Purpose – Nowadays, China’s economy is climbing up the value curve, transitioning from the low-cost manufacturing of basic products to the assembly of high-tech products and more recently to innovation-led growth. This article gives an overview of this dynamic. The authors first give a succinct historical perspective, then describe the present situation; lastly they look at issues for the near future. The authors contend that Western firms cannot afford to be absent from the paradigm shift described in the paper. Foreign R&D in China no longer has emerging status.
Design/methodology/approach – The article builds on a review of the literature, statistical data and field experience in different Chinese technological hot spots (including Shanghai Zhangjiang, Beijing Zhongguancun, and Suzhou high-tech parks).
Findings – The article highlights five areas where technical change has taken place in China. The assembled facts depict the constitution of a credible Chinese system of innovation. Examples of recent accomplishments in different industries argue for the sustainability of these advances.
Research limitations/implications – This paper can be considered as an essay reflecting the authors’ understanding of the Chinese situation; as such, it may be subjectively biased.
Practical implications – The paper provides arguments for Western managers to convince decision makers of China’s new role on the innovation and R&D map; Western managers should definitely be part of this move.
Originality/value – The paper highlights a major change: China is still a low-tech country; but it has developed world-class islands of knowledge for innovation and technology creation.