Differences between learning processes in small tigers and large dragons: Learning processes of two color TV (CTV) firms within China

Abstract

The main purpose of this paper is to describe the firm-level learning processes by indigenous firms in China, identify the differences between learning processes in small tigers and large dragons, such as China. This paper first sketches the history of the China’s color TV (CTV) industry in which learning processes take place to put the companies case studies into context. Then, this paper examines closely the actual experience of two major Chinese firms in their practice of technological learning. Finally, this paper finds that the most significant difference between learning processes in Chinese firms and these four other tigers’ firms is that, firms from four other tigers usually rely almost exclusively on export markets, but Chinese firms are mostly local market-focused. A novel contribution of this paper is its analysis of the issue: the two Chinese firms have followed not an export-growth path, but an local market-focused path, which proved to be much less successful in countries, such as India, Latin America, Africa and former Soviet Union. The success of this process in China hinges on the five critical factors: (1) a number of multinational firms are increasing their presence in China; (2) there is vibrant competition among domestic firms; (3) the huge domestic market is a key incentive for local firms to invest in technological learning; (4) Chinese central government takes a phased approach to liberalization of the domestic market; (5) there have a number of risk taking entrepreneurs with strategic version, who make investment decisions on learning. These factors should not be easily available to other developing countries. In this regard, China’s experience has limited application to other developing countries.