Science and Technology in The People's Republic of China - Technology Transfer and R&D By Multinational Corporations

Technology Transfer and R&D By Multinational Corporations

In the early 1980s foreign companies began transferring technology by licensing agreements and sales of equipment. Later in the 1980s many multinational corporations started transferring technology by entering into joint ventures with Chinese companies in order to expand in China. China in the 1990s introduced increasingly sophisticated regulations of foreign investment by which access to the Chinese market was traded for technology transfer. The entry of China into the World Trade Organization in 2001 required this practice stop but critics argue that it continues. Chinese critics have argued such technology transfer may be useful for catching up but does not create new, cutting edge technologies.

China has increasingly encouraged multinational corporations to create R&D centers in China. Chinese critics have argued that foreign owned R&D mainly benefits foreign companies and removes many talented Chinese researchers from indigenous companies and institutions. Chinese supporters have argued that the foreign R&D serves as a role model and encouragement for indigenous companies and creates skilled communities from which labor and knowledge can easily flow to indigenous companies. In 2010 there were 1,200 such R&D centers and 400 out the Fortune 500 corporations had created such R&D centers. Corporations have argued that this is a necessity in order to adapt products for the local requirements of the Chinese market as well as it being essential for maintaining global competitiveness to make use the many available Chinese engineers and scientists. China is now ranked first when multinational corporations are asked in which nation future R&D centers are most likely to be located.