An Investigation of Chinese Textile Firms’ R&D Performance

Abstract

The purpose of this study was to enhance the understanding of Chinese textile manufacturers' research and development (R&D) performance. Specifically, the study empirically examined (a) current trends of R&D activities in the Chinese textile industry; (b) R&D intensity among Chinese textile firms and determinants of its variation; and (c) R&D effectiveness among Chinese textile firms and factors impacting it. The research results are based on survey data from 768 textile manufacturers located in a Southeastern County with a mature textile and apparel cluster. Logistic regression was employed for data analyses. The results showed that R&D investment levels among Chinese textile firms are relatively low in comparison with advanced textile industries in developed countries. Chinese textile firms with international operations had a higher R&D intensity, or investment level, than those without international operations. Foreign ownership and financial resources were not significant predictors of the firm's R&D intensity. Chinese textile firms that relied on acquiring new machinery/technology and were involved in internal R&D activities were more likely to have higher R&D effectiveness, which translated into positive profit margin. The R&D intensity did not contribute significantly to R&D effectiveness. To offset increasing production cost and sustain its diminishing low-cost comparative advantage, the Chinese textile industry's next step is to focus on R&D. The study offers strategic directions to the industry and policy makers that might be helpful to keep the industry competitive in the global marketplace.