A History-friendly Model of China’s Mobile Communications Industry

This paper develops a history-friendly model of China’s mobile communications industry to explain how the sectoral environments (e.g., segmented markets and generational technological changes) of the industry facilitated domestic firms’ catching-up with respective to foreign multinationals. In a nutshell, segmented markets provided domestic firms with a nurturing ground in the peripheral (rural) market for surviving their infant ages, whereas generational technological changes opened windows of opportunities for domestic firms to catch-up with foreign multinationals in new product segments. Segmented markets, together with generational technological changes, allowed domestic firms to transform their initial comparative advantages in the rural market into rapid catching-up in the urban market. This paper mainly contributes to the literature on industry evolution by illuminating the role of market/technological regimes in the dynamic catching-up process.