Upgrading Big Brother: Local Strategic Adaptation in China’s Security Industry

What are the circumstances under which latecomer firms can develop indigenous innovative capacity and compete globally? China’s construction of a vast domestic security apparatus has contributed to it becoming the world’s largest supplier and consumer of video surveillance products and services. It has also produced several globally competitive companies, including those engaged in digital surveillance. Although security equipment producers initially emerged in Guangdong province, China’s leading technology companies are concentrated in Zhejiang province. This comparative study is motivated by the puzzle of why Guangdong, which has a larger security equipment industry with more local investment and earlier introduction of foreign technology, has lagged behind Zhejiang in technological upgrading. We trace this provincial variation to the policy choices of local state bureaucracies and the business strategies of local enterprises. While macro-level variables such as market demand and establishing national industry standards are important for industrial development, this study demonstrates the critical role of local technocrats and entrepreneurs in facilitating technological innovation in a rapidly evolving surveillance regime. Our analysis also reveals how latecomers to a technology-intensive industry were able to adapt their products strategically to meet the technical demands of a major segment of the domestic market, China’s public security sector.