The limits of brain circulation: Chinese returnees and technological development in Beijing

The Saxenian theory of brain circulation analyzes the two-way flow of transnational technical communities instead of the one-way flow portrayed in the brain drain theory. The brain-circulation theory is based on the experience of highly skilled labourers who travel frequently between the Silicon Valley and Hsinchu (Taiwan), leading to industrial upgrading in both locations. This article argues that the brain circulation theory cannot be applied to Zhongguancun (ZGC), a new high-tech region in Beijing, because ZGC is not compatible with the often neglected hypotheses in the brain-circulation theory, i.e., (i) a decentralized industrial structure with specialized producer networks; (ii) a trust-based inter-firm network that induces learning; (iii) a critical financial infrastructure for high-tech startups; and (iv) the role of the state in facilitating technology transfer. Then, what roles do the transnational technical community (Chinese returnees) play in ZGC? My findings suggest that unlike the Silicon Valley and Hsinchu cases, the knowledge assets (e.g., venture capital and research) in ZGC are mostly institutionalized and remain in the hands of the Chinese state. Thus, brain circulation can only apply to a limited number of experienced Chinese returnees who have the political skills to tap into institutionalized assets in ZGC. Nonetheless, the majority of the Chinese returnees continue to have a positive impact on the technological development of ZGC (different from the Hsinchu experience) by creating informal and indirect links between firms and public research institutions.