Technology transfer to China: a study of strategy in 20 EU industrial companies

David Bennett, Xiaming Liu, David Parker, H. Fred Steward, Kirit Vaidya

Research output: Contribution to journalArticle

Abstract

Foreign direct investment has been important in China's economic development since the early 1980s. In recent years, the volume of inward FDI into China, according to some estimates, has been second only to that into the USA. The Chinese government has emphasised the need for FDI to be coupled with the transfer of more advanced technologies to China. For foreign companies, technology transfer raises the risk of losing their technology based competitive advantage to potential competitor firms. This risk may be exacerbated by insufficient legal protection of intellectual property rights in China. After briefly reviewing the development of Chinese official policy on technology transfer, this paper considers the strategy adopted by EU companies regarding the transfer of technology; in particular in advanced technology sectors. The research on which the paper is based included an analysis of information gathered from 20 leading EU companies with investments in China and operating in high-technology sectors. Information was gathered from senior company managers based in both China and Europe during the second half of 1998. The main findings include a measure of reluctance on the part of EU companies to transfer their core technologies to China and to base R&D capability there. At the same time, the companies appear aware that this policy may be unsustainable in the longer-term in the face of Chinese official policy and a desire to expand their operations in China. While they attempt to protect their existing technological knowledge, most of them accept that there will be technology "leakage" and therefore the most effective strategy is to maintain their technological lead through R&D.
Original languageEnglish
Pages (from-to)151-182
Number of pages32
JournalInternational Journal of Technology Management
Volume21
Issue number1-2
DOIs
Publication statusPublished - 2001

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Technology transfer
technology transfer
EU
China
Industry
policy on technology
foreign company
Intellectual property
legal protection
high technology
intellectual property
right of ownership
direct investment
foreign investment
Managers
Lead
manager
Economics
firm

Keywords

  • Europe
  • China
  • technology transfer
  • technology strategy
  • FDI
  • competitiveness
  • economic security

Cite this

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abstract = "Foreign direct investment has been important in China's economic development since the early 1980s. In recent years, the volume of inward FDI into China, according to some estimates, has been second only to that into the USA. The Chinese government has emphasised the need for FDI to be coupled with the transfer of more advanced technologies to China. For foreign companies, technology transfer raises the risk of losing their technology based competitive advantage to potential competitor firms. This risk may be exacerbated by insufficient legal protection of intellectual property rights in China. After briefly reviewing the development of Chinese official policy on technology transfer, this paper considers the strategy adopted by EU companies regarding the transfer of technology; in particular in advanced technology sectors. The research on which the paper is based included an analysis of information gathered from 20 leading EU companies with investments in China and operating in high-technology sectors. Information was gathered from senior company managers based in both China and Europe during the second half of 1998. The main findings include a measure of reluctance on the part of EU companies to transfer their core technologies to China and to base R&D capability there. At the same time, the companies appear aware that this policy may be unsustainable in the longer-term in the face of Chinese official policy and a desire to expand their operations in China. While they attempt to protect their existing technological knowledge, most of them accept that there will be technology {"}leakage{"} and therefore the most effective strategy is to maintain their technological lead through R&D.",
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Technology transfer to China : a study of strategy in 20 EU industrial companies. / Bennett, David; Liu, Xiaming; Parker, David; Steward, H. Fred; Vaidya, Kirit.

In: International Journal of Technology Management, Vol. 21, No. 1-2, 2001, p. 151-182.

Research output: Contribution to journalArticle

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