The World Economy

The World Economy (2014)

doi: 10.1111/twec.12197

Globalisation and Industrial Policy: The

Case of China
Peter Nolan
Centre of Development Studies, University of Cambridge, Cambridge, UK

Chinese companies should expand their overseas presence at a faster rate, enhance their co-operation
in an international environment, and develop a number of world-class multinational
corporations. (President Hu Jintao, Report to the 18th Party Congress, 8 November 2012)

1. INTRODUCTION

T HE central plank of Chinas industrial policy has been the attempt to transform its giant
state-owned enterprises into globally competitive firms. Since the 1980s, the structure
and operational mechanism of the countrys state-owned enterprises has changed radically.
China now has a large group of them in the Fortune 500 and FT 500 global rankings. How-
ever, their large revenues and high market capitalisation mask weakness in global competi-
tion. The success of China state-owned enterprises has been based mainly on their privileged
position within key sectors of the fast-growing domestic market. Chinas national champion
firms have only a small international business system and a small share of international mar-
kets. In a wide range of high technology and branded goods sectors, global firms have built
their production base within China. After a quarter century of industrial policy, Chinas giant
state-owned enterprises have failed to become globally competitive. This necessitates further
reform. The direction and content of that reform is an open question.

2. CHINAS INDUSTRIAL POLICY SUCCESS

From the earliest days of Chinas economic reforms in the 1980s, the countrys leadership
has been committed to developing a group of globally competitive giant firms to match those
from the high-income countries. As early as 1987, central policy makers pointed out that the
development of business groups is of profound long-term importance to the development of
production capabilities and deepening the reform of the economic system. These policies
appear to have been remarkably successful. By 2012, China had 70 firms in the Fortune 500
and 22 firms in the FT 500. The aggregate market capitalisation of Chinese firms in the FT
500 was third, behind only the US and the UK.
Constructing an industrial policy presented special challenges compared with other late-
comer countries such as Japan and South Korea after 1950. China was attempting to
reform a closed centrally planned economy with a negligible private sector; Japan and
Korea were both bastions of the Wests struggle against communism, with a massive US
military presence. The West was prepared to accept a robust nationalist industrial policy
in its East Asian partners who were in the frontline of the struggle against communism.
Communist China was, and still is, viewed by the West as an ideological and military
threat. Moreover, Chinas attempt to construct an industrial policy has occurred in the
midst of the era of capitalist globalisation, which produced unprecedented global industrial
concentration of business power, far beyond that which faced Japan or Korea at a similar
2014 John Wiley & Sons Ltd 747
748 P. NOLAN

phase in their development. The industrial policies pursued by Japan and Korea could not
easily be transferred to China and cannot easily be transferred to developing countries
today.
Chinas economic reforms since the 1970s have been cautious and experimental. By the
late 1990s, most of the small and medium-sized enterprise sector had been removed from
state ownership, but the commanding heights of the economy had not. A long series of
experimental reforms attempted to create a group of globally competitive large enterprises.
The leadership regarded this is as a central focus of the countrys development strategy.
Initial cautious experiments in the 1980s increased enterprise autonomy, enhanced the right
to retain profits and engage directly with the market. From the early 1990s onwards, the
reforms deepened. Large enterprises were transformed into corporate entities with diversi-
fied ownership. Minority equity shares were floated on domestic and international stock
markets. In this process, large state-owned firms were subjected to public scrutiny, includ-
ing meticulous examination of the floated companies by international accounting firms
and investment banks. Joint ventures were established with leading international companies.
A new generation of highly trained professional managers moved into senior positions.
Extensive corporate restructuring took place through merger and acquisition. The number
of national champion firms was gradually reduced to around 80 super-large firms. Increas-
ingly, the corporate structure of Chinas giant enterprises resembled that of their interna-
tional competitors. This was a remarkable achievement in terms of institutional
transformation.
The main body of the national champion firms was in strategic industries, which were
broadly the same industries in which high-income countries had established their own state-
owned national champion firms after the Second World War. These were in key sectors,
including telecoms, oil and chemicals, aerospace, military and related equipment, automobiles
and trucks, power equipment, metals and mining, electricity generation and distribution, con-
struction, aerospace and banking. In these sectors, the states majority ownership makes it dif-
ficult for international firms to expand within China through merger and acquisition. The
national champion firms benefit from their access to procurement contracts from government
projects. Since these firms are all state-owned, they are able to think in a long-term fashion.
They can work together as a single team, sharing knowledge, supporting each other and buy-
ing each others products. They can cooperate in the development of new technologies to
meet Chinas needs for sustainable development. The Chinese government has successfully
pushed global companies to transfer technology to Chinas state-owned firms in return for
market access. Chinas booming economy has been based on an extremely high investment
rate, which has created intense demand for output from the main body of the countrys strate-
gic industries, mainly in the capital goods sector. This has permitted revenues and profits at
Chinas national champion firms to grow rapidly.
In key strategic industries, such as aerospace and banking, Chinas largest state-owned
enterprises have made substantial technical and management advances, supported by surging
growth in domestic demand.
In 1970, the Chinese government announced a project to build the Y-10, a large com-
mercial airliner of the same size as the Boeing 707. The first Y-10 was completed in
1978. Although only two were built, to produce such a technologically advanced product
was a remarkable achievement for a developing country. However, the aircraft was not a
commercial success, and the programme halted in 1985. The remaining Y-10 is at
COMACs headquarters in Shanghai. In front of it is a sculpture with the characters never

2014 John Wiley & Sons Ltd

 GLOBALISATION AND INDUSTRIAL POLICY IN CHINA 749

give up (yong bu fang qi). Chinas fleet of large commercial aircraft has grown at great
speed, consisting entirely of planes bought from Boeing and Airbus. However, China has
consistently expressed its intention to build its own indigenous large commercial aircraft
industry. In 2002, the Chinese government initiated a plan to build its own domestically
assembled regional jet, the ARJ21. In 2008, a new enterprise was established, the Commer-
cial Aircraft Corporation of China (COMAC), with the specific purpose of developing a
large commercial aircraft, the C919, which competes directly with Boeings B737 and
Airbus A320.
A decade ago, Chinas banking industry was mired in massive bad debts, with a chorus of
expert opinion calling for the break-up of the countrys big banks. Within 10 years, Chinas
leading state-owned banks accomplished a comprehensive transformation. IT systems have
been completely transformed, allowing centralisation of risk control. They absorbed invest-
ment from foreign strategic partners, who helped upgrade management systems. The manage-
ment has undergone a wide-ranging process of skill upgrading, including personnel exchange
with giant global banking partners and intensive international training programmes. Corporate
governance has been upgraded steadily. Flotation of part of the banks equity on domestic
and international stock markets has intensified media pressure on senior management. By
2012, China had four of the worlds top ten banks by market capitalisation and a total of ten
banks in the FT 500, more than any other country.
Throughout the period of transition from the centrally planned economies, the Washing-
ton Consensus institutions have argued unceasingly that state-owned enterprises are inherently
inefficient. The classic text was the World Banks publication Bureaucrats in Business
(World Bank, 1995). Chinas entry to the WTO coincided with intensified international pres-
sure for widespread Chinese privatisation. However, Chinas leaders persisted in the effort to
build globally competitive large firms that are majority-owned by the state. Foreign compa-
nies have negligible assets and market share in key strategic industries. The heads of the
national champion companies are selected by the Central Organisation Department of the
Chinese Communist Party. They frequently move on to positions within the party and gov-
ernment system. The party secretary remains the most powerful person in the state-owned
companies. The party retains tight control over personnel issues from the top to bottom of
state-owned enterprises. The State-owned Assets Supervision and Administration Commission
(SASAC) retains tight control over all key aspects of the leading state-owned enterprises,
including mergers and acquisition, human resources policy, remuneration, flotation and inter-
national expansion.
After 30 years of reform, Chinas industrial policy appears to have succeeded, with a large
batch of giant state-owned companies in the Fortune 500 and the FT 500. Between 2002 and
2011, the value of assets managed by SASAC rose from RMB 7.1 to 28.0 trillion and their
revenues rose from RMB 3.4 to 20.2 trillion. The remarkable success of China national cham-
pion firms suggests the Washington Consensus view on state-owned enterprises and industrial
policy was fundamentally flawed. Non-mainstream economists have seized on the evidence of
Chinas apparent industrial policy success to argue state-led industrial policy can build a
group of globally competitive companies to match those built by the United States in the
nineteenth century, Western Europe after World War II, and Japan and Korea in the 1960s
and 1970s. The international media have widely reported the rise of a new form of state capi-
talism in China. Its giant state-owned firms are widely thought to be buying the world,
greatly reinforcing Western fears about Chinas rise.

2014 John Wiley & Sons Ltd

750 P. NOLAN

3. THE CHALLENGE OF THE GLOBAL BUSINESS REVOLUTION

After the 1970s, the world economy entered a new phase of capitalist globalisation.1 which
involved a revolution in information technology, privatisation, liberalisation of international
trade and investment flows, opening up of the former communist planned economies, and
comprehensive policy change in the formerly inward-looking non-communist developing
countries. The policies that the Washington Consensus promoted across the world led to pro-
found changes in the nature of the large corporation.
Alongside a huge increase in global output, the number of leading system integrator firms
in most industrial sectors shrunk and the degree of global industrial concentration increased
greatly. The most visible part consists of the well-known firms with superior technologies and
powerful brands. These constitute the systems integrators or organising brains at the apex
of extended value chains. By the early 2000s, within the high value-added, high technology
and strongly branded segments of global markets, which serve mainly the middle and upper-
income earners who control the bulk of the worlds purchasing power, a veritable law had
come into play: a handful of giant firms, the systems integrators, occupied upwards of
50 per cent of the whole global market.
In 2007/2008, the worlds top 1,400 firms (the G1400) invested a total of US$545 billion
in R&D (Department for Business Enterprise, Regulatory Reform, 2008). This constitutes the
main body of global investment in technical progress. The top 100 firms, all from the high-
income countries, account for 60 per cent of the total R&D spending of the G1400, while the
bottom 100 firms account for less than 1 per cent of the total. In other words, around 100 or
so firms in a small number of high-technology industries sit at the centre of technical progress
in the era of globalisation.
As they consolidated their leading positions, the systems integrator firms, with enormous
procurement expenditure, exerted intense pressure upon the supply chain to minimise costs
and stimulate technical progress. As firms struggled to meet the strict requirements that are
the condition of their participation in the systems integrators supply chains, industrial concen-
tration increased rapidly. In sector after sector, a small number of firms account for a major
share of the market within each segment of the supply chain. This cascade effect has pro-
found implications for the nature of competition and technical progress. It means the chal-
lenge facing new entrant firms is far deeper than at first sight appears to be the case. Not only
do they face immense difficulties in catching up with the leading systems integrators, they
also face great difficulties in catching up with the powerful firms that now occupy the com-
manding heights in almost every segment of global supply chains, in the invisible part of the
iceberg that lies hidden from view beneath the water. Firms from developing countries are
joining the global level playing field at a point at which the concentration of business power
has never been greater.
If we define the firm not by the entity which is the legal owner, but, rather, by the sphere
over which conscious coordination of resource allocation takes place, then the large firm can
be seen to have enormously increased in size during the global business revolution. The orga-
nisation of the value chain has developed into a comprehensively planned and coordinated
activity. The systems integrator at the core of the value chain possesses the capability to raise
finance for large new projects and the resources necessary to fund a high level of R&D

1
The empirical evidence in this section is presented more fully in Nolan (2001a, 2001b), Nolan et al.
(2007, 2008) and Nolan (2012).

2014 John Wiley & Sons Ltd

 GLOBALISATION AND INDUSTRIAL POLICY IN CHINA 751

spending to sustain technological leadership, develop a global brand, invest in state-of-the-art

information technology and attract the best human resources. The systems integrator firm inter-
acts in the deepest, most intimate fashion with the major segments of the value chain, both
upstream and downstream. This constitutes a new form of separation of ownership and control,
in which the boundaries of the firm have become blurred. The numbers employed in the external
firm typically far exceeds the numbers employed in the core systems integrator firm itself.

4. CHINAS INDUSTRIAL POLICY FAILURE

a. Multinational Companies Going In to China

The Chinese government has kept around one-third of the economy substantially protected
from penetration by global companies, by maintaining ownership in the hands of indigenous
state-owned firms. Although this has greatly frustrated multinational firms, a large fraction of
the economy is open for them to operate relatively freely.
It would be a serious misunderstanding of the nature of the multinational firm to exagger-
ate the significance of China compared with other parts of the world. For example, the stock
of inward FDI in China is just one-third of that in Latin America and the Caribbean
(UNCTAD, 2012). As Chinas large firms go out, they confront global giant firms with
well-established production systems in both high-income and developing countries. Leading
businesses from the high-income countries have been going out for the whole era of modern
capitalist globalisation. China is a key part of the growth strategy of most multinational
companies. It has been consistently the largest recipient of inward FDI among developing
countries. Chinas continued rapid growth since the eruption of the global financial crisis has
helped greatly to sustain the prospects for global companies based in high-income countries.
In 2011, American companies had around $100 billion in FDI in China (USChina Busi-
ness Council). In 2008, the sales revenue of these enterprises in China totalled US$147 bil-
lion, their export revenue was US$72 billion and their profits were nearly US$8 billion.
Leading American global companies are deep inside China, with multi-billion dollars of
assets, several billion dollars of sales, many tens of thousands of direct employees and a much
larger number of indirect employees in their supply chains. For example, in 2011, GM had
sales revenue of $31 billion in China and it employs 35,000 people; Apple had $12 billion in
revenues from Greater China and around 500,000 people are employed assembling its prod-
ucts in China; Johnson Controls had $3 billion of revenues and employs 18,000 people; while
Yum brands had $4 billion of revenues and employs 230,000 people.
In 2011, Germanys stock of FDI in China was around $33 billion (Financial Times 29
August 2012) and group of giant German firms occupy a central position in their respective
sectors. For example, in 2011, VWs revenues were $42 billion and it employed 53,000
people; Boschs revenues were $5.8 billion and it employed 26,000 people; while Siemens
revenue was $8.1 billion and it employed 36,000 people. In 2011, Japans stock of FDI in
China was around US$83 billion (Hong Kong Research, 2012). There are over 22,000
Japanese companies in China, employing around 3 million people. Almost all of Japans
largest firms have extensive business systems. For example, in 2011, Toyota produced
815,000 cars and employed 28,000 people; Hitachi had revenues of US$16 billion and
employed 60,000 people; Nissan produced 1.25 million vehicles in China and employed
71,000 people; Toshiba had revenues of around US$8 billion and employed around 30,000
people; while Panasonic had revenues of US$13.5 billion.

2014 John Wiley & Sons Ltd

752 P. NOLAN

Multinational firms have made a critically important contribution to Chinas growth and
modernisation. They have been central to its ability to benefit from the advantages of the
latecomer through the application of the worlds leading edge technologies in almost every
sector, including the state-owned one. Foreign-invested firms account for around 28 per cent
of the countrys overall industrial value-added (Table 1). Their share of output is one-fifth or
less in non-ferrous metals, metal products, ferrous metals, non-metallic mineral products and
textiles (Table 2). However, their share of output rises to between one-quarter and a third in a
wide range of industries, including food processing (23 per cent), raw chemicals (24 per
cent), electrical machinery (24 per cent), plastics (25 per cent), medicines (26 per cent), cloth-
ing and footwear (31 per cent) and leather and fur-related products (34 per cent). In transport
equipment, their share is 44 per cent; in communications equipment, it reaches 57 per cent.
The contribution of foreign firms is especially important in high-technology sectors
(Table 1) where foreign-invested enterprises account for around two-thirds of overall value-
added. They account for 71 per cent of total value-added in the electronic and telecommuni-
cations equipment sector and 91 per cent in the computer and office equipment sector. It is
estimated that foreign-invested enterprises employ 37 per cent of Chinas total high-technol-
ogy workforce and 41 per cent of Chinas scientists and engineers (Steinfeld, 2010).
Chinas large commercial aircraft are entirely purchased from Boeing and Airbus, and it
faces an enormous challenge to build a globally successful large commercial aircraft industry.
Chinas aircraft components industry has only a small role within the supply chain of the
global industry. Its indigenously assembled commercial aircraft is based on the ARJ21 regio-
nal jet and the C919 large commercial aircraft, neither is yet in commercial service, and they
face great demand uncertainties. Their key sub-systems are supplied mainly by American by
firms, including GE, United Technologies, Honeywell, Rockwell Collins, Parker Hannifin and
Eaton.
In the auto industry, Chinas industrial policy has aimed at building globally competitive
companies through joint ventures. However, the automobile market is dominated by global

TABLE 1
Foreign-Invested Enterprises (Including Firms From Taiwan,
Hong Kong and Macao) in the Chinese Economy, 200710

Sector Share of Foreign-invested

Enterprises (%)

Industrial value-added (2009) 28

Of which:
Output from high-technology industries (2007) 66
Of which:
Medical, precision and optical instruments (2007) 43
Electronic and telecoms equipment (2007) 71
Computers and office equipment (2007) 91
Industrial exports (2010) 69
Of which:
New and high-technology products (2008) 90
Communication equipment, computers and 97
electronic equipment (2010)

Source: Gao (2011), State Statistical Bureau (2010, 2011).

2014 John Wiley & Sons Ltd

 GLOBALISATION AND INDUSTRIAL POLICY IN CHINA 753

TABLE 2
Market Share of Foreign-invested Enterprises (Including Firms From Taiwan, Hong Kong
and Macao) in the Chinese Economy, 2010

Market
Share (%)

Communications equipment 57.1

(computers and other electronic)
Transport equipment 44.1
Leather, fur and related products 33.9
Clothing and footwear 31.0
Medicines 26.1
Plastics 25.3
Electrical machinery and equipment 24.3
Raw chemical materials and 24.1
chemical products
Food processing 22.8
Special purpose machinery 20.8
Metal products 20.1
General purpose machinery 19.5
Textiles 16.4
Non-ferrous metals 13.6
Ferrous metals 13.4
Non-metallic metal products 12.9

Source: OECD (2012).

companies, which have over three-quarters of the national market in terms of units sold and
close to 90 per cent in terms of sales revenue. The auto sales of the three Chinese firms in
the Fortune 500 rely almost entirely on joint ventures controlled by global giants. Two assem-
blers, GM and VW, together account for over 30 per cent of the market. Domestic auto firms
are confined to low value-added, low technology vehicles.
The IT hardware and software systems from global firms are at the core of Chinas mod-
ernisation in a wide array of sectors. For example, leading international firms, mainly those
from the United States, have been at the heart of the high-speed modernisation of the IT
systems of Chinas main banks. Their mainframes are from IBM, servers from IBM and HP,
software packages from ORACLE and SAP and ATMs from Diebold, NCR and Wincor-
Nixdorf.
The Chinese market for high value-added consumer information technology products is
also dominated by global giants. In 2012, in the market for tablet PC devices, Apples iPad
has a market share of 73 per cent. In the smartphone market, Android (Google) devices
account for around 80 per cent and Apple for around 12 per cent (The Guardian, 14 August
2012).2 The indigenous Chinese PC assembler, Lenovo, relies on Intel for its core micropro-
cessor technology and Microsoft for its main software platform. Canon, Sony and Nikon have
three-fifths of the Chinese camera market. Most patented pharmaceuticals are supplied by glo-
bal firms, such as Pfizer, Novartis, Bayer, Johnson and Johnson, GSK and Astra-Zeneca.

2
Although several indigenous companies, including Lenovo, ZTE and Huawei, have established signifi-
cant market shares within the Chinese smartphone market, their core technology is Android (Google).

2014 John Wiley & Sons Ltd

754 P. NOLAN

There are a large number of indigenous pharmaceutical companies, but they mainly manufac-
ture generic, low-margin pharmaceuticals. Global firms dominate in branded goods, including
beverages, confectionary, cosmetics, luggage, watches, jewellery and clothing (Bain, 2010). In
branded consumer goods, indigenous firms are mainly confined to low value-added sectors.
In high-technology sectors that are less visible, the worlds leading firms also occupy a
large fraction of the market. The Chinese auto components industry is mostly controlled by
the global giants, such as Bosch, Denso, Valeo, Visteon, Delphi, Continental and Johnston
Controls, which have large investments in production facilities to meet the just-in-time
needs of the their global customers. The key installations in heating, ventilation and cooling
systems for buildings are mostly supplied by global firms including Carrier (United Technolo-
gies), Mitsubishi Electric, GE and Siemens. Most elevators and escalators are supplied by glo-
bal firms. Otis, Mitsubishi and Hitachi have an estimated 70 per cent of the market (China
Daily, 8 July 2011).
Multinational firms are critically important in Chinas export sector. Domestic enterprises
account for 74 per cent of its gross value of industrial output, but only 31 per cent of the
value of industrial exports (State Statistical Bureau (SSB), 2011). Foreign firms account for
26 per cent of Chinas gross value of industrial output, but account for 69 per cent of indus-
trial exports and for 90 per cent of exports of high-technology products. Within the high-tech-
nology sector, the communications equipment, computer and office equipment sector is much
the most important, accounting for 38 per cent of Chinas total industrial exports (SSB,
2011). Domestic capital is almost non-existent, accounting for just three per cent of the total
(SSB, 2011). The sector is deeply connected with the global economy, with 74 per cent of its
output value exported (SSB, 2011). Ninety-seven per cent of Chinas exports from this sector
are from the subsidiaries of foreign companies operating in China (Table 1).
China is unique among large latecomer countries in the degree of importance of foreign
firms in its modernisation and national economic catch-up. The number of people working
within the value chain of foreign firms is extremely large and beyond easy calculation. It is
remarkable that such an exceptionally high degree of openness has occurred under communist
party rule, which contradicts the predictions of almost all international experts on the transi-
tion from central planning.

b. Chinese Firms Going Out of China Into the High-income Economies: I Have You
Within Me But and You Do Not Have Me Within You (wo zhong you ni, ni zhong que wo)
Gerard Lyons, chief economist of Standard Chartered Bank, has expressed a widely held
view that China is buying the world, and thereby acquiring Western technologies. In 2007,
he said: The big worry is that [sovereign wealth funds] see an opportunity to buy strategic
stakes in key industries around the globe. . .[T]he expertise of emerging economies, such as
China, in low cost manufacturing could quickly be added to by the acquisition of high tech
firms overseas (Lyons, 2007, p. 9). In 2012, Lyons said: The three most important words in
the past decade were not the war on terror but made in China. On present trends, the
three most important words of this decade will be owned by China (quoted in Financial
Times, 6 September 2011). The reality is very different from the widely held popular percep-
tion that China is buying the world.
Chinas stock of outward FDI increased from US$28 billion in 2000 to US$366 billion in
2011 (UNCTAD, 2012). Chinas going out policy for its giant state-owned firms appears
to have taken off. This perception has contributed to the view that state-owned firms from

2014 John Wiley & Sons Ltd

 GLOBALISATION AND INDUSTRIAL POLICY IN CHINA 755

developing countries are catching up and overtaking those from the high-income countries on
a widespread basis.
In fact, Chinas firms are at the earliest stage of building global production systems. In
2011, Chinas outward stock of FDI (including Hong Kong, Macao, the Cayman Islands and
the Virgin Islands) was less than that of Australia, 39 per cent of the Netherlands, 27 per cent
of France, 25 per cent of Germany, 21 per cent of the UK and 10 per cent of the USA
(Table 3). It amounted to less than one-fiftieth of that of the high-income countries as a
whole.
Around one-half of Chinas outward FDI is in leasing, business services and financial
intermediation (SSB, 2012, p. 262). Much of this takes place in Hong Kong, which has
61 per cent of Chinas total stock of outward FDI, and in the Cayman Islands and Virgin
Islands, which together have 12 per cent of its total stock of outward FDI.
In 2011, Chinas total outward FDI in extractive industries was US$67 billion and in man-
ufacturing, it was just US$27 billion. Chinas total outward stock of FDI in the extractive
industries is less than a quarter of the international assets of a single giant global company,
Royal Dutch Shell and less than one-third of that of Exxon Mobil (Table 4). Chinas total
outward stock of FDI in manufacturing amounts to only one-twentieth of the foreign assets of
GE and 13 per cent of that of Toyota.
In 2011, Chinas stock of outward FDI in the high-income countries was US$62 billion
(Table 5), compared with an inward stock of US$712 billion, most of which is from
high-income countries. In other words, the high-income countries stock of FDI in China is

TABLE 3
Globalisation and FDI: Outward Stock of FDI, 1990 and 2011 (US$, Billions)

1990 2011 Increase, 19902011 % Total

(US$, Billions) Increase

World 2,093 21,168 19,075 100

Developed economies 1,947 17,056 15,109 79.2
Of which:
USA 732 4,500 3,768 19.8
UK 229 1,731 1,502 7.9
Germany 152 1,442 1,290 6.8
France 112 1,373 1,261 6.6
Netherlands 106 943 837 4.4
Australia 38 385 347 1.8
Developing economies 146 3,705 3,559 18.7
Of which:
Singaporea 8 339 331 1.7
Taiwana 31 213 182 1.0
Brazil 41 203 162 0.8
China 4 366 (230)b 364 1.9
India Negl. 111 111 0.6
Otherc Negl. 408 408 (2) 2.1

Notes:
(i) aThe World Bank categorises both Singapore and Taiwan as high-income economies.
(ii) bExcluding Hong Kong and Macao. Sixty-two per cent of Chinas outward stock of FDI is in Hong Kong and
Macao (State Statistical Bureau, 2012).
(iii) cMainly transition economies of Russia and Eastern Europe.
Source: UNCTAD (2012, annex, table 1.2).

2014 John Wiley & Sons Ltd

756 P. NOLAN

TABLE 4
International Assets Compared: China and Individual Global Firms (2011)

$ Billion Chinas Total OFDI

as % Individual Firms
Foreign Assets

Extractive industries
Chinas total stock of outward FDI 67
Foreign assets of:
Royal Dutch Shell (UKNetherlands) 296 23
BP (UK) 264 25
Exxon Mobil (US) 214 31
Chevron (US) 140 48
Manufacturing
Chinas total stock of outward FDI 27
Foreign assets of
GE (US) 503 5
Toyota (Japan) 214 13
VW (Germany) 115 23
Pfizer (US) 100 27

Source: UNCTAD (2012) and State Statistical Bureau (2012).

over eleven times greater than Chinas FDI stock in the high-income countries. Chinas stock
of outward FDI in the USA was $9.0 billion. In Germany, it was US$2.4 billion and in Japan,
$1.4 billion. The USAs stock of FDI in China was around $100 billion, eleven times larger
than Chinas stock of FDI in the USA (USChina Business Council). Japans stock of FDI in
China was around $85 billion, which is over 60 times greater than Chinas stock of FDI in
Japan (Hong Kong Research, 2012). Germans stock of FDI in China is around $33 billion,
which is fourteen times as large as Chinas stock of FDI in Germany (Financial Times, 29
August 2012).
Chinese firms have been conspicuously absent from major international mergers and acqui-
sitions. Its banks played no role in the massive round of mergers and acquisitions during the
global financial crisis. In 2011, there were 41 international M&A deals worth more than US
$4.0 billion. None was undertaken by a Chinese firm (UNCTAD, 2011).
The idea that China can catch-up technologically by buying high-technology Western
firms has so far proven to be incorrect. The main acquisitions have been of loss-making com-
panies in non-strategic industries. The attempt at more substantial acquisitions in more sensi-
tive sectors, by both state-owned and private firms, has mostly failed. There have been only a
tiny number of significant international acquisitions by Chinese companies. Moreover, with
one notable exception, none has been large by the standards of the worlds biggest mergers
and acquisitions.
In 2005, Lenovo acquired IBMs PC division for $1.75 billion, which helped make Legend
a global force in the PC market. However, the reason IBM was willing to sell is the low prof-
itability of this division, as well as the intense competition in the sector and the fact that
Microsoft and Intel possess the core PC technologies. Moreover, the future of the PC industry
is in serious doubt due to the explosive rise of new communication devices, including tab-
lets and Iphones. Nokia, the worlds super giant of the mobile phone industry, has been
eclipsed by Apple and Googles Android system. HP, the worlds largest producer of PCs,

2014 John Wiley & Sons Ltd

 GLOBALISATION AND INDUSTRIAL POLICY IN CHINA 757

TABLE 5
Distribution of Chinas Stock of Overseas Direct Investment by Country
and Region, 2011 (US$ Billions)

Region/Country US$ Billions %

Total 424.8 100

Of which:
Hong Kong 261.5 61.4
Africa 16.2 3.8
Of which:
Sudan 1.5 0.4
Nigeria 1.4 0.4
South Africa 4.1 1.0
Latin America 55.2 13.0
Of which:
Cayman Islands 21.7 5.1
Virgin Islands 29.3 6.9
High-income countriesa 62.0 14.6
Of which:
Europe 24.5 5.8
France 3.7 0.9
Germany 2.4 0.6
UK 2.5 0.6
North America 13.5 3.2
USA 9.0 2.1
Japan 1.4 0.3
Singapore 10.6 2.5
Indonesia 1.7 0.4
Korea 1.6 0.4
Thailand 1.3 0.3
Vietnam 1.3 0.3
Oceania 12.0 2.8

Note:
a
Excluding Hong Kong.
Source: State Statistical Bureau (2012).

is planning to spin-off its PC division due to slow profitability. It was not until 2010 that a
Chinese company made another significant international acquisition, when Geely acquired
Volvo Cars for $1.8 billion. Volvo was a loss-making division within Ford, and by late 2012,
Volvo Cars was making large losses and faced a bleak future. Its European managers
acknowledged that it was too small to compete with the global giants of luxury cars, Merce-
des and BMW.
Most of the efforts of Chinas large firms to acquire significant businesses in high-income
countries have ended in failure. In 2005, the third largest Chinese oil company, CNOOC,
launched a bid of $18.5 billion to acquire the mid-sized US oil company Unocal. In early
July, the US House of representatives voted by 39815 to call on the US government to
review the bid on the grounds that it constituted a threat to US national security. CNOOC
withdrew its bid, and Unocal was acquired by Chevron. In 2005, also it was rumoured that
Huawei was in negotiations to acquire Marconi, the loss-making UK telecoms equipment
maker. This prompted intense discussion in the UK mass media and rumours that the deal

2014 John Wiley & Sons Ltd

758 P. NOLAN

would be referred to the US Governments Committee on Foreign Investment in the United

States (CFIUS). Huawei made no formal offer, and Marconi was sold to Ericsson for $2.1 bil-
lion. In 2010, Huaweis bid to acquire the tiny American software company 3Leaf for $2 mil-
lion was blocked by CFIUS on national security grounds.
An alternative to full-scale takeover is acquisition of substantial minority shares. In 2007/
2008, it was proposed that Huawei would acquire 3Com, the US telecoms equipment com-
pany, jointly with the US private equity firm Bain Capital. Despite the fact that Huawei would
own only a small minority share, the proposal led to a US media furore focusing on Huaweis
threat to US national security and the case was referred to CFIUS. Before a formal ruling
was reached, the acquisition offer was withdrawn by Bain and Huawei. In 2010, HP acquired
3Com for $2.2 billion. In 2009, Rio Tinto, the Australian-based global mining giant agreed
that Chinalco, the leading Chinese mining company, would make a $19.5 billion investment
and acquire an 18 per cent equity share of Rio Tinto. Leading Australian politicians opposed
it vigorously on the grounds that it was a threat to national security, and Rio Tinto abandoned
the deal.
In July 2012, CNOOC made an offer to acquire the Canadian oil and gas company Nexen
for $15.1 billion. In a landmark decision in early December, the Canadian government
approved the acquisition, by far the largest made by a Chinese company. At the same time, it
approved the acquisition of Progress Energy Resources by Malaysias Petronas. However, the
Canadian government simultaneously announced the introduction of tougher rules for acquisi-
tions of Canadian companies by state-owned enterprises. Canadas Prime Minister, Stephen
Harper said: When we say Canada is open for business, we do not mean that Canada is for
sale to foreign governments. . .Canadians generally, investors specifically, should understand
that these decisions are not the beginning of a trend, but rather the end of a trend (Globe and
Mail, 8 December 2012).
Up until this point, Chinese firms have been extremely cautious in their international merg-
ers and acquisitions, as well as in greenfield investments. Chinas going out strategy has
advanced furthest in the energy sector. However, even here, its leading firms have proceeded
cautiously in both developing and high-income countries. They have far to go before they
catch-up with the global operations of the oil majors, the leading oil service companies.3 or
chemical companies. Chinas large firms remain far removed from the global production
systems that the worlds leading firms have established during the three decades of modern
globalisation.

5. THE CASE OF HUAWEI

a. Background
Huawei stands out among Chinese companies for its success in penetrating the worlds
most competitive high-technology markets in the high-income countries. Huawei is a telecom

3
For example, in the oilfield services sector, among the top 20 firms ranked by revenues, thirteen are
from the United States and the others are from France, the UK, Italy, Norway and Australia. There is
not one firm in the top 20 from a developing country. The top ten firms in the sector all have revenues
of over $10 billion and include the US giants Schlumberger ($27.2 billion), Halliburton ($18.3 billion),
National Oilwell ($13.4 billion) and Transocean ($12.7 billion) and the Italian giant Saipem ($14.8
billion).

2014 John Wiley & Sons Ltd

 GLOBALISATION AND INDUSTRIAL POLICY IN CHINA 759

equipment, software and services company, based in Shenzhen, in Southern China. In the
1990s, the Chinese telecom equipment market was dominated by a handful of giant global
companies. Since then, the global telecom equipment and service industry have gone through
a technological and business revolution. An even smaller number of giant firms now domi-
nate. Ericsson stands at the forefront. Other leading global firms, such as Nortel, Motorola,
Nokia-Siemens and Alcatel-Lucent, have foundered, while Huawei has emerged to become
the number two firm in the global telecom equipment industry, with revenues in 2010 of
$27.1 billion and an operating profit of over $4.3 billion. It has an approximate global market
share of around 16 per cent compared with around 20 per cent for Ericsson.
Huawei was founded in 1988 by Ren Zhengfei, a retired army officer. People with a
military background can sometimes be strong business leaders, with a firm grasp of strategy,
discipline and motivation. There is no evidence that sales to the Peoples Liberation Army at
any stage have formed an important part of Huaweis sales.4 Huawei is a private company
that is owned by its employees. It has been run from its inception by a single CEO, Ren
Zhengfei, and since 1999, it has had a single chairwoman, Sun Yafang. This provided Huawei
with remarkable continuity of its top leadership. The fact that it is not a state-owned enter-
prise put pressure on the company, but it also provided it with the possibility to pursue a dif-
ferent strategy from that of the large SOEs. The fact that it is not quoted in the stock market
has provided the opportunity to take a long-term view of strategy.
Faced with the near monopoly established by the global giants, in the early 1990s, Huawei
focused on the rural market. It used the countryside to surround the cities, following Chair-
man Maos pre-revolutionary guerrilla strategy. It used the wolf spirit to fight for sales. By
199899, it began to compete in the Chinese backbone market against the global giants. The
Chinese government only provided significant support for Huawei once it had become firmly
established. In 2004, China Development Bank (CDB) provided Huawei with a credit facility
of US$10 billion to support its international expansion by providing loans for Huaweis cus-
tomers to purchase its equipment. In the 1990s, there was almost no diplomatic support from
the Chinese government for Huaweis overseas sales. However, as it became an important
symbol of Chinas international business success, the government began to provide significant
diplomatic support, with Huaweis top managers frequently participating in the international
visits of Chinas leaders.
If Huawei had been a state-owned firm, it would have had opportunities to earn money
from investing in rent-seeking businesses dependent on political relationships. Numerous
Chinese state-owned firms were led into diversification, especially property development,
away from investment in their core business and away from face-to-face competition with the
global giants. In Ren Zhengfeis view, If the government had given Huawei the right to
develop the Beijing-Guangzhou railway, Huawei would have left the telecoms equipment
business (Fieldwork, Huawei Headquarters, Shenzhen, November, 2004). The fact that
Huawei lacked such opportunities forced it to re-invest in the telecoms equipment business
and look to international markets. Throughout its existence, Huawei has remained focused on
its core business. It has consistently spent a high share of revenue on R&D. In 2010, it spent
$2.4 billion, around 9 per cent of revenue. It outsources most of its manufacturing activities.
Around 51,000 employees of a total of 110,000 are engaged in R&D. In addition to its core

4
Despite intense investigative efforts by Western investigators, none has found any evidence Huawei
has enjoyed preferential access to military contracts.

2014 John Wiley & Sons Ltd

760 P. NOLAN

campus in Shenzhen, Huawei has 20 research institutes around the world, close to its custom-
ers, including the USA, Germany, Sweden, Russia and India.
The central government could not imagine any Chinese firm would be able to succeed in
such a fiercely competitive, high-technology industry. It left Huawei to its own devices, which
allowed it space to grow. In many sectors, the Chinese central government used industrial
policy to require foreign investors to establish joint ventures with specified local firms. In
numerous cases, central and local governments pushed firms into unwanted mergers and
acquisitions. In its early development, Huawei had to face the full force of competition with
the worlds leading firms on its own. In Ren Zhengfeis view, faced with the intense heat of
competition from the global giants, the Chinese market provided a furnace in which to refine
Huawei. Although the leading telecom operators are all majority state-owned, by 2004, Hu-
awei accounted for only one-tenth of the domestic market for mobile equipment. Because of
its relatively weak position in domestic markets, Huawei was forced to go into the interna-
tional market for its very survival.

b. Re-engineering Huawei
In 1997, Huaweis CEO, Ren Zhengfei, and its chairwomen, Sun Yafang, took the momen-
tous step of comprehensively re-engineering the company, shifting from a technology-based
to a customer-based approach. This involved a comprehensive transformation of culture, using
international consultants to lead the radical change process. The Huawei leadership was con-
vinced the only way to succeed in international competition was to adopt international best-
practice management techniques. The re-engineering process was so painful that Ren Zhengfei
likened the process to cutting our feet to fit American shoes. No other large Chinese com-
pany has gone through such a revolutionary change in its corporate culture.
At great expense, Huawei engaged IBM to lead the transformation of its product develop-
ment, which was core of its cultural transformation. Between 1998 and 2005, more than 200
IBM employees spent long periods at Huawei headquarters to institute the process of inte-
grated product development (IPD). In the telecommunications equipment industry, each cus-
tomer requires a different configuration, with assembly-to-order depending on specific
customers requirements. IBM introduced the idea of cross-functional teams focused on each
customers particular requirements. The process was now market-driven, not driven by R&D.
Product development now incorporates all aspects of the product from the start, including
financial assessments, procurement and the ease with which the product can be manufactured
and serviced. The IPD approach introduced by IBM tightly linked product development from
one end of the supply chain to the other.
KPMG helped introduce a new internal financial management structure, which enabled
Huawei to monitor closely the companys internal performance as well as its financial interac-
tions with other companies. The reforms allowed Huawei to introduce a centralised system
controlling all operational departments in both China and internationally. Henceforth, they
were all subject to strict central financial control in accordance with common financial prac-
tices across the whole company. Hay Group helped Huawei introduce key performance
indicators (KPIs) to evaluate and reward employee performance across the whole company.
Hay also helped develop the leaderships cross-functional skills, so they excelled in both
research and development, as well as marketing, and had a high energy level. In the 1990s,
Huawei employees considered themselves to be a Maoist guerilla force (youjidui) with
a culture that rewarded individual heroes. Mercer Management helped Huawei achieve a

2014 John Wiley & Sons Ltd

 GLOBALISATION AND INDUSTRIAL POLICY IN CHINA 761

radical shift of style towards team working within systematic structures and measurable per-
formance criteria.
Huawei paid great attention to internationalising its culture. This started from the design
and feel of the Huawei campus in Shenzhen. The overall design was undertaken by British
architect Norman Foster, with individual buildings following the style of leading international
architects, such as Frank Lloyd Wright. The total cost was around US$1.5 billion, which was
a huge expenditure compared with Huaweis annual revenues in the late 1990s. The campus
is designed to feel like a university, reinforcing the fact that Huawei is a science-based high-
technology company. It is the beating heart of the whole Huawei system. It provides a
strong non-financial attraction for scientists and engineers, Chinese and foreign, to work at
Huawei. It is a source of pride for all Huawei employees, in both China and across the world.
The campus strongly impresses foreign visitors, including customers and suppliers. Interna-
tional competitors acknowledge that Huawei has been highly successful at attracting the best
Chinese students in the field: Huawei is close to HP in its early days. Its a place where the
brightest people in China want to work (Fieldwork, Huawei Headquarters, Shenzhen, Novem-
ber, 2004).
The proportion of foreign employees at Huawei is exceptionally high compared with other
Chinese companies. Already in 2004, more than one-fifth of Huaweis 23,000 employees were
non-Chinese, and the proportion of foreign employees has remained at around that level. In
2010, Huawei had 21,700 foreign employees of a total of 110,000. As part of the re-engineer-
ing of the company, since the late 1990s, Ren Zhengfei required senior managers in each
functional department to use English as their standard language of communication.
Huaweis foreign sales have grown in a remarkable fashion rising from $100 million in
1999 to almost $18 billion in 2010. As early as 2004, 40 per cent of Huaweis sales were out-
side China. By 2007, more than two-thirds of Huaweis revenue came from international
sales. Its initial focus was on developing countries. In 2004, 94 per cent of Huaweis interna-
tional sales were to developing and transition economies. Africa was its biggest international
market, accounting for one-third of international sales; sales to Nigeria were three times as
large as total sales to Europe. Sales in the USA were non-existent. It is still the case that sales
to developing and transition economies are far greater than those in high-income countries,
but the latter have risen substantially, and now stand at around one-fifth of total overseas
revenue.
Huawei has made significant inroads into markets in high-income countries, especially in
Europe. In 2004, Huawei made a significant breakthrough, by winning a contract with Telfort
(now merged with KPN), the Dutch mobile phone company. It displaced Ericsson, which had
supplied Telfort for almost 10 years, installing most of its 2G network. It supplied Telfort
with over US$500 million worth of equipment. In 2005, Huawei displaced Marconi as one of
the suppliers for BTs massive twenty-first century network, and in the same year, Huawei
was approved as a long-term supplier for Vodafone, the worlds biggest mobile phone com-
pany. To qualify as a supplier to BT and Vodafone, Huawei needed to submit to the deepest
scrutiny of its products and processes and all aspects of its performance, including not just
technical issues but also its compliance with internationally accepted practices in terms of
corporate social responsibility.
Among large Chinese firms, Huawei has been uniquely successful in building a globally
competitive business system. It is alone in having penetrated the business system of the high-
income countries and met the most severe standards of global competition among customers.
It stands alone in being inside us. It is alone among large Chinese firms in terms of the

2014 John Wiley & Sons Ltd

762 P. NOLAN

continuity of its top management, focus on core business, high share of revenue allocated to
R&D, large share of its employees engaged in R&D, large share of foreign workers among its
employees, open and transparent system of organisation and remuneration of its workforce,
intellectual and physical attractiveness of the work environment and internationalisation of its
culture, including the use of English throughout the upper reaches of the company.
Is Huawei the exception that proves the rule, or the shape of things to come? Will there
be a large cohort of Chinese firms in the years ahead that will reproduce Huaweis competi-
tive success and establish themselves inside us?

6. CHINAS INDUSTRIAL POLICY DEBATE

Few people in high-income countries can name any Chinese company. Chinese firms have
a small, and some cases virtually non-existent, share of international markets in both high and
mid-technology products. These include IT hardware and software, commercial aircraft and
components, automobiles, trucks and components, pharmaceuticals, chemicals and plastics,
medical equipment, photographic equipment, lifts and escalators, heating, ventilation and
cooling systems, mining and earth-moving equipment, electronic and electrical equipment,
and oil equipment and services. The same is true for international markets for branded con-
sumer goods, including beverages, confectionary, tobacco, household goods, personal care
products and luxury consumer goods. It is true also for key service industries, including inter-
national commercial banking, investment banking, insurance, retail, healthcare, film and TV,
media and marketing, and legal services.
The core of Chinas industrial policy has been state ownership in strategic industries, with
state control of key personnel appointments and key operational decisions. In the view of
Chen (2012), an ownership chasm has grown-up between the SOEs and the non-state firms.5
Public disquiet has developed about the ownership chasm in which SOEs operate inside the
system of political networks and the non-state enterprises operate outside the system.
Although Chinas SOEs have failed to develop into globally competitive firms, they take the
lions share of loans from the state-owned banking system: they produce around one-third of
national output, but account for around 70 per cent of bank loans. This deprives the non-state
sector of funding they require to grow and compete. Instead, they are forced to rely on expen-
sive informal credit markets. The SOEs also benefit from being inside the glass door in
obtaining government procurement contracts. They are treated as near relatives of the gov-
ernment at every level, while the non-state firms are treated as strangers in gaining access to
public projects. The ownership label has become a critical issue for Chinese firms: There is
no other country in which the issue of the ownership system occupies such a prominent
position, with the market economy sliced up into separate components (Chen, 2012).
The success of Huawei in the worlds most competitive high-technology markets sheds
light on the next phase of reform of Chinas giant state-owned firms. Chen Qingtai has sug-
gested that reform of state-owned enterprises should switch towards the reform of state-owned
assets (Chen, 2012). He has argued that there should be an orderly retreat of state-owned
capital from ordinary production sectors and a switch towards publicly-owned funds which
aimed to maximise returns from their investments, thereby putting pressure on SOEs to

5
Chen Qingtai is former head of Number 2 Auto Works and former Deputy Head of the Development
Research Centre of the State Council.

2014 John Wiley & Sons Ltd

 GLOBALISATION AND INDUSTRIAL POLICY IN CHINA 763

improve their management and corporate governance. The commanding heights of the
SOE system should be transformed into genuine corporate entities with diversified owner-
ship rights. This would allow state-owned assets to return to their basic characteristic of
all-people ownership and facilitate a true separation of ownership rights and management
rights. In Chen Qingtais view, the state should consider setting aside 30 to 50 per cent of
the state-owned capital in ordinary productions sectors to switch the capital into funds for
social livelihood guarantees and public welfare, for medical insurance, housing guarantees,
the elimination of poverty, education, scientific and technical innovation, in order to supple-
ment the inadequate investment in these areas. In his report to the 18th Party, Congress Pres-
ident Hu Jintao said: By 2020 China should generally achieve equal access to basic public
services. . .Social security should cover all the people. Everyone should have access to basic
medical and public health services.

7. CONCLUSION
After a quarter of a century of industrial policy, Chinas objective of nurturing a group of
globally competitive state-owned enterprises appears to have succeeded beyond most expecta-
tions. The countrys SOEs have grown rapidly and earn large profits. In 2011, the net income
of Chinas four largest banks totalled $99.1 billion, compared with a total of $61.2 billion for
the four largest global banks. The net income of China Mobile reached $19.6 billion, com-
pared with $12.8 billion for Vodafone and $7.0 billion for Telefonica, the worlds largest glo-
bal telecoms services companies by net revenue. The net income of PetroChina reached
$21.1 billion, compared with $29.8 billion for Royal Dutch Shell and $24.8 billion for BP.
China seems to have demonstrated that in the era of globalisation, an industrial policy based
on state ownership of key strategic industries can succeed.
However, Chinas SOEs are far from catching up with the worlds leading firms. The vast
majority of the sales revenue of Chinas SOEs comes from the domestic market where they
operate in sectors protected from direct competition with the worlds leading firms. Chinese
firms have a negligible share of the worlds most competitive markets in high-income coun-
tries. The main success of Chinas SOEs in export markets is building infrastructure in devel-
oping countries, which has made a major contribution to economic development in those
countries. Chinas exports of manufactured goods to developing countries mainly come from
firms in the non-state sector. They mostly export low technology, low value-added and non-
branded goods or cheap counterfeit global brands, including footwear, clothing, household
goods and consumer electronics. Global high technology and branded goods producers have
rapidly expanded their investment and market share within China in many sectors that are rel-
atively open to international competition. Large parts of the domestic market are dominated
by global oligopolies. Chinas exports of high-technology goods are mostly produced by the
subsidiaries of global firms within China.
The approach of relying on majority state ownership of firms in the commanding heights
of the economy has produced the appearance of industrial policy success, but at the cost of
constraining the development of the indigenous non-state sector and without producing glob-
ally competitive firms. Protection through state ownership in a massive, fast-growing economy
has permitted Chinas SOEs to earn large profits and achieve high market capitalisations, but
this is not the same thing as building globally competitive firms. It is remarkable that the
worlds second largest economy and its largest exporter have so few globally competitive
firms. The fact that Chinas industrial policy has been unsuccessful after a quarter of a

2014 John Wiley & Sons Ltd

764 P. NOLAN

century of intense effort demonstrates how difficult it is to construct an industrial policy in

the era of capitalist globalisation, which has produced intense global industrial concentration
across large parts of the global value chain.
The detailed content of the next stage of reform of Chinas large state-owned enterprises is
obscure. The costs associated with following either the Soviet path of mass privatisation (No-
lan, 1995; Goldman, 2003) or closing the door to multinational firms would be high. Neither
of these reform paths would help Chinas large firms to catch-up with the global leaders.
However, the determination of the Chinese government to build a group of globally competi-
tive large, indigenous firms at the forefront of global innovation remains undimmed.

REFERENCES

Bain (2010), Chinas Luxury Market (New York: Bain and Co).
Chen, Q. (2012), Turning From State-owned Enterprise Reform Towards State-owned Assets Reform,
Caijing, May, 322.
Department for Business Enterprise, Regulatory Reform (BERR) (2008), The 2008 R&D Scoreboard
(London: BERR).
Gao, Y. (2011), China as the Workshop of the World (London: Routledge).
Goldman, M. (2003), The Piratisation of Russia (London: Routledge).
Hong Kong Research (2012), Sino-Japanese Tensions and Why the Economics Matter to Hong Kong,
5 October (Hong Kong: Hong Kong Trade Development Council).
Lyons, G. (2007), State Capitalism: The Rise of Sovereign Wealth Funds (London: Standard Chartered).
Nolan, P. (1995), Chinas Rise, Russias Fall (Houndmills: Macmillan).
Nolan, P. (2001a), China and the Global Business Revolution (Basingstoke: Palgrave).
Nolan, P. (2001b), China and the Global Economy (Basingstoke: Palgrave).
Nolan, P. (2012), Is China Buying the World? (Cambridge: Polity Press).
Nolan, P., J. Zhang and C. Liu (2007), The Global Business Revolution and the Cascade Effect
(Basingstoke: Palgrave).
Nolan, P., J. Zhang and C. Liu (2008), The Global Business Revolution and the Cascade Effect, and the
Challenge for Firms From Developing Countries, Cambridge Journal of Economics, 32, 1, 2948.
OECD (2012), China in Focus: Lessons and Challenges (Paris: OECD).
State Statistical Bureau (SSB) (2010), Chinese Statistical Yearbook (Beijing: Chinese Statistical
Publishing House).
State Statistical Bureau (SSB) (2011), Chinese Industry Economy Statistical Yearbook (Beijing: Chinese
Statistical Publishing House).
State Statistical Bureau (SSB) (2012), Chinese Statistical Yearbook (Beijing: Chinese Statistical
Publishing House).
Steinfeld, E. (2010), Playing Our Game (Oxford: Oxford University Press).
UNCTAD (2011), World Investment Report (Geneva: UNCTAD).
UNCTAD (2012), World Investment Report (Geneva: UNCTAD).
World Bank (1995), Bureaucrats in Business: The Economics and Politics of Government Ownership
(Washington, DC: World Bank).

2014 John Wiley & Sons Ltd