David Bennett, Kirit Vaidya and Zhao Hongyu
The value of technology and the appropriate form of transfer arrangement are important questions to be resolved when transferring technology between Western manufacturing firms…
Abstract
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.
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David Bennett, Zhao Hongyu, Kirit Vaidya and Wang Xing Ming
Results of complementary surveys of foreign and Chinese manufacturing enterprises with respect to their objectives and expectations regarding technology transfer into China show…
Abstract
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.
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Kirit Vaidya, David Bennett and Xiaming Liu
The paper assesses the extent to which China's comparative advantage in manufacturing has shifted towards higher‐tech sectors between 1987 and 2005 and proposes possible…
Abstract
Purpose
The paper assesses the extent to which China's comparative advantage in manufacturing has shifted towards higher‐tech sectors between 1987 and 2005 and proposes possible explanations for the shift.
Design/methodology/approach
Revealed comparative advantage (RCA) indices for 27 product groups, representing high‐, medium and low‐tech sectors have been calculated. Examination of international market attractiveness complements the RCA analysis. Findings for selected sectors are evaluated in the context of other evidence.
Findings
While China maintains its competitiveness in low‐tech labour intensive products, it has gained RCA in selected medium‐tech sectors (e.g. office machines and electric machinery) and the high‐tech telecommunications and automatic data processing equipment sectors. Evidence from firm and sector specific studies suggests that improved comparative advantage in medium and high‐tech sectors is based on capabilities developing through combining international technology transfer and learning.
Research limitations/implications
The quantitative analysis does not explain the shifts in comparative advantage, though the paper suggests possible explanations. Further research at firm and sector levels is required to understand the underlying capability development of Chinese enterprises and the relative competitiveness of Chinese and foreign invested enterprises.
Practical implications
Western companies should take account of capability development in China in forming their international manufacturing strategies. The rapid shifts in China's comparative advantage have lessons for other industrialising countries.
Originality/value
While RCA is a well‐known methodology, its application at the disaggregated product group level combined with market attractiveness assessment is distinctive. The paper provides a broad assessment of changes in Chinese manufacturing as a basis for further research on capability development at firm and sector levels.
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Jianhong Zhang, Jan P.A.M. Jacobs and Arjen van Witteloostuijn
Multinational enterprises (MNEs) play a dominant role in the international business (IB) literature. Traditionally, by far the majority of IB studies deal with issues at the micro…
Abstract
Multinational enterprises (MNEs) play a dominant role in the international business (IB) literature. Traditionally, by far the majority of IB studies deal with issues at the micro level of the individual MNE, or at the meso level of a sample of individual MNEs in industries. This paper focuses on the impact of MNE behavior through foreign direct investment (FDI) on a country’s international trade, and vice versa. In so doing, this study responds to a recent plea for more macro‐level studies in IB into the effect of MNE behavior on the macroeconomic performance of countries as a whole, particularly developing and emerging economies. In the current study, we focus on the largest developing or emerging economy of all: China. Applying sophisticated econometric techniques, we unravel the causality and direction of FDI‐trade linkages for the Chinese economy in the 1980‐2003 period.
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Xiaowen Tian and Shuanglin Lin
Using panel data of 11324 firms in China from 1996 to 1999, the study finds that FDI tends to generate positive technology spillovers to domestic firms within the same industry…
Abstract
Using panel data of 11324 firms in China from 1996 to 1999, the study finds that FDI tends to generate positive technology spillovers to domestic firms within the same industry, but adversely affect productivity of domestic firms in other industries. It is also found that both the positive and the adverse effects are more significant at the local than the national level. Evidence from China thus suggests that FDI technology spillovers are in favor of domestic firms within the same industry rather than domestic firms in other industries, and are most likely to affect domestic firms within the same locality. The finding has significant implications for the study of the interaction between MNEs and local firms in emerging markets.