An Empirical Analysis of the Institutional System’s Effects on the Development of China’s Personal Computer Industry—From Inertia to Innovation

Shanyu Lei, Masanobu Kita, Chihiro Watanabe and Yuji Tou
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Shanyu Lei: Tokyo Institute of Technology
Masanobu Kita: Tokyo Institute of Technology
Chihiro Watanabe: Tokyo Institute of Technology
Yuji Tou: Tokyo Institute of Technology

Chapter 2 in Technological Innovation Across Nations, 2009, pp 13-39 from Springer

Abstract: Abstract In line with the global advancement of information technology (IT), China’s personal computer (PC) industry has undergone a dramatic development in recent years. Worldwide, China ranked fourth in 2002 in total number of PCs installed, following the USA, Japan, and Germany. This marks significant progress, considering that China only ranked 16th in 1993. This leap can be attributed to China’s annual growth rate; at 42.9%, China is the frontrunner in the world. The quality of China’s PCs has also improved considerably. As a result, total sales by indigenous PC manufacturers caught up with those by international PC makers in 1997. Furthermore, Lenovo, China’s largest PC manufacturer, purchased IBM’s PC division in 2004, increasing the company’s world market share from only 2% (rank 9 in the world) to 7.6% (rank 3). The surge in China’s PC production suggests the following hypothetical reasons for the PC industry’s evolution from initial inertia along a continuously rising trajectory to its current state of success: (i) effective exploitation of technology spillover from imported PC components; (ii) the acceleration of market learning effects; and (iii) a shift toward high functionality development, enabling Chinese PC makers to catch up with international counterparts in the highly competitive market environment of the late 1990s. This chapter attempts to verify the aforementioned hypotheses through an empirical analysis of the factors that have shaped the development of China’s PC industry.

Keywords: Price Competition; Network Externality; Disturbance Term; Initial Inertia; Dynamic Learning (search for similar items in EconPapers)
Date: 2009
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DOI: 10.1007/978-3-642-00158-1_2

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