The Technical Path and Investing Form of International Industrial Shift

The analysis about the path law of international industrial shift shows that the service sector is increasingly becoming the leading industry of international industrial shift. However, the leading mode of international industrial shift is service outsourcing including research and development. Such a path law of international industrial shift enlightens us that from now on, we should guide more foreign investments to service industry when carrying on international industrial shift and utilizing foreign capitals, and the main form of utilizing foreign capitals will be service outsourcing.

1. Introduction

International industrial shift generally includes three aspects: choosing industry, technical path and investing form. The theoretical circles at home and abroad are researching on international industrial shift from these three aspects.

(1) The industrial evolution rule of international industrial shift: transferring from the primary industrial fields to service industry.

The international industrial shift actually started in the late 19th century, the international industrial shift in this period was mainly between primary commodities and manufactured goods. A research of Lv Zheng (2006) showed that the large-scaled development of international industrial shift was after the Second World War. During this period, the international industrial shift was developing in the field of primary products to industrial finished products. The international industrial shift was not only escalating in the structure, but also the cycle of structural escalation was shortening. Since the 1990s, along with the changes of international economic environment, there have been some new trends of international industrial shift coming out; the investment of service industry gradually becomes the new hotspot. During 1990 to 2002, the international direct investment inflow stock of the worldwide manufacturing increased by 2.03 times, while the inflow stock of the worldwide service industry increased by 3.60 times. These changes of inflow structure show that service industry has become the main field of international industrial shift.

(2) The technical path of international industrial shift: transferring from monopolizing technology to technical research and development.

The research of R.E.Caves and H.G.Jollnson shows that, in the 1960s, the technology of the international industrial shift was monopoly characteristics both in the home country and the host country. This monopoly technology generally had two resources: one was the monopoly advantage that the enterprises owing the core assets when implementing international industrial shift; the other was the possession and use of monopoly knowledge capital. In the 1970s, the technical status of international industrial shift changed, the transferring technologies were those which had already matured or standardized in the home country. The products life cycle theory by R.Vernon was the representing works of researching international industrial shift in this period. Although the technology of international industrial shift in 1970s was standardized technology, it still kept a certain advantage no matter in the home country or in the host country. But by the 1980s, the technical characteristics of international industrial shift promoted by Japanese multinational corporations completely lost its monopoly even the relatively advantages, the transferring technologies were the marginal technologies which were in a disadvantageous position (about to be eliminated). The marginal industry expansion theory by K.Kojima had a very good explanation to this phenomenon.

The above technologies of international industry shift, no matter it is monopoly technology, standardization technology or marginal technology, have one common point --- multinational companies research in the home countries, and then engage in technical investments externally. However, since the 1990s, along with the quick development of globalization and increasingly fierce international competition, the technical path of international industrial shift has undergone a significant change, so that the original organization form of researching and developing in the home country has changed to researching and developing in the host country. The international products life cycle theory by Robert D.Pearce, international production theory by J H.Dunning, theory of technological development and growth by Kuemmerle, W, theory of decentralization and centralization of research and development by Robert d.Pearce, Cheng, J and Bolon, D, Ove Granstrand, etc., and the ancillary assets theory by Manuel G., Serapio Jr., Donald H.Dalton, they are all the theories summary of researching deeply this phenomenon, which also explains that the research and development investment in 1990s has become the mainstream of international industrial shift.

2. The international shift of service industry and the construction of services outsourcing bases: acceptability and long-term growth

Through analyzing the path law of international industrial shift, we can see that the service industry is increasingly becoming the leading industry of international industrial shift, and service outsourcing including research and development is acceptable with international industrial shift. Such a path law of international industrial shift enlightens us that from now on, we should guide more foreign investments to service industry when carrying on international industrial shift and utilizing foreign capital, and the main form of utilizing foreign capital will be service outsourcing.

India and Ireland are the most developed countries of undertaking services outsourcing in the world, the two countries occupied almost 80% of global service outsourcing share. The successful experience of developing outsourcing from them is to build the intensive services outsourcing base. By integrating human, material, financial and other resources, full playing to the regional advantages and resulting force, the overall competitiveness of outsourcing industry will be enhanced and gradually achieve the purpose to form brands rapidly. Therefore, in order to ensure that China's services outsourcing can develop stably in a long term, we should use the experience from India and Ireland for reference. The effective path choice of undertaking outsourcing is to center on some conditional cities, effectively gather regional advantage, and form regional characteristics.

Services outsourcing, especially the construction of services outsourcing bases, started late in China, the foundation of development is still comparatively weak, so it needs the government to plan and support on the policy. Along with the National Ministry of Information Industry and the National Ministry of Science and Technology, the National Ministry of Commerce has begun to deliberate in the first half of 2006 about implement "Qianbaishi Project" of services outsourcing which is the important act of the recognition and support to the construction of services outsourcing bases. The goal of "Qianbaishi Project" is during the period of "the 11th Five-year Plan", we will build 10 base cities of services outsourcing with certain international compositeness in China. Additionally, we should promote 100 world-renowned multinational companies to transfer their services outsourcing businesses to China, cultivate 1000 excellent services outsourcing enterprises with international qualifications and developing potentials, and undertake the international services outsourcing businesses in all fields.

According to the international experience of undertaking services outsourcing, there are three types of constructing services outsourcing base: one is the multinational corporations build the bases by themselves, undertake the services outsourcing businesses from themselves and the world; second is the host countries build new bases to undertake international services outsourcing services; third is the branch offices set by other countries' services outsourcing companies used for subcontracting international services outsourcing businesses. According to the resource characteristics of wide market and accumulation of human and capital resources, the construction of services outsourcing base in China should follow the complex road, which is every base allows three bases existing with different types to achieve scale effect.

(3) Cultivating composite services outsourcing talents, reserving human resources for undertaking global services outsourcing

The reason why services outsourcing business has the problem of "limited to low-end" and "single structure" is that the services outsourcing talents cultivated when developing IT outsourcing are only suitable for "low-end software blue-collar work", it means those talents can only do some non-core software businesses. Therefore, we must learn from the lessons of cultivating talents on information technology services outsourcing, that is to say that we should focus on cultivating those complex services outsourcing talents who can undertake the businesses of processing and develop independently software, especially the embedded software, they can both engage in IT services outsourcing and undertake commerce outsourcing.