Nanotechnology in China: An Analysis of International Competitiveness

This is my essay for professor Marcella Miozzo‘s International Competitiveness class. Previously, i posted the power point presentation for this topic as well. Links to all the reference can be found in the bottom of the article. Hope its useful.

Nanotechnology is the manipulation and production of material within a very small scale (nanoscale). It is a complex technology which encompass multiple science discipline and industries (Islam & Miyazaki, 2009). Due to this multidisciplinary nature, nanotechnology is predicted to revolutionise the landscape of multiple industry sectors and become the foundation of the next industrial revolution (Moreira & Vale, 2016). This promising potential has attracted many countries to invest in the research and development this technology. Interestingly, this strategic scientific endeavor is not only pursued by developed economies. Newly industrialised economies are also investing heavily in nanotechnology to catch up with more established countries, increase competitiveness and stimulate growth (Moreira & Vale, 2016) (Niosi & Reid, 2007).

One of the newly industrialized country which gaining solid grounds in nanotechnology is China. Since the late 1980s, the country has been investing massively in nanotechnology to build international competitiveness in science and technology (Bai, 2005). This effort has started to bear fruits especially in science and research indicators. The number of China nano-science publication surpassed the United States since 2004 (Appelbaum & Parker, 2008). Number of China’s share in global nano-patent also doubled in less than a decade (Appelbaum, et al., 2016). In these two indicators, China has achieved international leadership.

This essay will discuss China’s nanotechnology development in the context of international competitiveness. The historical context of China endeavour in nanotech will be described first. Following that, factors supporting nanotechnology will be discussed using Malerba’s sectoral system of innovation theory as a lens (Malerba, 2004). Finally, the benefits of network will be explained using Podolny and Leung pipe, prism, and sponge metaphor (Podolny, 2001) (Leung, 2013).

History of nanotechnology in China

In the previous decades, China has experience long history of economic underdevelopment due to political conflicts and cultural revolution. As the economy prospered in recent years, Chinese political leaders have increasingly strong sentiments to become a recognizable world superpower in high tech science (Leung, 2013). The government also wants to increase international competitiveness by reducing dependency on external technology and innovations (Appelbaum, et al., 2016). These motivations are reflected in the doubling of R&D spending over GDP in the past decades (Zhou & Leydesdorff, 2006). Nanotechnology was chosen as one of the means to achieve this due to the nature of the field which are new to everyone. The technology was perceived as a level playing field which China can strive to be the global leader (Leung, 2013).

The effort to build nanotechnology capabilities in the country started in the 80s. Three of the state science institutions, China Academy of Science (CAS), National Natural Science Foundation (NNSF) and the State Science and Technology Commission (SSTC), began funding nanotechnology basic research (Bai, 2005). Then in the early 90s, the government helped to facilitate several international conferences including 7th International Conference on Scanning Tunneling Microscopy and the 4th International Conference on Nanometer-Scale Science (Wan & Bai, 2003). These conferences helped Chinese nanotechnology scientist to establish network and create a community. Apart from this, the conferences also attracted sparked interest in nanotechnology from the wider public (Bai, 2005).

The inflection point of China nanotechnology progression started in the 1999. During this year, the Ministry of Science and Technology (MOST) initiated nationwide basic research project in nanomaterial and nanostructure (Bai, 2005). Subsequently, nanotechnology was included in the National High Technology Plan. As the result of these initiatives, the government funded nearly 1000 nano-related projects from 1990 to 2002 with the total investment of 27 USD million (Bai, 2005). The scale of this funding sent a message to the public and scientific community that the government were serious about this endeavor. The government further solidified the commitment by setting up National Steering Committee for Nanotechnology in the following year. This institution would be responsible for the policy direction, execution and coordination related to Nanotechnology development (Ministry of Science and Technology of The People Republic of China, 2007).

nano publication.png — *Figure 1 : Percentage share of nano publication (Guan & Ma, 2007)*

Following the increasing investment from the government, China has been showing fascinating growth in the nanotechnology field. Since 2002, China has been the global runner up in terms of nanotechnology publication overtaking countries such as Japan, Germany, and France (Guan & Ma, 2007). No other countries managed to rose this quickly. In the institutional level, China Academy of Science also produced more academic paper than any other organizations globally and considered the most prolific nanotech research institutions in the world (Guan & Ma, 2007).

country share — *Figure 2 : Country share in nanotechnology patent applications (Appelbaum, et al., 2016)*

The traction in the research publications also mirrored by growth patent application. From 2004 to 2013, China has increased its share in global nanotechnology patent by almost double (Appelbaum, et al., 2016). China managed to overlap Japan and even the United States to be the country with the most nanotechnology patents. However, unlike Japan and the US, most of the nanotechnology patent holder in China is either scientific or academic institutions (Dang, et al., 2010).

Sectoral System of Innovation in China’s Nanotechnology.

To understand more about how China gain significant competitiveness in Nanotechnology, the supporting element of this sector need to be discussed. Sectoral System of Innovation (SSI) framework will be used to map all the relevant building blocks in the sector. Developed by Malerba, SSI concept lays on a principle that innovation and technological change in a sector are influenced by three elements: knowledge and technologies, actors and networks and institutions (Malerba, 2004).

Knowledge and technologies: knowledge base or technologies which become the commonality of the sector.
Actors and networks: Individuals, organizations or set of organizations which interact through the process of communication, cooperation, or competition in the sector.
Institutions: Norms, routines, practices, and standards which may affect the actors in the sectors. It ranges from informal to formal, specific to the sector or inherited from the bigger scope which the sector operates (e.g. nationwide law).

In the following section, each of the SSI elements of China nanotechnology sector will be described.

Knowledge and technologies

The access to nanotechnology knowledge base in China was opened when tunneling microscopes start developed in the 1980s (Bai, 2005). This is the key development which enabled scientists to observe material in a nanoscale for the first time. This subsequently open the gate for further nanotechnology research. Also by doing R&D, Chinese scientist community built absorptive capacity which enabled them to absorb knowledge from external source (Cohen & Levinthal, 1990). Series of international nanotech conferences in the 1990s further increased the knowledge base by bringing nanotechnology development from more advanced countries (Bai, 2005). Finally, the conferences also gave the opportunity for Chinese scientist to establish network with global nanotech community.

Actors and Network

Rather than market driven, China’s effort in nanotechnology was pushed out by top-down state initiatives (Appelbaum & Parker, 2008). As a result, most important actors in the sector are either government or academic institutions. The list of key government organization which directly impact nanotechnology development can be seen in the table below.

Chinese Nanotechnology Actors.png — *Figure 3 : Summary of Chinese organizations promoting nanotechnology (Appelbaum & Parker, 2008)*

As shown in the table, China central administration played significant role by putting Nanotechnology as a priority initiatives in the national plan. Both of related ministries, MOE and MOST, provide state funds to invest in research institutions and university. They also collaborated with national science institutions such as CAS and NNSF to provide supporting services such as knowledge sharing, incubation, and access to international networks. Regional governments such as Beijing and Shanghai also involved in nanotechnology fostering by means of funding, incubation and facilitating knowledge sharing between universities. This is because most of nanoscience institutions and universities are concentrated in these two regions (Motoyama, et al., 2014). In the later stages, Chinese government founded planning and coordination offices such as NSCN and NCSNT. Their objectives are to ensure nanotechnology policy and research initiatives not overlapping with each other.

Institutions

One of the national institutions that helped nanotechnology development is Chinese higher education system, specifically their effort to facilitate high-tech technology research in the early 2000s. Ministry of Education initiated 985 and 211 project to upgrade China universities into world-class research institutions by investing one billion yuen (USD 123 million) (UKIC, 2012). These funds were utilized to build facilities, facilitate technology transfer, establish partnership with foreign universities and attract leading scholars from western universities (Appelbaum & Parker, 2008). The development upgraded the capabilities of China universities to be able to research advanced technologies such as biotech and nanotech.

Another institution which contributed for China’s major presence in the publication journal is the academics and researcher incentive system. Majority of university and research institutions gave cash money for every paper published with varying amount according to the journal impact factor (Nature, 2006). Some organizations used allowance model where some percentage of the salary determined by how many papers they published (Appelbaum, et al., 2016). This incentive system contributed to significant growth in the number of nanotechnology publications. However, quality does not follow the increase of quantity. Chinese nano-science related paper citations are the still the lowest compared to US, Germany and even Japan (Bai, 2005).

Role of networks in China’s nanotechnology development

In the early days of China nanotech development, researchers faced needs considerable barrier in terms of access and capital. Even with government support, budget constraint hindered many Chinese scientist to purchase facilities or knowledge (Leung, 2013). In addition to this, Chinese science institutes also perceived as a low-status and had to overcome trust barriers to publish in popular European and US based publications. These factors drove the effort to establish networks with global nanotechnology institutions to enable information exchange, R&D sharing, co-authoring in publication (Bai, 2005).

This chapter will discuss the importance of network in China nanotechnology development using Leung’s pipes, prism, and sponge metaphor of benefitting from networks.

Theoretical lenses on benefitting from networks

In his study about venture capital, Podolny postulated that there are two major uncertainty in market transactions, egocentric uncertainties and alter centric uncertainties (Podolny, 2001). Egocentric happened because of lack of resources while alter centric uncertainty is about social legitimacy from other actors in the market. Connecting to network lessen this uncertainty because actors can get resources from others and give legitimacy by associated with the networks. Both benefits are symbolized as pipes and prism respectively.

Leung further expand this by adding the third metaphors which is sponge (Leung, 2013). He argued that by connecting to networks, actor get access to hands on learning which further develop their capacity to exploit more knowledge. For example, firms which connect to a network can get a chance to form joint R&D project to solve difficult problem. These hand on experience is a key driver for the firm to build absorptive capacity (Cohen & Levinthal, 1990).

The summary of pipes, prisms and sponge theory can be seen in the graphic below.

*Figure 4 : Three metaphors of network benefits (Podolny, 2001) (Leung, 2013)*

The following sub-chapter will discuss each of this metaphors within China’s nanotechnology context.

Pipes: Networks as means to tap into the flow nanotechnology information

To keep up with the nanotechnology innovation pace, Chinese scientist established connections with research institutes and laboratory from developed countries such as United States (Leung, 2013). This international collaboration was generally initiated by peer to peer connection from returning Chinese graduates (Appelbaum & Parker, 2008). This collaboration ensures China nanotech scientist knowledge can keep up with the latest research and information from the forefront of the field.

As China policy maker started to realize the benefits of international networks, country-level partnership initiatives started to get initiated. One of this initiative is Partnership for International Research and Education (PIRE) with US National Science Foundation (NSF, 2017). This program facilitate training, workshop, international technology transfer between the two countries which bring great benefits for China nanotech community. More partnership like this were established after the inclusion of international collaboration in the key pillars of science and technology policy roadmap (Appelbaum & Parker, 2008).

Prism: Networks as means to elevate reputation

In the early days of its nanotech development, China science institutes were facing difficulties to publish in European and American journal due to their low scientific credibility (Leung, 2013). To break this barrier, Chinese scientist collaborated with more prestigious research institute to raise their legitimacy and visibility.

Apart from research organization, establishing partnership with globally known technology company also pursued to gain prestige. One example of this is the establishment of University of Tsinghua – Foxconn Nanotechnology Research Centre in 2002 (Tsinghua, 2010). The investment provided by the company enabled the university to conduct nanotechnology research while also benefitting from Foxconn global reputation.

The prim effect can also happen in a peer to peer collaboration. For example, the collaboration between Chinese and American scientist which come from respected organizations can bring prestige for both. The Chinese scientist get prestige due to his elevated status as international scientist. While his American counterpart also getting highlight as “China expert (Leung, 2013).

Sponges: Networks as means to develop nanotechnology absorptive capacity

Apart from access and prestige, actors could get learning benefits from connecting to network. One example for this is the information about profiting from knowledge. By collaborating with countries which have better intellectual property regime such as US or Japan, Chinese scientist gained knowledge about patent strategy (Leung, 2013). The network also gave them opportunities to learn business acumen which enabled the scientist to develop product instead of just publishing papers.

Other learning benefits from nanotechnology network is the chance to involve in multi-disciplinary research. Due to the complex nature of nanoscience (Roco, 2007), scientist often do research with their counterpart from different scientific branch. For example, chemistry researcher studying nanomaterials frequently collaborate with their biological and material science counterpart. This provide opportunity for each scientist to learn from multiple discipline which further enhance their capability in nanotechnology.

Learning benefits can also come from relationship with exploitative nature. Network actors with higher status can exploit the lower-status partner for R&D outsourcing and exploring possibilities. On the other hand, the lower status actors gain benefit by getting involved which they probably will not get on their own merit. (Leung, 2013) Example of this is Chinese scientist from lesser known universities which actively seek partnership with foreign companies to get nanotechnology funding and equipment support. Foreign companies will view this offer as opportunities to do nanotech research and development with minimum investment.

Conclusion

China’s foray into nanotechnology development was fueled by aspiration to achieve word leadership in science and technology. Nanotechnology was chosen as focus due to it is relatively new to everyone. China started investing in this technology since the 1980s. By the start of 2000s, nanotechnology became strategic national focus hence the investment and development effort. The following years, the investment started to pay off with the meteoric rise of China in global nanotechnology science leadership.

Looking through the sectoral system of innovation lens, majority of the driving forces behind China nanotech development came top-down from government initiatives. The floodgates of nanotechnology knowledge and technology access started from networking and information sharing which slightly influence by the government. The actors and networks however was majorly contributed by government agencies, fund and institutions. Higher education transformation and publication incentive structure also played a role in China leadership in science publication.

China nanotechnology leadership also driven by the role of networks. Tapping into international nanotech networks opened the flow of information and development updates into the country research community. Partnership with more renown organizations in more developed countries also increase legitimacy and prestige of China nanotech scientists. Finally, networks opened the possibility of further learning by means of R&D outsourcing and multi-disciplinary research partnership which further developed China absorptive capacity in nanotechnology.