"Chinese government has set aside more than $500 billion in various funds to support indigenous R&D in technologies and products for which China currently depends on foreign companies.
In some cases China moves beyond extraction to outright theft. In 2010 American Superconductor (AMSC), a leading provider of the software used to control wind turbines, discovered that its Chinese partner Sinovel paid Dejan Karabasevic, a Serbian engineer employed at AMSC’s Austrian development facility, $1.7 million for AMSC’s full source code. Although the U.S. government filed and in 2018 won a criminal case against Sinovel, two Chinese Sinovel executives, and Karabasevic (who served a year in prison), AMSC has estimated that 20% of the wind turbines deployed in China in 2020 illegally continued to use its software.
China’s strategy began in 2005, with the launch of its Medium- and Long-Term Plan for Science and Technology Development (2006–2020), or MLP, in which the government called for increasing domestic content in 11 sectors to 30% by 2020 through import substitution. Ten years later, with the launch of the Made in China 2025 (MIC 2025) plan, it increased those goals, calling for domestic content of 40% by 2020 and 70% by 2025
in 10 sectors: information technology, robotics and AI, aerospace, shipping, railways, energy, materials, medical equipment and medicines, agriculture, and power equipment. MIC 2025 also set market-share goals for domestic corporations. For example, the plan envisioned that Chinese makers of electric vehicles and energy equipment would capture 80% and 90% of the domestic market, respectively. In the fall of 2020 President Xi announced his China Standards 2035 plan, which would establish China
as the global standard setter for technologies including 5G, the internet of things, and artificial intelligence. Thus, while significant domestic-content targets push foreign companies to increase production in China, high market-share targets ensure that indigenous firms will dominate the Chinese market." [1]
It is time for Lithuanian biotechnology and laser manufacturers to learn how to weave sandals from tree bark. It is a purely Lithuanian business, it will be able to compete with the state-supported Chinese business.
1. The Strategic Challenges of Decoupling. Navigating your company’s future in China
J. Stewart Black
Professor, INSEAD
Allen J. Morrison
Professor, Thunderbird School
of Global Management,
Harvard Business Review, May–June 2021, p. 49
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