Denis by 88B6oLN3


									Strategic Perspectives on
   the Globalization of

       Dr. Denis Fred Simon
      Levin Graduate Institute
    State University of New York

            Nanjing, China
            May 28, 2005
Microcosm: The Quantum Revolution in
   Economics & Technology (Gilder)

  “….in the past, wealth and power came mainly to
  the possessor of material things or to the ruler
  of military forces capable of conquering the
  physical means of production—land, labor and
  capital. Today, the ascendant nations & corporations
  are masters not of land and material resources, but
  of ideas and technologies.”
    International Technology Issues:
      New Perspectives and Issues
   More general awareness of role of technology in
    economic progress and competitiveness: NII in the US
   Revolution in communications and transportation
   Liberalization of trading policies across the globe via
    WTO…more foreign investment vs. trade
   Closer integration of product and capital markets
   Expansion of MNCs …including China and India
   Emergence of four dragons in Asia…Taiwan, Korea,
    Singapore and HK….+ fifth dragon…China
   Intensification of international competition…search for
    new markets, talent, and new ways to win: markets in
    China, engineers in India, under-utilized know-how in
    Russia, etc.
    Globalization of Technology
   New centers of technological capability outside US,
    Japan and Western Europe
   Process of technological exploration and exploitation has
    become trans-border/transnational
   More rapid movement of technology overseas at earlier
    point in life cycles
   Shift away from unilateral (one-way flow) of technology
    to bilateral (two-way) flows
   Ugrading of technology advance to a national priority,
    esp. as new high tech industries become more critical
   More extensive “people” movement, esp. in S&T fields:
    formation of a truly “global talent pool”
     Role of Technology in World of
   Shift from variable-cost to fixed cost competition:
    process and product + service differentiation count in the
    end as much as (if not more than) costs
   New success element: harnessing and managing
    transborder innovation—new core competency
   Competitive firms are those that perform well across
    three dimensions
      Ability to link and leverage knowledge, information,
       and people expertise across borders
      Ability to shift to integrated systems of operation and is critical as the “glue”
      Ability to be a technology leader: establishing the
       rules and standards of the game
Technology & the Borderless World

 “We are finally living in a world where money, securities,
 services, options, futures, information, and patents,
 software, and hardware, companies and know-how,
 assets and memberships, paintings and brands are
 all traded without national sentiments across traditional
                             Kenichi Ohmae
                             former head-McKinsey Japan
    Trends of Global Movement of
   More rapid movement of technology overseas as a
    result of shorter product life cycles and the demands of
    international competition: win through technology
   Increased focus on foreign markets for securing profits
   More small and medium businesses involved in
    international business, esp. those with high-tech focus
   Growing flow of technology into USA
   Greater emphasis on forging strategic alliances
   More government involvement as buyer, supplier, and
   Outsourcing..the recent trend..plugging into foreign high
    tech assets—cost, talent, market driven
         Factors Associated with Shorter
               Product Life Cycle
   Acceleration of pace of tech development
       Less time between recognition of feasibility and commercialization
       Disengage production from PLC
   Convergence of international markets and cost factors
       Standardization of capital costs
       Shift from labor-savings to materials-reducing technology
   Changes in international communications and transportation
       FDI decision no longer just a response to threat to export markets
   Specific product, technology and IPR strategies
       Integrated approach to global licensing
       More environmental scanning: strategic location identification
  Shortened Product Life Cycles
General Motors New Buick     60 to 30 mnths
HP            Printer        52 to 9-12 mnths
IBM           PC Computer    48 to 4-6 mnths
Honeywell     Thermostat     48 to 12 mnths
Ingersoll     Air Grinder    42 to 12 mnths
Warner        Clutch Brake   36 to 10 mnths
Sony          CD Player      24 to 3-4 mnths
    R&D Units Follow Japanese Firms to
          East Asia Economies
   Japanese companies shifting FDI away from reliance on
    labor-using factories, warehouses & sales outlets
   Increased emphasis on local R, D&E facilities to
    respond more quickly to market shifts: local/overseas
   Thailand, Philippines, Vietnam and Indonesia have
    become sites for more traditional Japanese FDI
   Matsushita Institute of Technology in Taiwan
      Design work for new product development for Asian
   Matsushita TV and a/c R&D units in Malaysia
    coordinating and integrated…but now moving to China
   China is now the new playing ground for Japanese
    electronics industry, including establishing R, D&E
Emergence of China: Next Techno-
   China has emerged as a major player in global technology
    affairs much more quickly than most would have predicted
   Chinese economy has been beneficiary of globalization:
    greater and easier access to newer technologies than any
    developing nation in last half of 20th century
   China has huge domestic market it can leverage for
    acquiring technology: not 1.3 billion , 250-300 m buyers
   Strong commitment to national technology base: govt
    investment in national airplane, semiconductor industry,
    nanotechnology and biotechnology
   Major site for MNC R&D investment: China no longer
    simply “factory to the world”
   Setting new global technical standards: sizeleverage
    International R&D Patterns and
       Agglomeration Dynamics
   Agglomeration dynamics led to greater concentration of
    R&D in postwar period…until late 1990s
   Internationalization has led to a greater dispersion of
    R&D activities, and steadily, albeit gradually, a shift in
    the sources of technological innovation
   Globalization and regionalization have led to a
    redefinition and reformation of existing technological
      GE R&DNIsakayuna(NY) + Shanghai
       +Bangalore+Munich+St. Petersburg
   Agglomeration patterns have begin to shift in general but
    are stronger in some industries (autos/electronics) than
    others (food stuffs)
   Technology attracts technology
     Impediments to Globalization
   Regionalization may be a possible impediment to
    globalization, e.g. European Union or even APEC in Asia
   Techno-nationalism is growing in some cases
   Shift away from comparative advantage (Adam Smith) to
    creating competitive advantage at national level: targeting
   Increased pro-active role of government in regulatory
    areas, e.g. environment, standards, etc.
   Corporate conservatism—both in terms of internal culture
    and organizational structure….the technology is there..but
    not necessarily the will
   Home country socio-political issues: transfer of jobs
       Boeing engineers and tech transfer to China: ITA case
        brought to Commerce Dept
       More China bashing on the way—IPR issues
The IPR Issue: Current Dilemmas
   Most important assets possessed by successful
    companies are intangible, primarily represented by
    intellectual property: codified as well as trade secrets or
    proprietary know-how
   Proprietary know-how produces economic advantage by
    creating barriers to competition from others
   Today, IPR control lies at heart of competitive
    marketplace: drives the investment in R&D, e.g. pharma,
    and creates an incentives for release of info re: royalties
   Software (rather than hardware) is the battleground, with
    piracy problems estimated to be in tens of US$ billions
   Bilateral/multilateral agreements only solve ½ problem
   Must create compliance incentives or rewards: share in
    the benefits through collaborative exploitation
              Where are we headed?
   Information technology revolution has led to more emphasis on
    coordination vs. control across corporate world: global playing field
   Companies are less homogenous as the traditional wire diagram has
    given way to more varied, complex, and multi-faceted types of
    cooperation, alliances, joint ventures, etc.
   Outsourcing revolution is just the beginning—driven not simply by cost
    differentials but by productivity increases at home
   Next battleground is over global standards: RFID, wireless, cellular tech
   Impact of 9/11 and H1B visa situation has sparked reverse brain
    drain..fewer foreign scientists and engineers staying in US..
   US no longer lone ranger as source of technological
    leveling is occurring
   There is a new game…a truly global game….and it is here to stay..we
    must adapt, adjust, and reorient our thinking…invest in education …key
    is already access to high end talent

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