Zhao Hongyu’s research while affiliated with Aston University and other places

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.

Technology is a key part of organisational knowledge and gives its owners their distinctive capabilities and competitive advantages. However, to best use these assets technology often needs to be transferred and shared with others through a form of technology collaboration. This raises the important question of how technology should be valued when it is being transferred. Technology valuation has become a critical issue in most transfer transactions. Transfer arrangements and terms of payment have a significant effect on the generation and sharing of joint benefits in commercial, technical and strategic aspects. In this paper the concept of “owner's value” is explored by highlighting its structure and components and assessing the importance of factors affecting value. The influence on technology valuation of the transfer arrangement, the associated terms of payment and the interaction between the shared benefits, cost and risks are discussed.

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.

In recent years it has become increasingly common for companies to improve their competitiveness and find new markets by extending their operations through international new product development collaborations involving technology transfer. Technology development, cost reduction and market penetration are seen as the foci in such collaborative operations with the aim being to improve the competitive position of both partners. In this paper the case of technology transfer through collaborative new product development in the machine tool sector is used to provide a typical example of such partnerships. The research evidence on which the paper is based includes longitudinal case studies and questionnaire surveys of machine tool manufacturers in both countries. The specific case of a UK machine tool company and its Chinese partner is used to provide a specific example of the operational development of a successful collaboration. The paper concludes that a phased co-ordination of commercial, technical and strategic interactions between the two partners is essential for such collaborations to work. In particular, the need to transfer marketing know-how is emphasised, having been identified as an area of weakness among technology acquirers in China.

To improve competitiveness and find new markets companies are extending their operations through collaborations involving technology transfer. However, such collaborations have often been based on ad hoc agreements resulting from negotiations in which each side has been inadequately equipped with information about the other’s motivations and expectations. As a result there has been a gap in the ‘value’ attached to the technology, leading to delays or even failure in reaching an agreement. To address this problem a technology valuation and collaboration model has been developed using empirical data gathered from various points along the UK-China value chain for machine tool 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 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.

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.

This paper draws on concepts and literature on strategic alliances, to analyse different forms of technology based relationships (ranging from a one-off sale of product technology to an equity joint venture) between manufacturing companies from industrialised countries and Chinese enterprises in the machine tools industry. Technology transfer is preferred over its exclusive use by the owner for an established technology, threat of competing suppliers, possible cost advantages of local manufacture, lack of market knowledge or high degree of market uncertainty and high barriers against imports of final products. The analysis and case study observations indicate that a formal legal agreement by itself is not adequate to (a) deal with the complexities and costs associated with transferring technological capability and making a commercial success of it and (b) protect the knowledge embodied in the transferred technology. Evolution of relationships between firms can also be interpreted as repeated games in which trust and reputation develop over time through a sequence of agreements with increasing levels of commitment.

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.

Since opening to the outside world in the late 1970s China has become one of the world's largest markets for manufacturing technology. Technology transfer is therefore becoming one of the most effective routes for gaining access to the Chinese market. China's policy of targeting specific sectors, coupled with its encouragement of foreign investment and technology inputs, have shaped the development and structure of priority industries. As a result, there are now wide differences between enterprises in China in terms <>f their capabilities as well as the forms and effects of collaboration with foreign technology suppliers. This paper examines and compares recent trends in the transfer of manufacturing technology to China's machine tool and electronics industries and discusses the influences of recent industrial policy changes. It is based on research carried out over the last five years and draws on various cases of technology transfer in these two sectors as well as data from questionnaire surveys carried out in the UK and China.