Foreign direct investment and innovation in China's e-commerce sector

▶ The technology involved in e-commerce consists of two components: technical aspects and non-technical aspects. As the entry barriers to the former continue to decrease, firms increasingly compete on their ability to understand and adapt to local markets. ▶ New technologies diffuse in China at an accelerated rate. Chinese firms that receive the new technologies gain late comer advantages, often due to their better understanding of the needs of local consumers. ▶ Foreign firms must improve their ability to adapt to local cultural, social, economic, and political environments in order to thrive in China.