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Perceptions on the Transfer of Technology to China: A Survey of British Companies
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Evidence from a survey shows that British engineering companies with a business interest in China recognise the potential benefits from technology transfer to China. The major strategic objective in transferring technology to China is to gain access to the Chinese market. British firms have a high opinion of the capability of Chinese enterprises to learn to use new technologies but they give a low rating to their managerial and technological capabilities and quality of existing equipment. Foreign companies appear to have a cautiously favourable view of the economic and political environment but the legal framework for doing business, time consuming negotiations, inconvenience of communications, bureaucracy, and unclear organizational authority are identified as the most difficult problems.
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... Many papers have been published over the last few years. The literature has dealt with issues such as the roles of government (Osland & Cavusgil, 1996;De Bruijn & Jia, 1997), trust, control and governance (Yan & Gray, 1994;Child, 1998;Luo, 2002;Goodall & Warner, 2002;Jolly, 2002b;Yan & Child, 2004), partner selection (Luo, 1998;Yan & Duan, 2003), knowledge transfer (Zhao, Bennett, Vaidyak, & Wang, 1997;Si & Bruton, 1999;Bruun & Bennett, 2002), guanxi (Ambler, 1995;Farh, Tsui, Xin, & Cheng, 1998;Chen & Glen, 2004), and human resource management (Tsang, 1994;Ding, Goodall, & Warner, 2000;Chen & Wilson, 2003;Wong, Ngo, & Wong, 2003). This paper focuses on the explanation of the nature of Sino-foreign joint ventures. ...
... A generic expectation for foreign companies is to facilitate their entry and to learn how to do business in China-a complex, highly regulated, volatile and uncertain environment. A survey conducted with 200 British companies by Zhao et al. (1997) shows that the compensation for technological transfers is gaining access to the Chinese market. Research conducted by Calantone and Zhao (2001) hypothesized that the foreign partners' motivation for forming a joint venture in China might be summarized in three words: efficiency, competition, and learning. ...
... A key element is the absorption capacity of each ally. This is a function of the level of education and the permeability of the people in place, of the technological level of development, i.e. of the already existing knowledge bases, the resources available to the firm (capital, infrastructures, equipment, etc.) and of the systems of management, supports and incentives that were set up previously (Zhao et al., 1997). The existence of a differential in the respective absorption capacities of the allies induces different learning rhythms (Kumar & Nti, 1998). ...
The paper suggests that Sino-foreign joint ventures areexogamicpartnerships. Three hypotheses were formulated: (1) partners pool differentiated sets of idiosyncratic and non-substitutable resources into their joint ventures; (2) they establish cooperation to gain access to resources provided by their counterparts; (3) the younger the partnership, the less the partners contribute with idiosyncratic resources. A questionnaire investigation was conducted into 67 Sino-foreign joint ventures. The test for H1 clearly demonstrated that each partner pools very different resources into the joint venture. H2 was also clearly supported by the data collected. However, H3 was weakly supported. Copyright Springer Science + Business Media, Inc. 2005
... The management of Sino-foreign joint ventures is a complex task. The literature has dealt with many issues including trust, control and governance (Yan and Gray, 1994;Child, 1998;Goodall and Warner, 2002;Jolly, 2002b), partner selection (Luo, 1998), knowledge transfer (Zhao et al., 1997;Si and Bruton, 1999;Bruun and Bennett, 2002), guanxi (Ambler, 1995;Farh et al., 1998), human resource management (Tsang, 1994;Ding et al., 2000), the role of government (Osland and Cavusgil, 1996;De Bruijn and Jia, 1997), etc. Sino-foreign joint ventures are considered in this text as a vehicle for knowledge and technology transfer. Gaining access to technological innovation is one of the most important issues in managing R&D. ...
... Some of these do not result from intended strategies, but from the situation experienced in Sinoforeign joint ventures. A survey conducted with 200 British companies by Zhao et al. (1997) identifies several obstacles to transferring technologies: excessive bureaucracy in Chinese enterprises as well as in government ministries and agencies, time consuming negotiations and Bartering technology for local resources r Blackwell Publishing Ltd. 2004 unsatisfactory protection of transferred technology. ...
... A key element is the absorption capacity of each ally (Cohen and Levinthal, 1990). This is a function of the level of education and the permeability of the people in place, of the technological level of development, i.e. of the already existing knowledge bases, the resources available to the firm (capital, infrastructures, equipment, etc.) and of the systems of management, supports and incentives that were set up previously (Zhao et al., 1997). The existence of a differential in the respective absorption capacities of the allies induces different learning rhythms (Kumar and Nti, 1998). ...
Five hypotheses were formulated regarding the exogamic nature of Sino-foreign joint ventures and two propositions regarding incentives for technology transfers and protection against imitation. Research relied on a questionnaire-based investigation in 67 joint ventures and case studies in various industries. Three lessons were drawn. (1) Each partner contributes with a differentiated set of idiosyncratic and non-substitutable set of resources; technology is the core contribution of foreign companies no matter which aspect is examined. There is an almost perfect symmetry between the pooled resources and the learning objectives of each partner. (2) Chinese respondents give a strong competitive value to technology transfers. (3) Beyond traditional technical and legal protection, foreign companies slow down imitation with three strategies: taking advantage of time lag; keeping the most creative value added stages at home; playing, not on the technology itself, but on inherent financial or commercial obstacles.
... This paper draws on several strands to this research in order to address the issue of quality and the perception question. The research builds on earlier investigations into the transfer of technology to China and the perceptions and expectations of suppliers and acquirers Zhao et al, 1997). ...
Impressions about the quality and reliability of products can depend as much on perceptions about brands and country of origin as on the evidence of hard data regarding performance and failure. This has implications for companies in developing countries that need to compete with importers. For established manufacturers in industrialised countries it also has implications for the value they can attach to their product and process technologies when globalising their production. This paper considers the issue of quality and reliability when technology is transferred between suppliers and acquirers in countries with different levels of development. It is based on a programme of research carried out in the machine tool industry in China. In carrying out the research empirical data were gathered from company case studies in the United Kingdom and China and questionnaire surveys were also undertaken of three groups of companies: UK manufacturers, Chinese manufacturers and Chinese users. The results show that all three groups recognise quality and reliability as being important and also support the premise that foreign technology based machine tools made in China carry a significant price premium over Chinese machines based on local technology. However, closer examination reveals a number of important differences concerning the perceptions and reality of quality and reliability between the groups.
... This paper draws on several strands to this research in order to address the issue of quality and the perception question. The research builds on earlier investigations into the transfer of technology to China and the perceptions and expectations of suppliers and acquirers (Bennett et al, 1997; Zhao et al, 1997). ...
Impressions about product quality and reliability can depend as much on perceptions about brands and country of origin as on data regarding performance and failure. This has implications for companies in developing countries that need to compete with importers. For manufacturers in industrialised countries it has implications for the value of transferred technologies. This article considers the issue of quality and reliability when technology is transferred between countries with different levels of development. It is based on UK and Chinese company case studies and questionnaire surveys undertaken among three company groups: UK manufacturers; Chinese manufacturers; Chinese users. Results show that all three groups recognise quality and reliability as important and support the premise that foreign technology based machines made in China carry a price premium over Chinese machines based on local technology. Closer examination reveals a number of important differences concerning the perceptions and reality of quality and reliability between the groups.
... Perceptions and strategies on the choice of technology transfer mode have been analysed from the viewpoint of the technology supplier (for examples, see Ball et al, 1993;Tsang, 1995;Tsang, 1997 andZhao et al, 1997). However, little has been done on exploring the process of assimilating and using the transfer-based technology and developing further capabilities by Chinese firms as technology acquirers in the context of policy reforms and economic transition. ...
This paper conceptualises the enhancement of technological capability by firms, following international technology transfer, as an evolutionary process. During this process, the existing technological, managerial and other complementary resources may require restructuring. Since China is in transition from central planning to market orientation, the organisational and managerial practices of Chinese firms are different from those of international technology suppliers. Resource-based and evolutionary theories of the firm, which provide insights into the evolution of structures, mechanisms, skills, experiences and technical know-how, have been applied to outline the processes of acquiring technological capability. Selected case studies have been used to illustrate the issues and the framework provides guide for further empirical work.
International technology transfer through collaborative partnership arrangements provides a means whereby companies can obtain many of the benefits of globalisation. They can take advantage of resource and market factors while, at the same time, sharing costs and potential risks. They can also make best use of their proprietary resources by extending the application of their know-how through its transfer to international partners. This paper examines some of the issues and considerations associated with partnership arrangements for international technology transfer. It focuses on four main issues that emerge when such collaborative arrangements are being considered. As its frame of reference the paper uses cases of technology transfer between Europe and China. It is based on research undertaken over a number of years with funding from the British Council, the UK Engineering and Physical Sciences Research Council and the European Commission. Recent evidence has been drawn from a study of joint ventures funded by the EU-China Higher Education Cooperation Programme. The focus of the paper is on the machinery and machine tools, electronics and telecommunications industries, where China's economic policy has especially encouraged technology transfer through foreign investment for the purpose of upgrading these sectors.
Sino-foreign joint ventures are exogamic partnerships where allies combine resources of different kinds. This implies a sharing of decision power and induces possible sharing of knowledge. Strategic, functional and operational decisions were analysed. Empirical data were drawn from face-to-face interviews in 67 equity joint ventures. The investigation shows that the more the decision is important for the venture's future, the less it is shared; foreigners tend to exert an overwhelming influence on decision processes. Several factors interplay in the knowledge transfer dynamic: it is hampered by exogamic barriers (such as cultural differences and language obstacles) but stimulated by business perspectives.
Purpose – This research aims to demonstrate that most of the current Sino-foreign joint ventures are exogamic partnerships and to analyze the resources pooled by allies in Sino-foreign joint ventures, the objectives pursued by each ally and how this mix has evolved since the first days of the open door policy. Design/methodology/approach – The paper is based on an extensive literature review and data collection into 67 Sino-foreign joint ventures. Data were collected into joint ventures employing more than 100 employees and primarily based around Shanghai. A semi-structured questionnaire was administered mostly with Chinese managers. A set of 21 different resources and 15 different objectives were examined. Findings – Three main conclusions emerge: partners of Sino-foreign joint ventures contribute with differentiated sets of idiosyncratic and non-substitutable resources that are distinctively under the control of each partner with Chinese bringing locally rooted resources and country-specific knowledge and foreigners bringing technology, managerial abilities, brand image and financial resources, there is a symmetrical relationship between the objectives of one partner and the resources brought into the alliance by the other with each one trying to gain access to what the other pools into the joint venture, and finally, the more recent the partnership, the less the partners contribute with their idiosyncratic resources. Research limitations/implications – The profile of Chinese partners might favor a Shanghainese point of view. More data from other areas such as Beijing and Guangzhou would be needed to test in future research whether cultural differences between different Chinese provinces might create some discrepancies relative to the issues raised. In the same vein, the limited number of foreign managers who answered the questionnaire did not allow for a comparison to be made with Chinese managers. A systematic comparison would offer some interesting areas for future research. Practical implications – This paper suggests that Sino-foreign joint ventures will increasingly be transformed into endogamic partnerships in the future. Because of the combination of differentiated resources in Sino-foreign joint ventures, each partner learns from its counterpart and tends to fill the knowledge gap. Once the learning process is completed, partners' profiles tend to be closer. Partners become able to accumulate similar resources. This produces size or scale advantages – which is precisely the benefit of endogamies. Originality/value – This is one of the first empirical research studies to use the endogamy/exogamy dichotomy in the field of business. These two archetypes offer new perspectives for the study of joint ventures, and especially for the analysis of Sino-foreign joint ventures. This research is also probably amongst the first studies to analyze these issues using data collected primarily from Chinese managers. And technology is not treated globally but is analyzed along different lines.
In the face of an integrating world economy where significant changes are taking place as a result of rapidly developing science and technology, China’s government must attach more importance to technology transfer to improve its economy. This paper analyses the features of the new environment and discusses the framework of technology transfer based on a review of theory, surveys and studies of Chinese enterprises. In particular, it considers the role of foreign funded enterprises and the importance of creating a positive cycle of technology “transfer-digestion-absorption-dissemination” in China for increasing involvement in international production and trade activities within a global market.
State owned enterprises in China have been given greater autonomy and responsibility, have freer access to foreign technology and are being encouraged to form groups to gain from rationalisation and integration. This article uses case studies to identify the key strategic issues which affect the commercial viability of foreign technology acquisition by state owned enterprises within the context of enterprise reforms. All the case study enterprises used technology transfer to develop new or improved products. Technologies acquired as parts of subcontracting arrangements and well established technologies to produce end-use products are easier to manage and operate profitably. However, the latter type of technology has been imported by numerous enterprises and has led to fierce competition and restructuring of industries. Importing capital intensive and complex technology to produce major components for products such as cars is more difficult and requires closer coordination with customers and suppliers.
Since the early 1980s China has undergone drastic industrial reform. With the progressive introduction of a 'dual' economic system, factories that once operated under a highly centralised command structure are now more exposed to the market and managers are increasingly accountable for the performance of their enterprises after the introduction of the 'contract responsibility system'. The reforms in China have also had a significant effect on the adoption and management of technology in its manufacturing enterprises. Firstly, the type of technology used has been increasingly influenced by the changing nature of the market for goods. Secondly, Chinese companies have been enabled greater, and wider, access to foreign machinery and 'know how' through the creation of joint venture companies and transfer agreements. In this paper the background to China's adoption of technology is discussed within the context of its recent industrial development. The question of success in adopting and managing manufacturing technology is then considered with reference to a number of companies that have tried to match the choice of technology to their own specific needs.
The opening up of the Chinese economy and the associated transfer of technology from abroad have been taking place at an accelerating pace. Technology is crucial to China's industrial development. It is a productive resource and has a vital role in the process of economic and social development. This article
provides an overview of technology transfer into China, focusing on recent developments, and examines the macroenvironmental and microenvironmental influences which foreign enterprises must consider when making investments or technology transfer decisions. Cases of companies engaged in international technology transfer are used to illustrate the discussion on the microenvironment. To be successful, foreign investors and suppliers of technology must respond to China's industrial priorities and pursue projects that are compatible with the country's broad policy goals as well as the corporate objectives of Chinese partners. The article concludes by listing a number of points to which attention should be paid before a decision is made to transfer technology to China.
The objective of this study was to identify for UK firms active in transferring technology into the PRC, their perceptions of the market and their clients. The research was progressed by questionnaire and interview. The companies approached were selected on the basis of contracts listed in Chinese government publications and the financial press.The main findings relate to the lack of awareness in the UK of the role of the Chinese research institutes, the poor quality of Chinese management, the inadequacy of infrastructure and training needed to support the new technology and the absence of problems arising from cultural differences or leakage of proprietary information. The Chinese are eager to obtain new technology although there is some difficulty in identifying suppliers.
Transferring manufacturing technology to China: Supplier perceptions and acquirer expectations, paper presented at European Operations Management Association Annual Conference: Manufacturing Strategy in a Global Context, London Business School
- D J Bennett
- H Zhao
- K G Vaidya
- X M Wang
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Transferring manufacturing technology to China: Supplier perceptions and acquirer expectations, paper presented at European Operations Management Association Annual Conference: Manufacturing Strategy in a Global Context
- D J Bennett
- H Zhao
- K Vaidya
- X M Wang
Bennett, D. J., Zhao, H., Vaidya, K. G; and Wang, X. M.
(1996). Transferring manufacturing technology to China:
Supplier perceptions and acquirer expectations, paper
presented at European Operations Management Association
Annual Conference: Manufacturing Strategy in a Global
Context, London Business School, 3 -4 June.