25 | NOVEMBER 2023
The newsletter is based on discussions and fruitful interaction on the topic of “Global Technology: China’s Industrial Innovation and Internationalization” which happened in Bologna, during the China Goes Global Conference, in July 2023. The OEET promoted this panel session to discuss the radical change taking place in the Chinese system of industrial innovation. The main purpose of the Panel was to share comparative conceptual and empirical insights, drawn from case studies on different key industries. The panel shed light on the evolving landscape of Chinese industrial innovation, related to internationalization drivers, processes and patterns. Policy implications were also discussed, in the current conflictual geopolitical environment, for global supply chains disruption and the role of other emerging economies.
The panel was chaired by Vittorio Valli, President of OEET, with presentations from Ignazio Musu (Università Ca’ Foscari of Venezia), Francesca Spigarelli and Gianluca Sampaolo (China Center - University of Macerata), Hua Wang (EmLyon Business School) and conclusions from Giovanni Balcet (University of Turin).
The newsletter summarizes main trends, challenges and perspectives of three key sectors of the Chinese economy as the energy, chips and car industries, including economic, geopolitical and industrial implications.
by Ignazio Musu[1]
Energy has been the foundation of China’s extraordinary economic growth; China overtook the United States to become world’s largest energy consumer and now it represents almost 25 percent of the world’s energy consumption.
China’s economy is still based for 86% per cent on the use fossil fuels; 60 percent of China’s total energy relies on carbon, 20 percent relies on oil, and only 6 percent on natural gas; it increasingly depends on imports of fossil fuels as in the past few years, it has imported more than 70 per cent of its crude oil and more than 40 per cent of its natural gas.
The reliance of Chinese economic growth on fossil fuels energy has implied an increasing trend of CO2 emissions; China continued its yearly emissions of CO2, overcoming, since 2006, those of the United States to become the world most important country emitting greenhouse gases; CO2 China’s emissions per unit of GDP are one and a half higher than those of the US; in 2019 China’s greenhouse emissions overcame those of all the developed countries jointly considered.
Commitment to research and investments towards a low-carbon economy started in China since the 11th 2006-2011 Five Year Plan; low-carbon related research and investments have been undertaken by a number of state institutions and by private institutions with a strong support of the government; in 2020 China invested in clean energy almost twice the amount of money invested by US.
By Gianluca Sampaolo[1] and Francesca Spigarelli[2]
Introduction
A semiconductor device is an electronic component that relies on the electronic properties of a semiconductor material (primarily silicon, germanium, and gallium arsenide, as well as organic semiconductors) for its function.[1] An integrated circuit or monolithic integrated circuit (also referred to as an IC, a chip, or a microchip) is a set of electronic circuits on one small flat piece (or “chip”) of semiconductor material. This global industry exceeds $500 billion, projected to reach $1 trillion by 2030,[2] and is crucial for technology sectors like AI, autonomous driving, and 5G,[3] as well as a large market for less advanced chips in industries such as automotive, healthcare, and manufacturing. The very same industry is today at the center of strong geostrategic interests and at the core of the global technological race for innovation capacity of states.
Recent shifts in global and geopolitical dynamics have led to a heightened recognition of technological leadership as a vital and central element of national security, prompting more proactive policy measures and interventions aligned with national strategic objectives, against the backdrop of a shift from multilateral to regional trade-investment agreements.[4] Geopolitical tensions, trade restrictions and the Covid-19 pandemic resulted in disruption and highlighted the vulnerability of global semiconductor supply chains, ultimately underscoring the need for resilient and diversified supply chains, domestic production capacity and innovation. A case in point is the current “Chip War” between the US and China.[5] Amongst others, this has exposed deep-seated structural deficiencies in the European Union (EU) semiconductors supply chain that have been tackled by a recent industrial policy initiative with the objective of making the Union more resilient and self-sufficient to a greater extent in the production and supply of semiconductors.
Despite decades of strategic initiatives and targeted investments in the pursuit of semiconductor technology independence, a critical void remains in the form of significant technological challenges in producing competitive high-end semiconductors devices, limitations in expertise, equipment, and technological capabilities faced by Chinese companies. In this context, it is intriguing to understand whether the industrial policies efforts pursued by the US first and then by the EU will, on the one hand, succeed in slowing down China’s technological advancement and, on the other hand, in building more regional and independent value chains.
By Hua Wang[1]
China’s electric vehicle industry
China has been the largest market for new energy vehicles (NEVs) since 2016
(China Association of Automobile Manufacturers, CAAM). In 2022, China accounted for 65% of global NEV sales, and its volume reached 6.88 million units[2].
Chinese carmakers are taking the leadership among global players in terms of volume of sales (INSIDEEVs.com). The number of Chinese carmakers among the top 20 global NEV carmakers has constantly increased, expanding from seven in 2020, to eight in 2021, then 10 in 2022. However, it is noteworthy to mention the issue of “proliferation”: there are over 100 carmakers in the country based on 2022 data. A wave of consolidation can be expected in the coming years.
BYD, SAIC-GM-Wuling (a Sino-US joint venture), GAC, SAIC, Changan, Chery, Geely, Dongfeng, Volvo (the affiliate of Geely), etc. are key players, followed by new entry in the market, like NIO (which entered the global top 20 list in 2020), Xpeng (in the global top 20 list in 2021, whose 5% of share was acquired by Volkswagen in 2023), Li Auto, and Hozon (in the global top 20 list of 2022).[3]
In this context, it is interesting to investigate how Chinese new energy carmakers are evolving and, at the same time, how those companies managed to shift from reverse engineering to the new platform strategy in the EV segment, then to gain the global competitiveness.
In this short contribution, the platform strategy is used as the theoretical approach to conduct the analysis based on the examination of two Chinese companies, BYD and Geely. These two companies have similar transition from reverse engineering to platform strategy, but they have distinctive features in terms of approaches to realize the platform strategy.
by Giovanni Balcet[1]
Globalization is at a turning point. The shift from a dominant optimistic free-trade approach to neo mercantilist policies opened the way to present times trade wars and (even more important) technology wars. They involve mainly the US and China, but also the EU and other global and regional actors, reducing cooperation areas and expanding areas of new conflicts.
This panel proposed a comparative overview of three key industries, in order to shed light on the radical changes taking place in the innovation and internationalization processes in Chinese industry in the new global scenarios, with special attention to the disruption of global supply chains.
Ignazio Musu focused on industrial dynamics and technological innovations in China's fast energy transition.
Francesca Spigarelli and Gianluca Sampaolo deeply discussed the evolving geopolitics and technology rivalry in the Semiconductors industry.
William Hua Wang analyzed technological trajectories and strategies in the Chinese automotive industry, focusing on new energy vehicles.
Together, these synergic case studies provided relevant empirical insights and an improved conceptual network on the evolving landscape of Chinese industrial innovation.
Network analysis and in-depth comparative company case studies proved to be crucial instruments in empirical research and a way to future research achievements.
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