An Assessment of the Business Environment for High-Tech Industrial Development in Shanghai

Abstract

The author presents the analysis of a survey of 500 high-tech enterprises in Shanghai which was designed to examine the local social, political, and economic environment in which high-tech enterprises operate and compete. Information sought in this survey comes in two kinds: the characteristics of high-tech enterprises; and their assessments of specified elements constituting their business environment. Survey findings suggested that state-owned or quasi-state-owned enterprises are still the leading players although local private enterprises and transnational corporations are becoming indispensable actors in high-tech industrial development in Shanghai. Among these enterprises, those which are locally based are mainly small and medium-sized enterprises and are in the start-up stage of business; they are domestically oriented and are not strong enough to exploit foreign markets. Foreign-based enterprises in Shanghai are, however, mainly subsidiaries, branch plants, or assembly lines, rather than regional headquarters, suggesting that Shanghai occupies a relatively low position in the international division of labor. The second part of the survey suggests that, in boosting the development of high-tech businesses, Shanghai achieves tangible objectives and improves the physical environment efficiently. Nevertheless, it is still quite weak in some soft dimensions, such as dynamic entrepreneurial culture, adequate business-support services, sophisticated educational and professional systems, comprehensive legal framework, etc. However, these dimensions are key components of innovative milieu in which technological innovation and entrepreneurial activities are facilitated and nurtured.