International technology transfers are growing at a great speed as many trade barriers lowered. Especially, in recent years the volume of inward FDI into China has been second only to that into the U.S.A. During this technology transfer procedure, what is the most obvious feature that deserves our attention? Are there any risks for both parties? And how to work it out more efficiently? Concerning the above questions, I chose the article of “Technology transfer to China: a study of strategy in 20 EU industrial companies” to review.
The information in the article was based around a detailed questionnaire designed to obtain an understanding of the views, experiences and strategies of European firms that had transferred technology to China. Information was provided by senior management directly involved in strategic decisions relating to their company’s technology transfer to China. The sectors and companies were chosen to represent different technological and competitive situations.
In my opinion, this article has the following valuable findings:
First, the author contributed the reasons for foreign companies investing in China into three main ones including: access to the Chinese market; access to cheap labor and raw materials and the globalization strategies of large multinational companies, therefore, we can say market access is the most frequently cited reason for technology transfer to China. The gains from market access and the other benefits have to be balanced against the risks to companies of creating competitors and the potential implications for their market prospects.
... China-China Mobile, China Telecom, China Netcom, China Unicom, China Rail com, and China Satcom, ranked in the order of market ... the development of internet technology accelerated the reconstruction of traditional ... retailing as the information transfer faster and count in ... spend with customers, the company can concentrates on the business ... international calls.Customers can access details of the calls ...
Secondly, the author shows us through different tables the mode for foreign companies investing in China. Compared to licensing, which occupies 21% of technologies, the joint venture dominates with up to 58% of the technologies associated with this form of transfer. By contrast, only 6% of the technologies involved a one-off sale. Besides, the author made a study concerned the transfer of “ key” part of technologies and got the answer that a dominant 75% of companies had retained key parts of their technologies. A main reason for this appears to be fears concerning the protection of intellectual property rights. At the same time, the author also conducted the question relating to the transfer of R&D capacity to China and plans to transfer such capability in the future, revealed that most the firms, 75% had not transferred R&D and of these slightly over a half had no plans to do so in the future. , and there are high percentage of firms that intended to expand their current operations or transfer more advanced technology at a later date. Only one company expressed intention to reduce it commitment to China.
Thirdly, the author made assessment of Chinese capability to absorb, use and replicate the technologies, and the respondent estimated that 25% of the technologies transferred could be absorbed and used within one year, but in general most would take much longer for the Chinese to master, especially replicate them. In terms of absorption, 25% would take between three and ten years, 23% of the technologies were associated with a replication period of over a decade, and 27% of the transferred technologies had estimated replication rates of three years or less. As to the EU firms, 90% of the firms expected to use R&D as a means of staying ahead of local Chinese competition, 50% indicated that collaboration with Chinese partners was part of their strategy. And a half of the firms restrict the amount or type of technology transferred to China to protect their competitive position.
... of the post-Neolithic metal tools technology, the millennia that followed “saw the outpouring of Chinese technological inventions that included paper, ... Diamond, pp. 322-333. New York: W. W. Norton and Company, Inc. , 1999. Sinor, Denis. Inner Asia, History, Civilization, ... Asian countries—their cousins (ibid. ). Of course, China is not China today solely because of its early advantage in food ...
I think this article helps us to have better understanding of the motivation of European companies in transferring technology to China, the modes chosen by them and their strategies for dealing with the risks of loss of technological advantages .To other foreign companies doing business in China, this article is very helpful because they can get the picture of what others are thinking and why they think in that way. To the economists, they can get much useful information, which is good for their economic analysis. And to Chinese government and companies, this article is especially of great importance. There is an old Chinese saying:” Knowing your rivals as you know yourself, you will surely win the war.” Therefore, with the help of this article, we have some idea of what the foreign investors are thinking and doing, we can thus take corresponding actions and take better use of what they provide, and then negotiate with them for further cooperation.
However, I still think this article has methodological limitation. Because when doing fundamental research, they use questionnaire to collect information. I don’t think this way of doing research can give exact feedback, and the respondents may not think it necessary or important to state their real opinions. I used to do some field research on the topic of “ Investment effect of EU invested small and medium sized enterprises in Shaanxi province” in China, we found it more applicable to take face-to-face talk with the very person in charge, otherwise we may either get vague answers, or get long delay. Therefore, I am still questioning about the precision of some data provided by the article.
This article relates closely to the corresponding topics in our textbook. And I believe it is a useful and necessary supplement of our study in management of technology. In our textbook, we have some information about the technology transfer in the newly industrialized countries of Asia as well as of the United States. But China—as a good example of fast growing country in the world economy—was not mentioned much. Nevertheless, as MBA students studying in Asia, we should at least have good knowledge of Asian countries, and then Europe and America. That is why I think this article worth reading.