Technology Transferand MNCs

Courtney DavisMatthew EliasMichael TangLalita Urasuk

MET AD 655 – International Business, Economics and CulturesProfessor Jung Wan LeeDecember 8, 2014

Technology Transfer and MNCs Technology is a driving force for economic development and competitiveness Developing nations such as China have attempted to close the technology gap by

encouraging technology transfer from multinational corporations (MNCs) China is an attractive market for MNCs but technology transfer comes with risks

Research Questions What are the benefits of technology transfers for MNCs and China? What are the MNC’s concerns regarding technology transfer to joint

ventures in China? How can MNC’s safeguard intellectual property rights of their technology

transfers in China?

Ranked #55, in Fortune 500 Companies Revenue of $47 billion Over 75,049 employees worldwide

What are the benefits of technology transfer for Cisco and China?

New Market Access to established

business partners Strong local cultural partner Access to more scientists and

engineers

Foreign Direct Investment Job creation Increase in knowledge –

technological, processes and management

Access to newer technologies

Cisco China

Cisco Systems

Intellectual property theft Chinese government does not strongly enforce IP rights

Creation of competitor through government subsidies IE Huawei electronics

What are Cisco’s concerns regarding technology transfer to joint ventures in China?

How can Cisco safeguard intellectual property rights of their technology transfer in China?

Smarter partner choices Look for companies with integrity and strong reputations

Don’t transfer the newest technology Ensure proper IP protection in the US

Samsung Rank #13, in Fortune 500 Companies Revenue of $206 Billion Assembly plants and sales networks in 80 countries Employ 370,000 people

What are the benefits of technology transfer for Samsung and China?

Increased Market Penetration Increased Production

efficiency & Capacity Increased Product Lines Tax incentives & R&D support

Narrowed Technology Gap Increased Productivity and

Product Quality in local market Increased in Global

Competitiveness

Samsung China

High Bargaining Power of Chinese Government Government Restriction in Selected Sectors Imbalance of Technology Expertise

What are Samsung’s concerns regarding technology transfer to joint ventures in China?

How can Samsung safeguard intellectual property rights of their technology transfer in China?

Sign Cross-Patent Contract With Chinese Partners Limited Chinese professionals to participate in R&D Center Provide Short Training On Core Technology

Ranked #9, in Fortune 500 Companies Revenue of $146 billion Over 305,000 employees GE Aviation – leader in avionics

What are the benefits of technology transfer for GE and China?

Market Entry Complimentary Partner/Sharing

of Intellectual Properties Access to Established

Customers Increased Jobs/Profits

Decreased Technology Gap Increased Productivity/Jobs Increase in Reputation

GE China

General Electric

Intellectual Property (IP) Theft by Military Government Restriction/Ban Reputational Risk Lack of Legal Recourse

What are GE’s concerns regarding technology transfer to joint ventures in China?

How can GE safeguard intellectual property rights (IPR) of their technology transfer in China?

Vetting of Partner/Employees Establish Protocols With Input from Governments and Industrial

Experts Use of Third Party Auditors Tiered Technology Transfer

Ranked #7, in Fortune 500 Companies Revenue of $155 billion Over 212,000 employees worldwide

What are the benefits of technology transfer for GM and China?

Low-wage manufacturing Access to thriving market Partner with top domestic

automaker

Auto manufacturing knowledge Proprietary knowledge/business

practices Jobs

GM China

General Motors

IP theft resulting in competing domestic vehicles Pressure from Chinese government to share trade secrets Theft of hybrid vehicle technology

What are GM’s concerns regarding technology transfer to joint ventures in China?

How can GM safeguard intellectual property rights of their technology transfer in China?

Seek protection such as design patents Be strategic in determining which technology to transfer Use bargaining power with Chinese government

Results and FindingsWhat are the benefits of technology transfer for MNCs and China?

Market Entry/Jobs Local Knowledge Lowered Labor Costs

Access to Established Customers

Mutual Transfer of IP Decreased Government

Bureaucracy

Similarities Differences

What are the MNCs’ concerns regarding technology transfer to joint ventures in China?

IP Theft by Indigenous Firms Government Subsidized

Competitor Lack of Legal Recourse

Government Theft of IP Changing Government Policies (Local

and Foreign) Reputational Risk (Local and Foreign)

Similarities Differences

Results and Findings

How can MNCs safeguard intellectual property rights of their technology transfer in China?

Choose Reputable Partner That Contributes To Innovation

Use of Tiered Technology Transfer

Detailed Enforceable Contracts

Establish Protocols with Input from Experts and Government Representatives

Use of Third Party Auditors Withdrawal from Market

Similarities Differences

Conclusion

MNCs need to enter Chinese market to further company growth

MNCs need to vet indigenous firms for their joint venture

MNCs need to establish protocols to protect their IP

Communication, cultural understanding & business flexibility