Hongyu Zhao’s scientific contributions

This paper describes some empirical studies that have been carried out to investigate the characteristics of the Chinese steel industry in terms of technological renovation and its relationship with the more general question of technology tiansfer to China. Consideration is given to the question of technology valuation that is an issue when technology is being transferred between owners and acquirers. Comparisons are made between considerations of value in steel making and the results of earlier investigations in the machine tool sector.

Technology is at the core of both products and processes, so to improve competitiveness and access markets it must be acquired, absorbed and developed. Moreover, as manufacturing has become more globalised, technology is also increasingly being transferred as part of collaborations between companies and has therefore effectively become a commodity in itself. It can be sold for a direct financial return or exchanged for a share in the local market, for example when being transferred through foreign direct investment from developed to the newly developing economies. This paper describes the concept of a “technology valuation and collaboration” model that has been developed using empirical data gathered from along the UK-China value chain for machine tool technology. It can be used to assist the negotiations and ongoing technology transfer arrangements of manufacturing companies that are supplying or acquiring technology.

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.

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.

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.

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.

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.

Results of complementary surveys of foreign and Chinese engineering 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 but they are much less sanguine than Chinese enterprises about the managerial capabilities, level of technological development and equipment quality of the latter and regard the inadequate legal framework as a significant obstacle.

UK companies are increasingly willing to transfer their technology as a way to exploit the Chinese market while Chinese enterprises are also eager to import foreign technology to improve their performance and gain access to world markets. They both want to establish effective partnerships but there may need to be more mutual understanding

Technology is increasingly becoming a commodity that is bought and sold on world markets or transferred by a variety of other means. Of all the industries to be affected by this phenomenon, electronics production has probably undergone the most dramatic transformation and in just a few years the structure of the sector has been massively transformed. Manufacturing is now increasingly footloose and globalised, attracted by low labour costs or local investment incentives, and the associated movement of technology has been an inevitable consequence. Nowhere has the transformation of the electronics industry been more remarkable than in China. Just ten years ago its electronic products lagged well behind world standards in terms of design, performance and quality, yet today China is on the verge of becoming a leading global player. This is not just due to its low production costs and ability to rapidly assimilate transferred technology, but is also the result of its own vast domestic market which offers the possibility of greater scale advantages than have been achieved elsewhere in the region. This paper discusses the emergence of electronics manufacturing in China and examines the role played by technology in enabling it to be transformed into a major world producer. It is based on research conducted in China during the last six years and draws on cases to illustrate how government industrial policy, coupled with foreign investment and technology inputs, have shaped the development and structure of the industry.