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Transferring Technology To China By Means of Joint Ventures
Abstract
Establishing a joint venture in the People's Republic of China is complex and time consuming because of the differences between China and the West in managerial philosophy, market systems, industrial infrastructure, and motives for creating the joint venture. Acquisition of advanced technology is a predominant concern for China. As a result, technology transfer is almost always a key step in running a joint venture in China. However, in practice there are many unexpected problems in the technology transfer process because of the specific Chinese situation. Currently there is increasing interest in building up joint ventures in China, which leads the authors to discuss the key issues for management in the process of technology transfer to China via joint ventures.
... The complexity of technology transfer was emphasized by several researchers (e.g. Ivarsson & Alvstam, 2004;North, 1997;De Bruijn & Jia, 1993;Grant & Gregory, 1997). According to them it mainly involves the transfer of product and process knowledge which can be explicit or tacit of nature. ...
... Next, technology is assimilated and improved. De Bruijn and Jia (1993) have identified five key problems associated with technology transfer, in this case in a Chinese context. 1) Selection of the right product to transfer is often problematic. This selection should be based on the market objectives and the technology should be as advanced as possible given the capability of the supplier. ...
... In summary, technology transfer was often found to be a complex and lengthy process with many potential problems (e.g. De Bruijn & Jia, 1993). Two processes can be distinguished for which steps have to be identified: a supplier development process and a knowledge transfer process. ...
... The purpose of this paper is to glean extant literature ( E.g. , studies that have focused more on technology and knowledge transfer in alliances, like but not limited to : Aguilera, 2007;Akubue, 2002;Al-Azad, Mohiuddin, & Rashid, 2010;Baran, Pan, & Kaynak, 1996;Baughn, Neupert, Phan, & Ngo, 2011;Becker, Balfe, & Rosenberg, 2001;Bo, Shuai, & Lishi, 2010;Bzhilianskaya, 2001;Campbell & Hand, 1998;Cannice, Chen, & Daniels, 2003;Carrillo, 1996;Chen & Chung, 2008;Chow & Fung, 1997;Contractor, 1983;Daellenbach & Davenport, 2004;Daniels & Magill, 1991;Debruijn & Jia, 1993;Gruber & Heinemann, 2010;Isobe, Makino, & Montgomery, 2000;Janczak, 2008;Jolly, 2002;Kent, 1991;Koh & Venkatraman, 1991;Mukherjee & Marjit, 2004;Muller & Schnitzer, 2006;Oxley & Wada, 2009;Piachaud & Muresan, 2004;Protogerou, Caloghirou, & Siokas, 2012;Richter & Vettel, 1995;Sengupta & Perry, 1997;Shaughnessy, 1995;Svejnar & Smith, 1984;Tey & Idris, 2012) and find out what has been the research interest/s and theme/s and related documentations when it comes to technology transfer and knowledge transfer between strategic alliances and in particular joint ventures. The literature review being done tries to posit itself as bedrock for conducting research in/over the spate of joint ventures and other forms of alliances which are formed with an intention to access each other's knowledge, capability and technical knowhow. ...
... By covering a succinct set of brief terminologies which are of importance to understanding elements of Technology Transfer (also, TT) between firms we acknowledge what we mean by technology ( see : Carr, 1999;Debruijn & Jia, 1993;Ganesan & Kelsey, 2006;Garcia-Canal, Valdes-Llaneza, & Sanchez-Lorda, 2008;Gronhaug, Hauschildt, & Priefer, 1999;Hanvanich, Richards, Miller, & Cavusgil, 2005;Kumaraswamy, 1995;Link, Rothaermel, & Siegel, 2008;Mukherjee & Marjit, 2004;Müller & Schnitzer, 2006;Ramani, El-Aroui, & Audinet, 2001;Wahab, Rose, & Osman, 2011) and why it is needed in today's global economy (Akubue, 2002) where technology transfer is seen to aid modern economic growth and where an increase in the useful stock of knowledge and an extension of its application has been inextricably linked to successful transfer of technology (Arrow, 1969;D. J. Teece, 1977). ...
This write-up focuses in a broad overview on the important themes and ideas that concern technology transfer in strategic alliances with a special focus on joint ventures.
... Even the type of a political system may greatly influence either success or failure of a joint venture between two countries with contrasting economic achievements and technological settings [33]. For all paramount importance of such intricate matters, the relatively successful stories of East Asian countries, including China, during the past several decades have proved that joint ventures can really expedite the acquisition of advanced foreign technology, persuading both the developmental governments and private companies in the region to accentuate technology transfer as a key precondition for running a joint venture with any resourceful investor and entrepreneur hailing from other country [7,32,62]. ...
After the Trump administration tossed aside the nuclear deal in May 2018, many Chinese businesses had to reconsider their policy of technology transfer to Iran pretty similar to the way that technological relationship involving the Middle Eastern country and its major Western and Eastern partners underwent significant changes upon the comeback of the crippling regime of international sanctions against Tehran. Unlike their more sophisticated and resourceful rivals that almost terminated their teetering technological connections with the Iranians, however, the Chinese experienced a new situation concerning the nature and size of their transfer of technology to the Persian Gulf country after the Americans shunned away from the landmark nuclear deal. On one side, a lot of Chinese companies also abandoned their ongoing or prospective business projects in Iran, refusing to share their technology and technical knowhow with Iran in direct and formal ways. On the other side, a number of important economic sectors in Iran became increasingly dependent on Chinese technology, and the whole process brought some unprecedented dynamics to the Mideast country’s indirect and informal patterns of technological partnership with the East Asian power. The present study tries to shed some light on such critical developments involving China and Iran in the wake of Washington’s unilateral withdrawal from the nuclear agreement.
... Establishing an EIJV with a local host government parent usually provides the foreign partner with legal support, financial benefits, and political power, due to host government control of local information and power sources (Lamont, 1973;Young and Bradford, 1977;Child, 1994). Such an association allows the host government to attain political, economic, and social goals: i.e., obtaining knowledge, reducing unemployment, absorbing new technologies, and entering the global arena, while protecting national interests (Heenan and Keegan, 1979;de Bruijn and Jia, 1993). Luo (1996) noted that state-owned parents have advantages over other firms in terms of market power, distribution networks, production facilities, and host government relations. ...
Based upon existing literature and research findings, the relationships between functional and dysfunctional parent company dissimilarity and equity international joint venture (EIJV) effectiveness are examined. Managers of potential EIJVs face a dilemma. While they want to work with partners that are similar, they need partners that are dissimilar in order to gain from collaborating. The findings of this research are important because they give managers some indications of which kinds of dissimilarities should be avoided because they are dysfunctional and which dissimilarities can be encouraged since they are functional. A cross-national study of 140 EIJVs shows that substantial differences in the primary industries of the parent companies contributed significantly to EIJV effectiveness, whereas substantial differences in the reputations of the parent companies detracted significantly from EIJV effectiveness. Also, cultural differences among the parent companies in individualism ±collectivism and in uncertainty avoidance produced a positive impact on EIJV effectiveness. With respect to differences in parent company goals, this study found a consistently negative (although not statistically significant) correlation with EIJV effectiveness. Functionality and dysfunctionality of differences in equity distribution, parent company size, and ownership type were 1075-4253/01/$ ± see front matter D 2001 Elsevier Science Inc. All rights reserved. PII: S 1 0 7 5-4 2 5 3 (0 1) 0 0 0 3 9-4 (O. Shenkar). Journal of International Management 7 (2001) 81 ± 104 also examined with respect to five common performance measures and a general effectiveness index. D
... In the 1980s, 1990s and heading into the 2000s it was generally accepted that China and India and learned from western multinational enterprises (MNEs). In fact, one of the main goals of the Chinese Joint Venture law was to transfer western technology and knowhow into Chinese firms (De Bruijn and Jia, 1993) through China's open-door policy. Since 1999, the Chinese Go Global policy has prompted many Chinese firms to go global, which has resulted in many Chinese brands operating globally, including Hisense, Haier, Geely, Huawei to name but a few. ...
Purpose
This paper aims to identify and discuss new and novel business paradigms in China and India. In addition, this study examines the new business environment in those countries (2020 onwards) in the context of COVID 19 and explores the challenges and opportunities in the post COVID period.
Design/methodology/approach
Based on content analysis, this study discusses contemporary topics such as innovation, exports, foreign direct investment, technology, social capital, board independence as part of corporate governance and explores novel themes such as consumer behaviour in regard to luxury brands and women entrepreneurship in an emerging country context in this paper.
Findings
It was found that there are several novel paradigms in the context of China and India. A paradigm shift in diplomatic relations has taken place as an aftermath of COVID-19 in the world.
Originality/value
This paper explores most of the unique dimensions of new and novel paradigms in the context of China and India.
... Establishing the value of technology is a crucial question in technology transfer arrangements [1]. Elsewhere we have described the main factors which make it difficult to determine a value for technology that is acceptable both to suppliers and acquirers. ...
In recent years technology transfer has been used increasingly within international manufacturing as a means of reaching new markets and is playing a critical role in establishing collaborative ventures between companies in developed and developing countries. This paper considers the concept of transfer value within the context of a technology valuation model which is being developed using empirical data gathered from the machine tool industry in the UK and China. The paper presents the preliminary results from surveys in China and describes some case studies of technology transfer collaborations. Some of the main issues arising from the cases and the surveys are discussed.
... There is still, however, a question concerning the value of technology that arises in most technology transfer negotiations and collaboration arrangements (Bruijn & Jia, 1993). There have been many cases where multinational enterprises proved reluctant to conduct inter-firm transfers due to the value of technology not being fully appreciated by acquirers (Hymer, 1976;Teece, 1982). ...
As manufacturing becomes increasingly globalized the value of technology has become a crucial question when being transferred from suppliers to acquirers. Under many forms of transfer arrangement the value of technology cannot be considered in isolation from the nature of the arrangement itself which could range from one-off transactions to an equity joint venture or other forms of close partnership. The distribution of costs, risks and benefits varies substantially between types of arrangement as well as the specifics of the agreement. Previous research by the authors into the transfer of technology between the UK and China has revealed that the issue of reaching mutual agreement on the value of technology was a major handicap to many transfer negotiations. This paper describes the framework and progress with development of a technology valuation model. The main focus of the research is on machine tool technology being transferred from the UK to China. The results will assist companies in developing their technology transfer and global manufacturing strategies. The overall aim of the research is to develop a model using empirical data gathered from both countries to identify the factors that both technology suppliers and acquirers consider when valuing transferred technology. The model will provide a framework for assessing the components of value, their relative weights, the balance between them and how they are related to the form of collaboration between the supplier and acquirer.
... Here, knowledge acquisition does not proceed in a straightforward way; it occurs rather as a complex, difficult and delicate process, often linked to problems between the people involved (Martin and Salomon, 2003). In this sense, De Bruijn and Jia (1993) purport that cultures and social systems are important contingency factors in the knowledge acquisition process. ...
This paper aims at developing and evaluating an instrument for measuring knowledge sharing at the individual level in inter-organisational networks. To achieve this objective, we proceed as follows: (a) identification or generation of individual items, (b) developing a psychometric instrument and (c) empirical validation. For the latter, a questionnaire was applied to 202 professionals from different healthcare organisations in Portugal. The results reveal a high validity of a two-factor structure (Knowledge Acquisition and Knowledge Transfer). Hence, the psychometric instrument for measuring knowledge sharing we propose has potential for future research and application in networks as knowledge transfer mechanisms. Our study contributes to advancing theory at the interface of knowledge management and networks.
... Despite the emphasis on learning advanced technology, the Chinese authorities and firms have paid relatively little attention to factors affecting the learning capacity and intent of local firms. The low technological and organizational capabilities of Chinese firms (Bruijn & Jia, 1993), a shortage of skilled Chinese workers (Wong & Law, 1999) and competent managers (Park & Luo, 2001), and inefficient practices inculcated by a command economy have often hindered Chinese subsidiaries from effectively absorbing the knowledge contributed by their foreign parents. Foreign firms have often avoided transferring the most advanced technologies that China has sought (Wang, 1997) because of concerns over competition, IPR protection and the capabilities of their subsidiaries. ...
... Knowledge acquisition is not straightforward; studies show that it constitutes a difficult and subtle process, often coupled with significant dissatisfaction between partners (Martin and Salomon, 2003). De Bruijn and Jia (1993) report that knowledge acquisition is fairly complex because it is not only a matter of the knowledge itself, but rather transfer is also influenced by differences in cultures and social systems. In addition to this, knowledge acquirers (IJVs in this paper) from developing countries usually have less experience in learning new information (Hitt et al., 2000). ...
This paper contributes to the literature on intra- and inter-firm knowledge transfer by examining knowledge acquisition by Korean international joint ventures from their foreign parents. A conceptual model is presented which identifies the factors that have been found to influence knowledge transfer, organised into variables related to the local recipient firm, the foreign sender firm and the relationship between the two. The model is examined by means of a series of multiple regressions using a sample of 128 Korean international joint ventures. We find that: (1) the international joint ventures intent to learn and international experience; (2) the level of trust between parents and their business relatedness; and (3) the active managerial engagement of the foreign parent are the most important factors explaining the level of knowledge acquisition within the international joint ventures.
... With China's entry into WTO, technology imports, FDI and their restrictions will increasingly be subject to WTO guidelines. Thus, while firms have greater discretion in deciding which technologies to import from abroad, the government will have fewer options for exerting control through formal or informal means (Chen, 1995; De Brujin and Jia, 1993; 1997; De Meyer, 2001; Leung et al. 2001; Ma,1998; Guo, 2002). ...
Acknowledgements We would like to express our thanks to Mr. Jianguo XU, Vice Director of the Department of Development Planning, Ministry of Science and Technology of China, who provided information on China's evolving science and technology policies; Mr. Zhiping ZHAO, who assisted in collecting information on China's technology imports; and Mr. Jun LI, who provided information on the R&D activities of foreign firms in China. Gordon Redding, Jonathan Story and Peter Williamson have provided valuable feedback on earlier versions of this paper. We also acknowledge the support of the National Science Foundation of China, Project Numbers 70373005 and 70173008.
... Establishing an EIJV with a local host government parent usually provides the foreign partner with legal support, financial benefits, and political power, due to host government control of local information and power sources (Lamont, 1973;Young and Bradford, 1977;Child, 1994). Such an association allows the host government to attain political, economic, and social goals: i.e., obtaining knowledge, reducing unemployment, absorbing new technologies, and entering the global arena, while protecting national interests (Heenan and Keegan, 1979;de Bruijn and Jia, 1993). Luo (1996) noted that state-owned parents have advantages over other firms in terms of market power, distribution networks, production facilities, and host government relations. ...
Based upon existing literature and research findings, the relationships between functional and dysfunctional parent company dissimilarity and equity international joint venture (EIJV) effectiveness are examined. Managers of potential EIJVs face a dilemma. While they want to work with partners that are similar, they need partners that are dissimilar in order to gain from collaborating. The findings of this research are important because they give managers some indications of which kinds of dissimilarities should be avoided because they are dysfunctional and which dissimilarities can be encouraged since they are functional. A cross-national study of 140 EIJVs shows that substantial differences in the primary industries of the parent companies contributed significantly to EIJV effectiveness, whereas substantial differences in the reputations of the parent companies detracted significantly from EIJV effectiveness. Also, cultural differences among the parent companies in individualism-collectivism and in uncertainty avoidance produced a positive impact on EIJV effectiveness. With respect to differences in parent company goals, this study found a consistently negative (although not statistically significant) correlation with EIJV effectiveness. Functionality and dysfunctionality of differences in equity distribution, parent company size, and ownership type were also examined with respect to five common performance measures and a general effectiveness index.
... The best will be promoted to decisionmaking positions in a gradual effort to localize venture management. Empirical evidence suggests that such localization is essential to the ultimate effectiveness of the technology transfer (De Bruijn and Jia, 1993). It is impractical to sustain a high-technology venture with expatriate management. ...
An Open Door Policy has encouraged foreign direct investment (FDI) into the People's Republic of China (PRC) since the late 1970s. Cultural affinities and geographic proximities help to explain the dominant investment role of the Nanyang Chinese to date. The PRC is now actively seeking greater participation from Western and Japanese firms. Their technology is deemed critical for further modernization in China. Higher-technology firms are being lured to Shanghai, a city with a cosmopolitan past, a solid industrial tradition and a strategic location. In their own cross-cultural research venture, the authors examined seven pioneering higher-technology joint ventures in greater Shanghai. Each has a Western partner and has achieved success by designing, realizing and maintaining a delicate venture-level equilibrium within a dynamic macroenvironment. These exemplars are used to provide high-technology venturers in liberalizing economies with a comprehensive and empirically-based prescription for success.
... As economic activity becomes more international, cross-cultural management issues become increasingly difficult to ignore. The Chinese are now selectively assimilating foreign technologies into many parts of their business operations [16,65]. Despite an increase in their inter-cultural interactions, the Chinese continue to employ a unique approach to business. ...
Despite the growing economic power of the Overseas Chinese and the People's Republic of China, Chinese business practices remain poorly understood. Recent studies do indicate that Chinese managers make remarkably limited direct use of computer-based information systems. A theory is developed to explain the observed phenomenon by first contrasting Western and Chinese philosophy and then considering the Confucian-based values and behaviours which distinguish Chinese management systems from their Anglo-American counterparts. The explanatory theory suggests that the use of MIS in the Chinese business culture has been, and will continue to be, shaped by factors such as paternalism, personalism and high context communications. The implications for competing or collaborating with Chinese organizations and supplying information technology-based products and services to the Chinese market are discussed. The cross-cultural challenge facing information management researchers and practitioners is outlined.
... Valuing the technology is a crucial question in most technology transfer negotiations and collaboration arrangements (de Bruijn and Jia, 1993). Bennett et al. (1997a) have identified the main factors which make it difficult to determine a value of technology and form of transfer acceptable both to technology suppliers and acquirers. ...
The value of technology and the appropriate form of transfer arrangement are important questions to be resolved when transferring technology between Western manufacturing firms and partners in industrialising and developing countries. This article reports on surveys carried out in the machine tool industries in the UK and China to establish the differences and similarities between owners and acquirers of technology regarding the relative importance of the factors they evaluate, and the assessments they make, when considering a technology transfer. It also outlines the development of a framework for technology valuation. The survey results indicate that the value of product technology is related to superior technical performance, especially on reliability and functionality, and the prospects of premium prices and increased sales of the technology transfer based machine tools. Access to markets is the main objective of UK companies, while Chinese companies are concerned about improving their technological capability. There are significant risks, especially related to performance in the market, and while owners and acquirers have benefited in the short term, the long term collaboration required for strategic benefits has been difficult to achieve because of the different priorities of the owners and the acquirers.
... (a) the trade channel which includes sale of technology and licensing and franchising arrangements (Zhu et al, 1995), and (b) the investment channel encompassing eo-production agreements, project or equity joint ventures, company acquisitions and transfer to own subsidiaries by multinationals (Bruijn and Jia, 1993 ). ...
Results of complementary surveys of foreign and Chinese manufacturing enterprises with respect to their objectives and expectations regarding technology transfer into China show that the major strategic objective of foreign enterprises, to gain access to the Chinese market, fits well with Chinese enterprises’ main objective of improving domestic competitiveness but less well with that of accessing world markets through technology transfer. Foreign firms rate highly the capability of Chinese enterprises to learn new technologies and also find the Chinese macro environment for business favourable. The survey results provide information that will help managers with their negotiations on co-operating with prospective partners for the transfer of technology as well as assisting policy makers who wish to facilitate more effective transfer arrangements.
... The value of technology owned by an enterprise is considered as the "gain" which can be made by ensuring its best possible use. However, as the technology may be used solely by the owner or shared with others, its value to owners and acquirers (actual or potential) will depend on their different perspectives (Bruijn and Jia, 1993). The effectiveness and value of technology are dependent on upstream factors (cost and quality of components, processes and services required to produce the technology). ...
Previous research into the transfer of technology between the UK and China has shown that the value of technology is a crucial question in most transfer negotiations and collaboration arrangements. To assist with negotiations a technology valuation model is being developed through a project supported by the UK Engineering and Physical Sciences Research Council. The main project focus is on technology transfer from the UK to China. Empirical data are being gathered from the machine tool industry to identify the
factors that suppliers and acquirers consider when valuing transferred technology. The aspect of the model examined in this paper is how to assess the added value and secondary gain that can be
captured both by technology suppliers and acquirers as a result of introducing more advanced machine tool technologies into Chinese industrial production.
... In recent years international technology transfer has been used increasingly in connection with globalised manufacturing. The value of technology is normally a crucial question in technology transactions (Bruijn & Jia 1993). A 'technology valuation' model could assist negotiations when technology is transferred through some form of eo-production agreement or joint venture. ...
In recent years international technology transfer has been used increasingly as a mechanism for globalising manufacturing and is seen to be playing a critical role in establishing collaborative ventures between enterprises in developed and developing countries. In China, technology transfer agreements are
not only driven by the foreign suppliers' motive to enter the Chinese market but also the desire of local enterprises to acquire technology. One of the major problems in technology transfer is how to establish the value of technology. Four value components have been identified by the authors for incorporation into a 'technology valuation' model. Of these components, 'transfer value' is of greatest importance to both suppliers and acquirers. This paper describes the framework for evaluating 'transfer value' and progress with development of a technology valuation model. The main focus of the research is on machine tool technology being transferred from the UK to China. This paper is based on preliminary surveys of machine tool manufacturers and users in China.
... Establishing the value of technology is a crucial question in technology transfer arrangements (de Bruijn and Jia, 1993). Elsewhere we have described the main factors that make it difficult to determine a value for technology that is acceptable both to suppliers and acquirers. ...
In recent years technology transfer has been used increasingly within international manufacturing as a means of reaching new markets and is playing a critical role in establishing collaborative ventures between companies in developed and developing countries. This paper describes the outline of a framework for technology valuation that is being developed using empirical data gathered from the machine tool industry in the UK and China. Some results from surveys in the UK and China are also presented. The main issues arising from the surveys are discussed and the technology valuation model framework is described.
... In this paper, based upon our ongoing research since 1971, see e.g. [9][10][11], we present a model that is aimed at helping managers in these situations. ...
Many manufacturing companies have become involved in international production. The primary reasons for moving manufacturing offshore are access to low labor cost, access to markets and/or access to skilled labor. However, many companies fail when operating in international markets. Historically Western companies have been faced with challenges when operating in international situations, in some instances leading to huge losses. This indicates that operating in international markets, and in particular in developing countries, is a challenging task. Few models exist that can aid the management of overseas, in particular developing countries', operations. In This work, based upon ongoing research since 1971, we present a model that is aimed at helping managers in these situations. The model distinguishes factors that can be different in international markets, and combines these with their effect on different manufacturing cost categories. The model facilitates managers in their assessment of international cost differences and, eventually, with preventing costly mistakes.
Joint ventures between foreign enterprises and business partners in the People s Republic of China are confronting new economic and legal conditions. The new conditions require changes in the way that existing JVs operate and that new JVs are structured. Companies planning to form JVs in China are therefore advised to move quickly, establish a reliable foothold, search for alternatives to bank financing, maintain good relationships with the authorities, be prepared for their partner becoming privatized, invest in quality, and offer state-of-the-art technology.
Joint ventures between foreign enterprises and business partners in the People's Republic of China are confronting new economic and legal conditions. The new conditions require changes in the way that existing JVs operate and that new JVs are structured. Companies planning to form JVs in China are therefore advised to move quickly, establish a reliable foothold, search for alternatives to bank financing, maintain good relationships with the authorities, be prepared for their partner becoming privatized, invest in quality, and offer state-of-the-art technology.
Due to its fast growth China is rapidly becoming a focus for globalised manufacturing strategies and is now one of the world's largest markets for technology. The international transfer of manufacturing technology has also contributed significantly to the recent sharp increase in the rate of China's industrial development. The Chinese machine tool industry, for example, has exhibited an annual growth of more than 12% between 1980 and 1995 and is now one of the world's largest markets for machine tool technology. Technology transfer agreements are not only motivated by the willingness of foreign suppliers but also the desire of Chinese enterprises to acquire technology. One of the major problems in technology transfer is how to establish the value of the technology, Bruijin and Jia (1). In many cases partnerships between foreign companies and Chinese enterprises fail to become established because the value of technology cannot be agreed by both sides. It is therefore important to establish a method for valuing transferred technology. This paper outlines the concept of a technology valuation model which is being developed using empirical data from the machine tool industry. It is based on research carried out in the United Kingdom and China and draws on selected case studies of technology transfer in the machine tool sector supplemented by information obtained from questionnaire surveys carried out in both countries.
This article sees technology transfer (TT) as a practical and strategic means of increased collaboration between the EU and the Chinese economies. Research and studies that have touched on this issue are rare, mainly because the demarcation line between technology transfer and technology imports is blurred. Technology transfer differs from technology imports in conceptual as well as in real terms, as we discuss in this article. It goes along with FDI which requires a full involvement in occupying a new market. After an attempt at defining technology transfer and clarifying the optimal context in which TT can be performed, we shall briefly assess the positive impact of technology transfer from the standpoint of both the transferor and the receiver. We then provide a concise review of Sino-EU relations, with a specific emphasis on technology transfer in two selected industries.
By China's entry into the WTO, Chinese as well as German companies are facing the question, how to minimize the risk of unfamiliar cooperation partners when developing products. The rise of customer demands concerning quality, product diversity and the reduction of expenses require flexibility and efficiency with reliable component suppliers. In order to build and strengthen sino-german cooperations, a manufacturing control using homogenized and efficient measures to assure high quality is of vital importance. Lack of unifications may cause identical measurements conducted at subcontractors or customers to be carried out with different measurement processes which leads to incomparable results. Rapidly growing company cooperations and simultaneously decreasing of manufacturing scope cause substantial difficulties when coordinating joint quality control activities. "ProSens," a sino-german project consortium consisting of industrial users, technology producers and research institutes, aims at improving selected production processes by: Creation of a homogeneous quality awareness in sino-german cooperations. Sensitization for process accompanying metrology at an early stage of product development. Increase of the process performance by the use of integrated metrology. Reduction of production time and cost. Unification of quality control of complex products by means of efficient measurement strategies and CAD-based inspection planning.
In this paper, we investigate the influence of the foreign firm, through its interaction with the local partner, on the extent to which international joint ventures (IJVs) acquire knowledge and reach a higher level of performance. Based on the literature, we posit and test the proposition that there is a positive relationship between IJVs’ knowledge acquisition from foreign firms and their performance. To date, very few studies exist on IJVs in Korea, and fewer still examine the relationship between management knowledge acquired from foreign parents and IJVs’ performance. Using a sample of IJVs in Korea, this paper contributes to the literature, firstly by examining and confirming the positive relationship between managerial knowledge acquisition from foreign parents and IJV performance; and secondly, by testing for the extent of foreign firm support, and the relationship between parents with respect to both managerial knowledge acquisition and performance. This study extends knowledge on IJV knowledge acquisition and performance, more specifically in the Korean context.Asian Business & Management (2008) 7, 11–32. doi:10.1057/palgrave.abm.9200243
This article presents a framework for analysing the factors which influence the mode of international technology transfer. The factors are divided into three groups, namely the characteristics of the receiving country, the transferor, and the technology. The framework of analysis is then applied to China which has a low capacity to absorb technology. Viable modes of transfer for each type of technology are suggested for small and medium sized enterprises (SMEs) and multinational corporations (MNCs). Since SMEs face more financial and human resource constraints than MNCs, they should generally choose strategic options which require fewer resources.
Executives in 111 foreign enterprises selling within the People's Republic of China completed questionnaires examining the extents to which guanxi was recognized as a critical factor in salesforce marketing, and the influences of such recognition on their companies' local salesforce remuneration policies. The results suggest that businesses which did regard guanxi as important for Chinese salesforce marketing were more likely to employ behaviour-based than outcome-based reward systems. This finding is compatible with the proposition that the banking and recall of personal favours, network integration, willingness to rely on partners and other guanxi-related characteristics can lead to sales performances for which outcome-based remuneration systems may not be appropriate. Notwithstanding the influence of guanxi on the manners in which salespeople were paid, volatility in the business environments within which firms operated encouraged their managements to adopt more market-led approaches to remuneration. Differences in the perceptions of the role of guanxi held by managers in foreign firms based in Chinese commonwealth and in other countries were also investigated. It emerged that companies based in the Chinese commonwealth acknowledged the importance of guanxi to a greater extent than companies with headquarters in Western nations. The longer a company had operated in China the more likely it was to incorporate guanxi considerations into its local management systems.
Since 1978, when China announced its ‘open-door’ policy to pursue the country's long-term national goal, the Four Modernisations, more than 220,000 foreign funded ventures have been approved. By the end of 1994 some US95 billion of utilized investment, making the country the most important recipient of foreign direct investment (FDI) in the developing world. This paper analyses the phenomenon of FDI in China. It examines the different forms and composition of FDI, reviewing its development since the early days of the ‘open-door’ policy and analysing its importance for Chinese domestic and export industries, as well as Western investor companies. Furthermore, the paper focuses on the world-wide sources of FDI in China and its distribution by both region and industry. Additionally, it reviews the existing research on FDI in China, emphasizing the investment mode of equity joint venture.
Abstract The environmental agenda for mitigating climate change through international transfers of technology is linked with a diverse literature, reviewed here within a framework that combines technological, agent/agenda, and market/transaction perspectives. Literature that bears on international technology transfer for climate change mitigation is similar in many w ays for Russia and China: opportunities for energy efficiency and renewable energy, economic reform and restructuring, the difficulties enterprises face in responding to market conditions, international assistance policies, international joint ventures, market intermediation, and capacity building for market development. In both countries, capacity building means enhancing market-oriented capabilities in addition to technological capabilities. For Russia, institutional development is critical, such as new commercial legal codes and housing-sector changes beyond privatization. For China, technology policies and modernization programs significantly influence technology transfers.
Special economic zones (SEZs) have been adopted by many countries, particularly in the Asia region, as a popular means by which to foster and stimulate economic development (Wong and Chu 1985; Oborne 1986). Encouraged by the success of SEZs in other Asian regions and countries in the 1960s and 1970s, China set up four SEZs in 1979, including one in Shenzhen. As a result of its extraordinary growth and success, Shenzhen SEZ has itself become a positive example and impetus for the rest of the world. Although a large number of SEZs are already in operation around the globe (approximately 400), it is likely that a growing number of SEZs will continue to appear, both in Asia and worldwide. This is because SEZs have generally proved to be a successful means of fostering economic growth and prosperity. However, despite their general effectiveness, there do exist variations in the relative success of SEZs both within China, and between China and other countries. For example, within China, Guangdong's other two SEZs lag far behind Shenzhen SEZ (Liao 1999). Indeed, Shenzhen SEZ is perhaps the most successful example of a SEZ in the world, having enjoyed explosive growth (Kasliwal 1998). Shenzhen also stands in stark contrast with some rather unsuccessful SEZs in other countries, including those near Bombay and the Kandla SEZ in India.
The Open Door Policy in China (the People's Republic of China) since 1979 has primarily attracted the Overseas Chinese. Although this group has contributed to the remarkable economic development of the areas which neighbour Hong Kong and Taiwan, industrial modernization in China is contingent on the transfer and effective assimilation of leading-edge technologies from the West. World-class firms are being lured to Greater Shanghai, a coastal metropolis with a strong business tradition and a cosmopolitan past. Unfortunately, potential foreign investors are hindered by the scarcity of reliable information about the current Shanghai business environment. The authors used an interpretive research methodology to examine critically the experiences of the pioneering joint ventures in Shanghai. Effective technology transfer mechanisms and soft management skills, to develop relationships, motivate workers and bridge differences in cultures and systems, were found to be critical success factors.
The main purpose of this paper is to describe the firm-level learning processes by indigenous firms in China, identify the differences between learning processes in small tigers and large dragons, such as China. This paper first sketches the history of the China’s color TV (CTV) industry in which learning processes take place to put the companies case studies into context. Then, this paper examines closely the actual experience of two major Chinese firms in their practice of technological learning. Finally, this paper finds that the most significant difference between learning processes in Chinese firms and these four other tigers’ firms is that, firms from four other tigers usually rely almost exclusively on export markets, but Chinese firms are mostly local market-focused.A novel contribution of this paper is its analysis of the issue: the two Chinese firms have followed not an export-growth path, but an local market-focused path, which proved to be much less successful in countries, such as India, Latin America, Africa and former Soviet Union. The success of this process in China hinges on the five critical factors: (1) a number of multinational firms are increasing their presence in China; (2) there is vibrant competition among domestic firms; (3) the huge domestic market is a key incentive for local firms to invest in technological learning; (4) Chinese central government takes a phased approach to liberalization of the domestic market; (5) there have a number of risk taking entrepreneurs with strategic version, who make investment decisions on learning. These factors should not be easily available to other developing countries. In this regard, China’s experience has limited application to other developing countries.
Despite the significant research progress in the field of technological learning relevant to developing countries, there is very little literature concerning China. This paper aims to start filling this gap in the literature by examining the developement process of China’s CTV industry. This paper suggests that the learning process occurring in China’s CTV industry is inherently the same as that of other NIEs (Newly Industrializing Economies). Meanwhile, there are some differences in technological learning between China and other NIEs. China is a big country with a huge domestic market. Firms in China’s CTV industry can combine marketing skills for the domestic market with imported assembly lines to enter the market and build a brand name in the domestic market. Therefore, it seems that there is a greater opportunity for Chinese firms, compared with latecomer firms from other smaller NIEs, to utilise its cheap labor cost and economies of scale in an international market. Also, this paper draws out lessons from the development of China’s CTV industry, which may be of interest to other developing countries.
This article studies the formation process of Taiwan 's integrated circuit (IC) industry, which in 1973 consisted of assembly plants only but has since grown to comprise a complete industry infrastructure, including design, mask, fabrication, and assembly capabilities. Taiwan's IC industry was formed in the following way: IC technology, strategically selected by the government, was introduced from RCA of the USA by the Industrial Technology Research Institute (ITRI) and then transferred to the industrial sector after being assimilated and improved.This article describes the formation process, including the selection of the IC industry as a target industry, the introduction of foreign technology, the assimilation and improvement of the introduced technology, and the transfer of this technology to local industry. Through a process of introducing, developing and disseminating technology, Taiwan's IC industry was established.
The emergence of latecomer firms from East Asia in high-technology sectors is one of the most striking phenomena of world economy in the past decades. However, while most literature focuses on the catch-up of Korea and Taiwan, we know relatively little about the practices in China, especially the firm-level experiences. Based on in-depth case analyses of three Chinese ICT firms from exploratory and evolutionary perspectives, we attempt to locate the window of opportunity for Chinese ICT firms to catch up with forerunners and identify strategies they employed to seize the window of opportunity. Our research findings suggest that paradigm shifts provided these latecomers with an opportunity to penetrate the market and universal standards or new technologies from other domains serve as the window of opportunity for latecomers to surpass forerunners. This study also reveals that technology-market combination as well as other strategies including niche market proposition, service innovation, collaborative R&D and leveraging complementary technologies can be utilized as effective approaches to realize catch-up.
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.
Due to its fast growth China is rapidly becoming a focus for globalized manufacturing strategies and is now one of the world's largest markets for technology. The international transfer of manufacturing technology has also contributed significantly to the recent sharp increase in the rate of China 's industrial development. The Chinese machine tool industry, for example, has exhibited an annual growth of more than 12% between 1980 and 1995 and is now one of the largest markets for machine tool technology. Technology transfer agreements are not motivated only by the willingness of foreign suppliers but also by the desire of Chinese enterprises to acquire technology. One of the major problems in technology transfer is how to establish the value of the technology. ' In many cases partnerships between foreign companies and Chinese enterprises fail to become established because the value of technology cannot be agreed by both sides. It is therefore important to establish a method for valuing transferred technology. This paper outlines the concept of a technology valuation model which is being developed using empirical data from the machine tool industry. It is based on research carried out in the UK and China, and draws on selected case studies of technology transfer in the machine tool sector supplemented by information obtained from questionnaire surveys carried out in both countries.
It is now widely believed that Foreign Direct Investment (FDI) affects positively the productivity of individual enterprises in the host economy and this is a main argument in favour of FDI. Although China is the largest recipient of FDI after the USA, there has been little empirical research as to whether such productivity effects of FDI are present in China. In this paper we attempt to answer some of these questions using a data set constructed from the Third Industrial Census of China conducted in 1995. We employ a Data Envelopment Analysis (DEA) to estimate individual enterprise level relative productivity scores from an industry level nonparameteric production technology. These individual results are then related to the level of FDI via a Bootstrap regression which is used to insure consistent estimates of the variance covariance matrix of the regression estimates. The results are decomposed by size of enterprise and industry and provide an insight to the manner in which such spillover effects may be operating in the Chinese Economy.
The literature has identified three main approaches to account for the way exchange rate regimes are chosen: i) the optimal currency area theory; ii) the financial view, which highlights the consequences of international financial integration; and iii) the political view, which stresses the use of exchange rate anchors as credibility enhancers in politically challenged economies. Using de facto and de jure regime classifications, we test the empirical relevance of these approaches separately and jointly. We find overall empirical support for all of them, although the incidence of financial and political aspects varies substantially between industrial and non-industrial economies. Furthermore, we find that the link between de facto regimes and their underlying fundamentals has been surprisingly stable over the years, suggesting that the global trends often highlighted in the literature can be traced back to the evolution of their natural determinants, and that actual policies have been little influenced by the frequent twist and turns in the exchange rate regime debate.
Joint ventures promise to be a critical vehicle for commercial interaction between the People's Republic of China and the rest of the world. Yet the joint venture format has proven to be an unstable and problematic form of organization in other settings. This article examines the experience of thirty U.S.-P.R.C. joint ventures. While a number of issues posed formidable challenges for all these firms, most have successfully dealt with the problems. The U.S. partners exhibited a surprising level of satisfaction with the performance of these ventures. Their experience provides useful insights for other firms contemplating or engaging in joint venture activities in China.
This article examines U.S. joint ventures in the People's Republic of China. It focuses on the motives for these joint ventures and the American investors' assessment and management of political risk. Information was collected in interviews with management personnel from eleven U. S. firms which had made direct investments in China by the fall of 1983. There are some significant differences for U. S. direct investments in China as contrasted to those in other countries, which have important implications for the establishment of future U.S. joint ventures in China.
This article reports the results of a survey of foreign business executives in Beijing and subsequent interviews with U.S.-based China trade executives, and describes the Chinese negotiating process. The Beijing-based managers identify pricing, servicing, training for Chinese personnel, and technology-related issues as the key business matters they face. They are also confronted by the larger bureaucratic issues of uncertainty about decision making and the difficulty of access to Chinese end-users. At the same time, the Deng regime's economic reform program has led to decentralization of economic authority and the elevation of younger, more technically competent officials. Accordingly, while the older bureaucratic Chinese business style remains an important feature of the business environment, the reforms appear to be promoting more modern business practices in China.
China's rich natural resources and cheap labour continues to lure foreign investors to participate in joint venture activities; added to the attraction are the various preferential policies offered to foreign-financed enterprises. However, many of the joint ventures also encounter problems and difficulties. This article analyses these problems and difficulties and also suggests certain keys for foreign investors to remember in order to increase their chance of success in doing business in China.
The Chinese mind game
- C N Chu
Hands across the ocean: Management joint ventures with a spotlight on China and Japan
- S Goldenberg
Widely exchange between the East and the West
- X Zhen
Problems of management joint ventures in China: Negotiation and operation
- J Hu