Research on the Construction of Wuhan Optoelectronics Information Industry Clusters
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1 Research on the Construction of Wuhan Optoelectronics Information Industry Clusters YANG Li Mao, TANG Xuan School of Business, Hubei University, P.R.China, Abstract: Industrial Clusters is now one of the important features of industry organization development and have a clear competitive advantage. Based on the in-depth research of Wuhan optoelectronics information industry and the analysis of influencing factors, this paper gives the development model of the construction of Wuhan optoelectronics information industry and path selection according to Michael Porter s industrial cluster theory to enhance Wuhan optoelectronics information industry clusters effect and global competitiveness. Key words: Industry Clusters, Optoelectronics, Wuhan, Construction, Competitiveness, Cluster Effect,OVC 1 Introduction The 21st century is an era of knowledge economy, and information industry is a pillar industry in the era of knowledge economy. The development of the information industry and photonics technology development are closely linked. With the rapid development of information technology and large-capacity optical fiber communication network construction, optoelectronics industry may replace traditional electronics industries, and become the largest industries in the 21st century, and become an important measure symbol of a country's economic development and overall national strength. Industry Cluster is one of the important features of industry organization development. Although it is still currently no accepted definition, but Michael Porter (1998) proposed the concept of industrial clusters have the broadest applications and the greatest impact. He believes that industry clusters are the geographically close and the inter-related companies and associated institutions. They are in or associated with a specific industry area and are linked with each other because of the common and complementary nature. The earliest Industry Cluster theory of the earliest can be traced back to Adam Smith s division of labor theory, Alfred Marshall (1890) theory of the external economies of scale theory. At present, the domestic and foreign scholars studies on the theme of industrial clusters mainly focus on the formation reasons of industrial clusters, the conditions of formation of industrial clusters, development strategies of enterprises which are in the industrial clusters, the evolution of industrial clusters, the competitiveness of the industrial cluster, the industrial cluster policy and industrial clusters research levels and methods, and so on. With the rapid development of economic globalization, impact of industrial clusters caused by information technology and enterprise information, the relationship between globalization and industrial clusters and industry clusters and so on are needed for in-depth research. 2 Development Status of Wuhan Optoelectronics Information Industry 2.1 Domestic and foreign optoelectronics industry development statuses The development of the global optoelectronics industry began in the 1970 s, a long period of high-speed development in the 1990 s. According to PIDA (Photonics Industry & Technology Development Association, Taiwan) statistics, in 2004 the global optoelectronics industrial output value is 198 billion US dollars, in 2005 has exceeded 200 billion US dollars. Japan Optoelectronic Industry and Technology Promotion Association predicted that in 2010 the global photonics industry output will reach billion US dollars, and in 2015 will reach billion US dollars. Japan, the United States, Germany and France, and other countries and Taiwan photoelectron enterprises have occupied a leading position in the global market. 519
2 Over the past 10 years, China s optoelectronics industry has rapidly developed. According to COEMA (China Optics and Optoelectronics Manufactures Association) statistics, in 2006, the photonics industry output value over 110 billion Yuan, accounting for about 5% of the global market. It is estimated that in 2010, China will have more than 450 billion dollar value, accounting for about 10% world market share. China in the laser, optical fiber cable, optical device technology and industrial level has been at or near the international advanced level, Wuhan, Changchun, Xi'an has become a national photonics industry base. To promote development of key technology in areas of optoelectronic, China has set up 11 national photonics technology key laboratories, five key laboratories attached to the Ministry of Education, five state-level laser photonics research centers and four laser photonics national engineering technology center and trained a number of high-level photonics technology research and development backbone and formed a complete matching development system. 2.2 Wuhan Optoelectronics Information Industry development status The State Council approved the Wuhan East Lake High-Tech Development Zone as the first state-level high-tech industrial development zones in In July 2001, the State Development Planning Commission, Ministry of Science and Technology approved the establishment of the photoelectron Information Industry Base in East Lake high-tech zone- the Wuhan Optics Valley of China(OVC), it has already become Wuhan photonics industry cluster core. In November 2003, the Ministry of Science and Technology approved construction of Wuhan National Laboratory for Optoelectronics as one of the six national laboratories. After nearly seven years construction, Wuhan Optics Valley of China has made a major breakthrough in the optical transmission systems, optical fiber cable, optical devices, IP technology, and other fields and mastered a number of key international level core technology and submitted four approved international standards in photoelectron information the field, more than 400 national and industry standards. It has built the largest fiber-optic cable of nation, optoelectronics production base. Production scale of optical fiber and cable is No.2 in the world, 50% domestic market share, 12% international market share. The domestic market share of optoelectronic devices, laser products is 40%, and ranks among the world's leading photonics industry group and initially formed world-renowned optoelectronics industry cluster. Wuhan photoelectron information industry base made130 billion Yuan in 2007, accounting for about 8% of global market share. There are 22 global top 500 enterprises such as Foxconn invest in Optical Valley Technology Group or set up business agencies. 3 The influence factors of Wuhan Optoelectronics Information Industry development Wuhan photoelectron information industry base s establishment and development is under the vigorous support of China, Hubei Province, Wuhan municipal government. It is a typical government-led industrial cluster. Compared to the objectives of establishment of the world's advanced level optoelectronics industry, the following factors affect the building and development of Wuhan photonics industry cluster: 3.1 Acts leading role of Government is too big Industry Cluster is a product of the market economy, it should mainly rely on the market forces and market operation discipline to build. From the experience of countries in the world, there is not one successful high-tech zone s construction was led by the Government. As the Government objectives is not completely consistent with enterprises, the consequences which are borne by government and enterprises in economic activities are not the same, which determines that the behavior differences between the government and enterprises. 3.2 Industry Cluster effects not clear Now, Wuhan photoelectron information industry mainly focuses on optical communications, laser industry. Optical storage, optical display industry has just started and upstream and downstream 520
3 industries and supporting capacity is not so good, and industrial chain is imperfect. Advantages of the software industry have not been brought into full play. Investment and the market exploration are not enough. Integration of research and production is not close. 3.3 Insufficient support for small and middle enterprises The development of Wuhan photoelectron industry base mainly focuses on large enterprises and specific projects. It pays very little attention on small and medium enterprises and the region innovation capability. Large enterprises enter the market can rapidly increase market share in the short term, but from a long-term perspective, the real technological innovation vitality must rely on a large number of small and medium enterprises existence and development, which have no any exceptions to any high-tech enterprises. 3.4 Lack of proper mechanism industry cluster Cooperation mechanisms have not been set up among business, government and scientific research, intermediary inter-agency. Professional intermediary service institutions, such as venture capital companies, professional firms, headhunting companies, accounting firms, consultants, industry associations and other service organizations are imperfect, especially the lack of adequate venture capital firms. Besides the enterprises in Wuhan photonics industry cluster haven t made good use of knowledge, skills and talents from universities, research institutes, which has affected the real formation of the cluster and role play. 4 The path selection of Wuhan Optoelectronics Information Industry clusters construction Michael Porter considered that industry clusters are extremely important to enhance the competitiveness of enterprises. They can help the enterprise better access workers, public goods and relevant agencies services. They are also good for innovation and product export at the same time. Accelerate innovation to lay a solid foundation of enterprises future growth. Porter also studied role of government in the clusters, he believed that government should not tamper with the market, but should find the restricting factors of clusters development and start to improve. Based on Michael Porter's theory of industrial clusters, through in-depth investigation and study, the authors believe that in construction and development process of Wuhan photonics information industry cluster, it should establish government guidance, market-driven, technology supply and market demand, combination of industry-university-institute, interaction of science and the industrial chain, taking Wuhan National photoelectron information industry base as the core industrial clusters development model. The focuses are shown as follow: 4.1 Give full play to the functions of the government and create a favorable environment and conditions Wuhan photonics industry cluster construction In the two-way interactive development model, the government should guide the direction of development of industrial clusters, to achieve the integration of science and economy based on Wuhan photonics industry strategic planning by capital investment. It functions mainly reflect in the following aspects: first, providing a good infrastructure and creating a favorable investment environment for local entrepreneurs and foreign entrepreneurs, and providing facilitate procurement as much as possible for foreign enterprises. Second, creating reasonable system environment, establishing a dialogue mechanism and enhance the trust among enterprises, enriching local social capital, coordinating the joint action among the companies, and giving birth to healthy competition and cooperation pattern. Third, providing effective public services, establishing public training institutions, insisting public, integrated, open concept. Integrating science literature, data, test base, testing services, technology transfer, business incubators, and other scientific and technological resources, promoting scientific and technical information flow sequenced and professional. 521
4 4.2 Construction of the regional innovation system and vigorously promote enterprise innovation Adylot noted that regional innovation environment has a strong promoting effect to enterprises gathering in the region. Specific social cultural environment is good for the promotion of enterprise birth, growth and motivate regional economic growth. GREMI considered that cluster development relies more on improvement of the region innovation environment. Technological innovation is the basis and driving force of high-tech industries development, and also the source of flowing water of high-tech industries development. For building Wuhan photoelectron information industry cluster, first must construct Wuhan regional innovation system. A number of state-level and provincial-level key laboratories and research centers, engineering and technical centre have already been set up in Wuhan photoelectron information industry base. There are a group of national top creative talents, and FiberHome Technologies Group,Yangtze Optical Fibre and Cable Company Ltd. (YOFC) and other large enterprises have rich innovation resources. Therefore, it should make full use of intellectual resources in Wuhan, and strengthen innovative cooperation among colleges, institutions and enterprises, and actively explore the innovation model of combining of production, learning and research, and build knowledge innovation system which take universities and scientific research institutes as the mainstay and technological innovation system which take enterprises as the mainstay, and construct innovative dynamic union, and form a number of key technologies which have the independent intellectual property rights and photonics technology sustainable development achievements, and vigorously promote enterprise innovation. 4.3 Increase investment power, build wide range input and financing system and risk mechanism Photonics information industry is high-yield industries which use science research, development as the pioneer and is high input, high risk and high profit. Only relying on traditional means of financing is difficult to meet funds demand in the course of industrialization. The achievement in the process, which is the shortage of funds in commercial phase, which is one of the main reasons cause a low conversion rate of optoelectronic information technology results. Risk investment has become a powerful means of the promotion of innovation and scientific and technological achievements transition through innovation to the traditional means of financing. It is the incubator and catalyst of the high-tech industrialization. The experience of development of electronic information industry in foreign country shows that the function of risk investment is really important. Accelerating the development of Wuhan photoelectron industry must break "bottleneck" restrictions. It is necessary to increase the government's investment, but also to face market financing, and build a wide range of investment and risk mechanisms. Open multi-channel, multi-level, multi-form funding places of scientific and technological input, and actively implement the financial policies which are good for promoting photonics industrialization, and adopt various effective methods to attract funds from the public, and organize various forms of technology investment funds, and achieve effective docking between government inputs, credit investment, and the securities market, risk investment and overseas financing, other elements of production and every step of industrial development in order to provide effective financial support to basic research, technological innovation, industrial development, and other areas of Wuhan photoelectron information industry cluster. 4.4 Adhere to open-up and promote international development of Wuhan photoelectron information industry base Adhere to open-up, that means to actively implement the "bringing in and going out" strategy, and to expand information exchanges and cooperation with the world-renowned photoelectron enterprises, and to promote the development of Wuhan photonics industry. On the one hand, we should increase the intensity of investment to attract domestic and foreign enterprises to base invest in Wuhan photoelectron high-tech information industry enterprises, especially to attract more multinational companies. On the other hand, we must strengthen international cooperation with international photonics field. Adhering to the combination of strategic, forward-looking and the applicability to introduce the advanced nature, and the applicability and economics external technology selectively, focused, high started, and should digest, absorb and innovate during the introducing process. The enterprises in the industrial base should "go 522
5 out" to actively participate in international competition, and strive to improve photonics technology products international market competitiveness which has independent intellectual property rights, and enhance the products global market share. 4.5 Create Wuhan photonics industry strong brands, and enhance enterprises global competitiveness After years of construction and development, "Wuhan China Optical Valley " have set a good brand image at home and abroad, and building basically perfect international platform. Creating a strong brand of the clusters and enterprises brands is good for making full use of global resources and achieving leaping development of the industrial cluster. In the building of Wuhan photonics industry cluster, it should highlight its own characteristics and advantages and realize the full exchange between industry and academia by holding an annual meeting of international photoelectric expo, the East Lake Private Economic Forum, Optical Valley Forum, and other activities. Accelerate the steps to integration into the international research and production system and increase Wuhan photonics industry cluster global visibility by international financing, international human resources, international trade and production, research and development. At the same time, enterprises should implement the brand-name strategy. The core enterprises of Wuhan photonics industry cluster like FiberHome Technologies Group YOFC Huagong Tech Co., Ltd Chutian Laser Group and so on have reached a considerable scale, considerable technical strength R & D capabilities, but there are still relatively gap to the large international brands. By the means of powerful combination and complementary action, using innovative marketing and brand innovation to further enhance enterprises brand recognition and influence, and enhance their global competitiveness. 4.6 Fully exploit the global intellectual resources, and strengthen personnel The construction of Wuhan photonics industry cluster should change the geographical concepts of talents using, and explore new human resources in the global context and create a mechanism and the stage for the emergence of innovative talent, and create new situation in which people can bring all the talent into play and the talent of people can be made full use. First, strive to create a good business, work and living environment, and encourage and attract domestic and foreign photoelectron information technology professionals with technology, funds, and the project to participate in the construction and development of Wuhan photonics industry cluster. Second, strengthen high-level personnel training and introduction. Relying on key projects, and national key laboratories and engineering and technology center, accumulate a number of academicians and academic leaders in photonics information technology field, and step up to cultivate the talented people. Third, create a good talent growth environment, and establish the management mechanism which can help people s promotion and orderly flow, encourage professionals innovation, entrepreneurial enthusiasm. Fourth, improve the professionals incentive mechanism, and respect and protect the legitimate rights and interests of professionals, and give full play to market mechanism basic functions in the allocation of human resources, and continue to be optimized and strengthen the OVC personnel. 5 Conclusions Wuhan photoelectron industry cluster based on Wuhan national optoelectronic information industry has begun to take shape after nearly seven years of construction. OVC has already has high visibility and influence in the industry. However, in the course of rapid development of China-Optical Valley based on government have emerged a lot of problems. Industry clusters mechanism is imperfect, resulting in Wuhan photonics industry cluster effects are not obvious and the competitiveness in the global optoelectronics information industry market is not so strong. In order to give full play to Wuhan photoelectron information industry base's resource advantage and promote the construction and development of Wuhan 1+8 Megalopolis two-oriented society, it should establish government guiding, market-driven, two-way interaction between technology supply and market demand, combination of industry-university-institute, industries cluster development mode of linkage action 523
6 between technology chain and industrial chain, establish regional innovation system, and building strong cluster brands and enterprise brands, effectively promote the construction and development of Wuhan photonics information industry cluster, and enhance their global competitiveness. References [1]Porter,M.E.Clusters and the New Economics of Competition. Harvard Business,1998,76(6): [2]Porter, M.E.Location, competition and economic development: Local clusters in a global economy. Economic Development Quarterly,2000,14(1):15-34 [3]WANG Kun,WANG Wen li.clusters theory and the research on the industry clusters in our country. Journal of Inner Mongolia University (Humanities and Social Sciences), 2007, 39(1):21-26(in Chinese) [4]Hassink R,Wood M..Geographic clustering in the German opto-electronics industry: its impact on R&D collaboration and innovation.enterpreneurship & Regional Development, 1998, 10(4): The Author can be contacted from ylimao@hubu.edu.cn Authors Brief YANG Li Mao Dean, Dept. of e-commerce & Dept. of Marketing, School of Business, Hubei University, China. 524
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