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Technology transfer under China's economic reforms: Business environment and success factors

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Abstract

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.
Technology Transfer Under
China's Economic Reforms:
Business Environment and
Success Factors
Zhu
Fudong, Wang
Xing
Ming,
David
Bennett,
and
Kirit
Vaidya
This is the third and concluding article in a series dealing with technology
management in China.
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 technol-
ogy transfer are used to illustrate the discussion on the micro-
environment. 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 part-
ners. 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. Technology Management
1995,
2,
2-17.
Zhu Fudong and Wang Xing Ming are at the People's University of China,
Department of Industrial Economics, Beijing, China; and David Bennett
and Kirit Vaidya are at the Aston Business School, Aston University, Bir-
mingham, United Kingdom.
Address correspondence to David Bennett, Technology and Innovation
Research Centre, Aston Business School, Aston University, Birmingham
B4 7ET, United Kingdom.
T
he success or failure of China's economic reforms
will
depend on the transformations taking place in
the application of science and technology within in-
dustry. Since opening its doors to the outside world
in the early 1980s foreign investment, accompanied by
technology, has been flowing into China at an increasing
rate. According to official figures, foreign direct invest-
ment into China grew at a rate of over 74% between 1983
and 1992, and in 1993 the value of approved contracts
amounted to U.S. $1 11.43 billion [I], which was about the
same as the total over the previous 14 years.
Technology is crucial to industrial development not
only because it is a valuable productive resource but also
because it has
a
vital role in the process of economic and
social development. For this reason an understanding of
the business environment for international technology
transfer (ITT) into China is important.
A
general defini-
tion of international technology transfer is "The develop-
ment by people in one country of the capacity on the
part
of nationals of another country to use, adopt, replicate,
modify, or further expand the knowledge and skills asso-
ciated either with a different manner of consumption or
product use, or a different method of manufacture or
performance of either a product or service, than that pre-
viously known" [21.
ITT
as an interorganizational exchange is as much a
social process as it is an economic one and multiple cul-
tures and social systems, macrofactors and microfactors,
O
1995 Elsevier Science Inc.
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