
technological enterprises. In order to enhance the innovation capability and
core competence, the government should support enterprises to explore
international markets and establish a platform for technological intermediary
services.
Image Attribute:
Beijing's Zhongguancun High-Tech District, known as China's Silicon Valley /
Source: Bloomberg
Keywords: International
Strategy, Resource Integration, Technological Enterprises
1. Introduction
The recent
worldwide generation of technology and industry revolution creates new
opportunities for the international development of technological enterprises.
Chinese companies should grasp the chance of new technology revolution,
accelerate their innovation breakthroughs in various fields and enhance their
capability of independent innovation. Meanwhile, the companies should follow
the world trend of technology innovation, deepen the technology collaboration
globally, get involved in the global technological innovation network actively,
and substantially take the responsibilities of leading national innovations.
Therefore, these companies can have head starts in the new technology
revolution and industry revolution.
Currently, the
international economy is still affected by the global financial crisis. In
order to handle the crisis, developed countries are looking for new sources of
economic growth, which are mostly from the integrated development of cross-countries
and cross-regions, the communication of technology, capital and human
resources, as well as the deepening of collaborations between industries and
markets. This approach will lead the global innovation collaboration to a new
phrase, and it provides chances for technological enterprises in Beijing to
speed their integration in the international innovation network. Zhongguancun
area is famous for technology enterprise clusters, it gathers a large number of
scientific and technological enterprises. In this study, we use the data from
Zhongguancun area to reveal the typical international development path of
technology companies.
2.
Internationalization stage Theory
After the middle
of 1970s, scholars from University of Uppsala in Sweden including Johanson and
Wieder- sheim-Paul (1975) [1] , Johanson and Vahlne (1977) [2] established a
new theory in their research about the internationalization of northern
European companies, the enterprises’ internationalization stage theory. This
theory has a wider applicability since it claims that the international
marketing of enterprises is a gradual modification process of the companies
when they are confronting with changes of themselves and the external
environment.
The
internationalization of a company can be divided into four phrases: frequent
exports; exports through independent agents; establishment of foreign branches;
and manufacturing from foreign branches. These four phrases is a gradual
procedure, indicating the deepening of internationalization. In this theory,
the features are reflected in two aspects. Firstly, this theory follows a
geographical progressiveness. Companies usually expand their markets in a
geographical order: local market, national market, neighbor foreign market and
global market. Secondly, the theory reflects transnational operation
progressiveness: the domestic operation before internationalization, the
indirect exports via agents when the internationalization starts, direct
exports by foreign branches and foreign productions.
From the perspective
of internationalization approaches, there are three approaches of enterprise
internationalization: international trading, foreign economy and technological
collaboration, foreign direct investment (FDI). The internationalization
operational methods of enterprises can be grouped into external
internationalization operational methods and internal internationalization
operational methods. The research of natural international enterprises
originated from the thesis “The Overview of Natural International Enterprises”
by Oviatt and McDougall [3] in 1994. The thesis pointed out that the
traditional internationalization theories usually focused on mature large-scale
enterprises and rarely paid attention to small and medium-sized enterprises
(SME). As with the development of modern communication technologies and the
reduction of logistics costs, SMEs are able to obtain business chances from
different countries and competitiveness. Even though current resources are
limited, these SMEs can succeed in the global market [4] [5] .
3. The Current
Situation and problems of the internationalization
The total amount
of imports and exports is an important indicator of market
internationalization. The firm size and international target market are also
main indicators. In recent years, the imports and exports of technological
companies in Beijing increase rapidly, standing out under the circumstances of
international financial crisis and fast decreases of the sum in national
imports and exports. The substantial increase has contributed to the overall
economic growth of the city. Confronting with the complicated international
economic situation, the technological enterprises in Beijing handled the
dilemma actively and solved the problems pro-actively. By learning advanced approaches,
enhancing self-innovations, increasing the competitiveness and added-value of
products and promoting the modification of industry constructions, these
companies expanded their market sizes and improved the trade structures in
fierce international competitions. They also got involved in the global
distribution of technology and industry resources. The international influence
and the right of speech of the enterprises increased gradually, promoting the
development of the internationalization of companies in Beijing. We analyzed
the situation and features of the technological enterprises’
internationalization in the following aspects: the basic imports and exports
conditions, the total amount of imports and exports, internationalized
companies’ sizes and internationalized target market [6] [7] .
3.1. The Basic
Imports and exports conditions
In recent years,
the foreign trade of technological enterprises keeps growing. The
internationalization level of technological enterprises in Beijing deepens
consistently, and the international influence of them grows significantly. At
the age of economic globalization, technological enterprises in Beijing adopt
advanced management values, and improve their capability of self-innovation.
The companies cater to the changes of consumer needs and gradually get involved
in the global industry chain, enhancing their competitiveness. The growth rate
of foreign trade in Beijing has decreased recently, and the adverse trade
balance expands, leading to an inverse growth of foreign trade in 2014.
However, under such circumstance, technological enterprises in Beijing took the
advantage of innovative resources and improved the international
competitiveness of high-tech products, keeping a trend of stable growth of
imports and export. According to the data of technological enterprises (table
1), from 2011 to 2014, the foreign trade of technological enterprises in
Beijing kept a stable and consistent growth. In 2014, the total value of
imports and exports amounted 99.58 billion dollars, consisting 24% of the total
imports and exports in Beijing and drawing a new record in recent five years.
The data demonstrate that the technological enterprises led the growth of
foreign trade in Beijing. The continuous enhancement of Beijing industry
structures has contributed to the economic growth and economic structure
adjustment of Beijing positively.
3.2. The
Distribution of Imports and Exports
The contribution
to the total value of imports and exports from domestic investment and foreign
investment is similar. In the total sum of imports, the rate of domestic
investment is less than that of the foreign investment, although the situation
is opposite in the total sum of exports. However, the differences are not
significant. In domestic companies, limited liability companies have the
greatest amount of imports and exports, accounting for near 50% of all domestic
enterprises. According to the data from Zhongguancun, on the type of
enterprises’ registry, the total amount of imports and exports of domestic
enterprises reached 51.581 billion dollars in 2014, accounting for 51.8% of the
total value. This percentage is less than that in 2013, and the contribution of
foreign trade from both domestic enterprises and foreign enterprises is
similar.
Table 1. The
comparison of imports and exports between technological enterprises in Beijing
and the overall situation in Beijing (2010-2014).
Notes: Data from
Zhongguancun management committee.
3.3. The Size of
Internationalized enterprises
According to the
size of import and export enterprises, the amount of imports and exports is
positively related to the income, and the imports and exports values are
totaled more than 80% for the companies that generate incomes of more than one
billion. Among them, the imports are accounted more than 80% of the total
imports, while the exports are accounted more than 80% of the total exports. In
general, large-scale companies occupy dominating positions in international
trades.
3.4.
Internationalized Target Market
The biggest
target markets for the technological enterprises in Beijing are the developed
areas and countries, such as Europe, America, Japan and South Korea. Recently,
the growth of technological enterprises in Beijing slowed down in the European
market and kept stable in the export market in Hong Kong. Moreover, while the
market shares of these technological companies increased firmly in Taiwan,
Australia, India and Southeast Asia, they decreased in the American market.
Currently, on the choice of location, the technological enterprises in Beijing
selected their target markets in Europe, America and Southeast Asia according
to their different features of products and industries. The companies emphasize
on low cost to the exports to Europe and America, while focusing on technical
added value when exporting to Southeast Asia and Africa and contracting foreign
projects. When selecting foreign locations, these companies will choose
developed countries where the technology level could be driven by the developed
conditions. The chasing of capital market is more location oriented for
technological enterprises, and NASDAQ is the main capital market that attracts
technological companies in Beijing. According to the data from Zhongguancun,
the export destinations in 2014 were majorly located in Northern Europe,
America, Japan, Hong Kong, Macau and Taiwan, etc., and Northern Europe was
still the top choice of exports although the growth rate slowed down. Except
for Northern Europe, the export income of other regions has increased compare
to that in 2013. It can be seen that the income of exports to America and
Southeast Asia increased 0.11 billion dollars.
3.5. Current
Problems
Firstly,
companies are lack of core competence, and the technology innovation should be
enhanced. The technology enterprises in Beijing have generated some reputable
companies, but many of the enterprises are SMEs and startups. There are wide
gaps between SMEs and large-scale enterprises in technology and management
levels, which influence the development of the entire industry. So far, there
is a lack of industry policy that motives joint development of large-scale
companies and SMEs, therefore the connections between these two types of
companies are not yet established. Strengthening the long-term business and
technology collaboration between big companies and SMEs is an important way to
enhance product quality and international competitiveness. It is the future
that more technological enterprises in Beijing will be integrated into global
research and development [8] .
Zhongguancun
demonstration plot is the most representative park for technological enterprises
in Beijing. So far, 95% of the companies are SMEs. Because their target markets
and sources are within China, the pressure and intention of “going out” are
low. Lacking of strong competitiveness, many companies are merely followers in
the industry with insufficient critical technologies. Taking PCT international
patent as an example, the PCT patent applications from Intel, HP, Google and
Apple totaled 2069 in 2012, surpassing the sum in demonstration plot by 1736.
Meanwhile, the mode of internationalization for technological enterprises in
Beijing is single, mainly in product exports. Although there are more cases of
financing mergers, acquisitions and technological collaborations in recent
years, companies are not familiar with the internationalization development
path and are lack of mature approaches [9] [10] .
Secondly,
technological enterprises are lack of core technologies. For example, foreign
PC companies in information industry control core technologies of CPU,
operation systems and database. Also, in the mobile phone production chain,
foreign companies hold critical chips, materials, operation systems and other
core technologies. Many SMEs mainly depend on domestic market and are weak at
technology capabilities, so the internationalization degree of the market is
rather low. The export income is accounted a little part of the total
corporative income, and companies have little cutting-edge technology.
According to other researches, although the technological enterprises in
Beijing possess many patents, the qualities of these patents are low, and few
patents could realize industrialization. The investment for patents in later
stage and the difficulty of exploitation will be larger. Meanwhile,
private-owned companies have more patents than state-owned companies. Moreover,
since these companies are lack of competitiveness, they have not yet formed
high-technology enterprises. According to the dominating position of foreign
enterprises in Beijing, domestic companies are comparably weak. The total income,
value of gross output and exports of foreign enterprises still take a
significant proportion of the total value.
Thirdly,
companies are dominated in the industry chain, and the industry’s international
competency needs to be improved. So far, the technological companies in Beijing
depend mostly on exports for internationalization and less on direct
investments. Also, the amount of oversea sales channels and development
collaborations is small. Low strength of the companies is an important reason
for low internationalization. Large transnational corporations are the main
force of international investment and global resource distribution, but there
is a lack of strong transnational corporations in Beijing, therefore the
current companies cannot compete to foreign transnational companies in capital,
technology, human resources and branding. The technological enterprises in
Beijing are dominated in the industry chain, and they have not yet generated
collective advantages as well as industry groups with competitive innovative
core technologies. Currently, the industry groups in Beijing include electronic
information, biological pharmacy, aerospace exploration, new materials, new
resources and high-tech services. These groups have the biggest economic scale in
China. In the global labor distribution, technological enterprises are
generally dominated, and the added values are relatively low. The direction of
technological enterprises’ internationalization should promote the position of
themselves in the global industry chain. Companies should obtain the right of
speech in the global industry chain by technological innovation, business mode
innovation and international brand establishment [11] .
4. Policy
suggestions in Improving Market internationalization
4.1. Support
Enterprises to explore international Markets
Firstly, by
utilizing the foreign affairs resources of Beijing and China, companies could
improve the efficiency of exploring international markets. Beijing should use
the advantages of being a political center, use the foreign affairs resources
in Beijing actively and conduct bilateral and multilateral international
collaborations for a higher level of communication with international
companies.
Secondly,
establish collaborative policies with Chinese embassies and international
organizations. By this means, Shenzhen, which previously had no foreign
resources, has attracted 44 institutes from 33 countries and regions and builds
up a “Shenzhen international technology business platform”. Many of the institutes
are the contact offices for investments and trade promotions of foreign
state-owned political departments, enhancing the collaborations among Shenzhen
high-tech enterprises and international companies.
Thirdly,
strengthen the innovative cooperation by establishing sister cities. Many
high-tech areas promote the relations with sister cities. For example, the
high-tech area in Suzhou is bounded with county Kilkenny, the creative area in
Ireland; the high-tech area in Changzhou holds the principles of “spread
globally, develop important projects, promote consequently and lead
comprehensively”. Not only does Changzhou established collaborations with Hull
Ford in Germany and Stavropol Industrial Zone in Russia, but it is also
connected to Komatsu in Japan and Duluth in America. The companies in Beijing
should make use of the international collaborations and foreign communication
resources, and discuss the opportunities to connect to high-tech zones and
innovation origins with reputable cities, in order to expand Beijing’s
potential of internationalization.
Fourthly, make
use of the geographical advantage where the central government locates, and
negotiate the communication and collaboration systems with related departments
and Chinese embassies. Companies should receive international innovation
resources and use the support and resources on research from various countries.
For example, the technology department established regional or bilateral
cooperation systems, bringing up major research fields and supporting the
collaboration financially. Beijing should communicate with Chinese embassies
closely and join important technology plans and multilateral cooperation
projects actively. Beijing should attract support from multiple sources and
gather international innovation resources, promoting the establishment of
international technology innovation center in Beijing.
Fifthly, the
government should support enterprises to join international trainings, market
research and international conferences, as well as foreign exhibitions. The
government should support the companies in passing authoritative international
certificates, setting international branches, and obtaining services about law,
consultancy and market analysis in foreign institutes. The government should
offer financial policies and services to support enterprises in international
competitions and collaborations. The government should found a rewarding system
for enterprises’ internationalization. The government can implement a method of
“rewarding as compensation” to lead the companies into international
developments. The government ought to reward the outstanding ones in ranking
the internationalization degree among the companies, especially to those who
get a certain amount of foreign income, establish foreign branches, publish
abroad, and obtain international patents. The government should accelerate the
decision on the rewarding system.
4.2. Accelerate
the Improvement of the Intermediary service system on Enterprises’
Internationalization
Firstly, explore
the establishment of the docking mechanism in international enterprise
services. Based on the current international service platform and consistent
improvements, the government should establish a docking mechanism between
intermediary institutes and enterprises. The government ought to analyze the
needs of internationalization and supply efficient mechanisms. It is important
to solve the problem on the rewarding of intermediary services and explore the
possible support from the government to lessen the cost of enterprises.
Secondly, the
government should import high standard intermediary institutes. Several
international intermediary institutes should set branches in Beijing and
provide professional services. The government should encourage the large
transnational companies to set up independent intermediary institutes
internally and conduct added-value services. Meanwhile, the local intermediary
institutes should be cultivated. The government should strengthen the
integration of current intermediary institutes and support them to enhance
their abilities. Moreover, the institutes should be encouraged to expand their
business fields and provide various value-added services. The government should
support incubators and the establishment of intermediaries specialized in
international services.
Thirdly, build a
collective area of intermediary institutes of technological
internationalization. The companies should strengthen the communication with
the Beijing government in order to integrate the real estate resources and
establish a collective area for intermediary services. Based on the current
collective zone, the intermediary institutes should expand their domain and
form a service system to improve their capabilities.
4.3. Establish a
platform for Technological Intermediary services
The contribution
of intermediary institutes on the integration of Beijing technological industry
should be highlighted. Therefore, the government should concentrate on building
a comprehensive intermediary service system, including profitable organizations
and non-profit organizations. The profitable intermediary organizations provide
human resources, technology transformation, accounting, taxing, law,
consulting, headhunting, real estate management and safety services. Besides,
there are some non-profit intermediary institutes, such as some associates and
unions, focusing on the promotion of innovative startups. Intermediary
institutes are important participants of the technological industry system in
Beijing. It is of great significance to upgrade the services under the support
of the government. Currently, there are many active intermediary institutes,
and more famous institutes will be imported in the future to promote the
internationalization of local counterparts. It is also important to complete
the system of international and local studies and researches, implement the
promotion of intellectual property, set funds and import intermediary
institutes and innovative information. The government should strengthen the
establishment of public technology services, property information, transaction
information and intermediary platform. Meanwhile, the government ought to lead
and support the industry leagues and associates, emphasize the functions of
industry associates and professional organizations. By promoting the
transactions of properties, industrialization and internationalization of
technologies and strengthening the internationalization of human resources,
taxation, law and consultancy services, the intermediary institutes will provide
the first-class services for the technology enterprises in Beijing.
Acknowledgements
This research is
supported by BLCU (Beijing Language and Culture University) Business School
supported project (supported by the Fundamental Research Funds for the Central
Universities) (Approval Number: 14YJ04005), Beijing supporting Central
University joint project―Young Talent Plan.( Project No. YETP0880).
About The
Author:
Lan Wang, School
of Business, Beijing Language and Culture University, Beijing, China
Publication
Details:
Technology and
Investment,
Vol.06 No.04(2015), Title: Study on the
Status and International Strategy Development of Technological Enterprises, Article ID:61527,7 pages
Copyright © 2015
by author and Scientific Research Publishing Inc.This work is licensed under
the Creative Commons Attribution International License (CC BY).http://creativecommons.org/licenses/by/4.0/
Cite this paper
LanWang, (2015)
Study on the Status and International Strategy Development of Technological
Enterprises. Technology and Investment,06,151-157. doi: 10.4236/ti.2015.64017
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