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Technology transfer and Chinese government policy: Opportunities and implications for business

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Abstract

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 rationalization and integration. This article uses case studies to identify the key strategic issues that 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 industry restructuring. 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.
Technology Management: Strategies
&
Applications,
Vol.
3,
pp. 95- 108
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Case
Study
@
1997
OPA
(Overseas Publishers Association)
Amsterdam
B.V.
Published in The Netherlands under
license by Gordon and
Breach
Science Publishers
Printed in India
Technology Transfer and Chinese Government Policy:
Opportunities and Implications for Business
I
aAston Business School, Birmingham, UK; b~he Business School of
the
People's University of China, Beijing, China
I
(Received injnal form
9
October
1996)
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 rationalization and integration. This article uses case studies to identify the
key strategic issues that 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 industry restructuring. 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.
Keywords:
Technology transfer, China, Economic policy, Industrial policy, Economic reform,
Value
chain
INTRODUCTION
include outmoded technology and products. Liberal-
ization of policies on foreign direct investment and
A
succession of policy changes in China since
1978
technology imports were intended to enable state-
has led to rapid growth of industrial production and owned enterprises to upgrade their capabilities, but
foreign investment. However, the development has this process has been slower than expected.
been uneven geographically and between the state Within the context outlined above, this article
and non-state sectors. The fastest growth has been uses evidence from case studies to examine the role
in the coastal areas in the South, which were the first of international technology transfer in the strate-
to be granted Special Economic Zone status. State- gies of state-owned enterprises. While the focus is
owned enterprises have performed less well overall, on technology transfer at the level of the enter-
but they vary significantly in their capabilities and prise, the effects of the policy environment on the
performance. Major problems facing many of them technology transfer strategies of enterprises have
95
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Transferring technology to China: supplier ' perceptions and acquirer expectations Manufacturing Strategy: Operations Strategy in a Global Context Business School/European Operations Management Asso-ciation
  • D J Bennett
  • H Y Zhao
  • K G Vaidya
  • X M Wang
Bennett, D. J ., Zhao, H. Y., Vaidya, K. G. and Wang, X. M. (1996). Transferring technology to China: supplier ' perceptions and acquirer expectations. In: Voss, C. (ed) Manufacturing Strategy: Operations Strategy in a Global Context, Proceedings of the European Operations Man-agement Association 3rd Intemational Conference, London Business School/European Operations Management Asso-ciation, London, pp. 73-78