The implications of WTO accession on the pharmaceutical industry in China

Given the limited capabilities of R&D and global distribution channels, and the virtual non-existence of patented drugs, the Chinese pharmaceutical industry has little chance to enter the global market of Western prescription drugs and compete with the established global giants head-on. The reality is that they are chasing a moving target and their competitors are becoming bigger and stronger day by day. The substantial reduction of import tariffs and the granting of comprehensive trading and distribution rights to foreign-financed firms following WTO accession, effectively tilted the level-playing field against the Chinese pharmaceutical industry. Given the short-term competitive advantages of the Chinese pharmaceutical industry on Chinese drugs, three development strategies are suggested: (1) consolidate the local market of herbal and generic drugs; (2) market Chinese drugs via the Internet; and (3) outsource R&D and collaborative marketing

Large firms and catch-up in a transitional economy: the case of Shougang Group in China

This study examines the possibility of catch-up of the Chinese steel industry, in particular the Shougang Group, with the leading global steel giants. Shougang is one of the four steel companies that have been selected by the Chinese government to constitute the core of the future Chinese steel industry. The contract system at Shougang, which operated from 1979 to 1995, unleashed an extraordinary entrepreneurial energy in the formerly traditional state-run steel plant. In the post-contract system, Shougang's range of decision-making independence in respect to the purchase of inputs, its production structure and product marketing has increased substantially compared to the contract system, when the government still controlled many of the key decisions. As a result of institutional constraint, the low value-added steel products dominate Shougang's portfolio. To challenge the established giants in the steel industry, Shougang has to divest the loss-making non-core businesses, slowly downsize employment in the core business, raise capital on the stock market and generates the resources for continued upgrading of its steel technology and diversifying its product portfolio

Regional monopoly and interregional and intraregional competition: the parallel trade in Coca-Cola between Shanghai and Hangzhou in China

This article uses a “principal-agent-subagent” analytical framework and data that were collected from field surveys in China to (1) investigate the nature and causes of the parallel trade in Coca-Cola between Shanghai and Hangzhou and (2) assess the geographic and theoretical implications for the regional monopolies that have been artificially created by Coca-Cola in China. The parallel trade in Coca-Cola is sustained by its intraregional rivalry with Pepsi-Cola in Shanghai, where Coca-Cola (China) (the principal) seeks to maximize its share of the Shanghai soft-drinks market. This goal effectively supersedes the market-division strategy of Coca-Cola (China), since the gap in wholesale prices between the Shanghai and Hangzhou markets is higher than the transaction costs of engaging in parallel trade. The exclusive distributor of Coca-Cola in the Shanghai market (the subagent) makes opportunistic use of a situation in which it does not have to bear the financial consequences of the major residual claimants (the principal and other agents) and has an incentive to enter the nondesignated Coca-Cola market of Hangzhou by crossing the geographic boundary between the two regional monopolies devised by Coca-Cola. The existence of parallel trade in Coca-Cola promotes interregional competition between the Shanghai and Hangzhou bottlers (the agents). This article enhances an understanding of the economic geography of spatial equilibrium, disequilibrium, and quasi-equilibrium of a transnational corporation's distribution system and its artificially created market boundary in China

What are the impacts of implementing ISOs on the competitiveness of manufacturing industry in China?

Based on the proposed ‘PIE’ analytical framework, this paper argues that the preparation, implementation and evaluation of international standards (ISOs) affect the competitiveness of (foreign-financed) export-oriented manufacturing industry in southern and southeastern China, both in the short- and long-term. During the period of preparation, the decision to adopt ISOs is mainly driven by market demand and/or by the decisions of established competitors. Negative effects due to the diversion of scarce resources and institutional resistance to change during the period of transitional implementation are offset by the overall enhancement of the firm's productivity in the long run. ‘Tailoring for the external audit’ and ‘second-best’ practices are two strategies commonly employed by Chinese firms to lower the transaction costs involved in ISO audits

Big business with Chinese characteristics: two paths to growth of the firm in China under reform

This paper presents a case study of two large firms which emerged from among the ranks of traditional state-owned enterprises and new entrants: Shougang (steel) and Sanjiu (pharmaceuticals). Rather than being irreconcilable with the market economy, the experience of these two firms suggests that the Chinese Communist Party and the People's Liberation Army possessed a rich legacy of organisational and motivational skills. Moreover, Shougang and Sanjiu both grew rapidly through mergers and acquisitions in the absence of privatisation and a developed stock market. Furthermore, the main reason for Shougang and Sanjiu's success is not special help from the government or the army, but rather the fact that its leadership used their autonomy to construct a highly effective business organisation

Government policy and competitive advantages of foreign-financed firms in the Guangdong province of southern China

This paper investigates the impact of various Chinese government policies on the competitive advantages of foreign-financed manufacturing firms in Guangdong province of southern China. The objectives of various government sector-specific policies are to lubricate the factor markets in labour, capital and products and to facilitate the operation of foreign-financed firms. However, the actual effects are often quite different: the ambiguity, complexity and inflexibility of policies impose higher transaction costs on foreign-financed firms. These disadvantages offset some economic benefits gained under the central government's preferential foreign direct investment policy and thus damages the competitive advantages of foreign-financed firms based in Guangdong. Worse still, the lack of co-ordination among various bureaux further hampers arbitration between government bureaux and foreign investors

Does WTO accession matter for the Chinese textile and clothing industry?

Based on field surveys conducted in Guangdong, Zhejiang and Beijing in 2000 and 2001, this paper argues that accession to the World Trade Organisation (WTO) by China will create a new competitive arena for different categories of textile and clothing firms located in that country, partly dependent on the size and ownership of the firm. From the perspectives of reducing import tariffs, eliminating export quotas and the regulations on trade disputes, WTO accession does matter for the majority of Chinese firms in this ‘win–lose’ game. From the perspective of compliance with international standards, this paper argues that accession to the WTO does not really matter for some Chinese firms, as they may not survive the intense competition prior to 2005, when the effects of the Agreement on Textiles and Clothing materialise

Geographical interdependence, international trade and economic dynamics: the Chinese and German solar energy industries

The trajectories of the German and Chinese photovoltaic industries differ significantly yet are strongly interdependent. Germany has seen a rapid growth in market demand and a strong increase in production, especially in the less developed eastern half of the country. Chinese growth has been export driven. These contrasting trajectories reflect the roles of market creation, investment and credit and the drivers of innovation and competitiveness. Consequent differences in competiveness have generated major trade disputes

Foreign direct investment and investment environment in Dongguan Municipality of southern China

Based on 26 case studies, this paper investigates the socio-economic causes of the inflow of FDI and its policy implications in Dongguan. The favourable factors for foreign investors in Dongguan can be categorised under the Dunning's OLI (ownership, locational and internalisation advantages) framework. This paper argues that factors other than policy incentive, such as sub-contractual and pseudo integration, are playing more important roles in attracting the inflow of FDI and maintaining the high level of economic growth in Dongguan. This finding questions the effectiveness of policy incentives, such as tax-breaks, implemented by the Government as a means to attract FDI in Dongguan. The existence of 'Chinese crony capitalism' calls for further improvement in the implementation of laws and regulations in Dongguan and the reduction of bureaucratic red-tape by the central and local governments

Altered thymic differentiation and modulation of arthritis by invariant NKT cells expressing mutant ZAP70

Various subsets of invariant natural killer T (iNKT) cells with different cytokine productions develop in the mouse thymus, but the factors driving their differentiation remain unclear. Here we show that hypomorphic alleles of Zap70 or chemical inhibition of Zap70 catalysis leads to an increase of IFN-gamma-producing iNKT cells (NKT1 cells), suggesting that NKT1 cells may require a lower TCR signal threshold. Zap70 mutant mice develop IL-17-dependent arthritis. In a mouse experimental arthritis model, NKT17 cells are increased as the disease progresses, while NKT1 numbers negatively correlates with disease severity, with this protective effect of NKT1 linked to their IFN-gamma expression. NKT1 cells are also present in the synovial fluid of arthritis patients. Our data therefore suggest that TCR signal strength during thymic differentiation may influence not only IFN-gamma production, but also the protective function of iNKT cells in arthritis