preentation for my strategic management course...

1. TECHNOLOGY TRANSFER IN
FDI
AJIT KUNWAR(201275048)

2. Executive summary
This presentation focus on
Commercial technology
Motives of host and home countries
Generation, transfer and diffusion
Conflict resolution
Creating win-win situation
Brief discussion on Chinese automobile
industry

3. TNCs goes abroad for…
Resource seeking
Market
Efficiency
Global presence and overall increase in turn-
over

4. Host countries‘ motives…
Technology transfer
Partnership and alliances in R&D
Training and knowledge spillovers
Employment and economic growth

5. Technology Generation
Capital intensive R&D, time consuming
process, may take decades to be commercially
viable
Developing nations lack enough infrastructure to
make R&D economical

6. Ways of technology transfer
1. Trade in goods and services
2. Foreign direct investment(FDI)
3. Technology purchase and licensing

7. Technology transfer through FDI
1. Internalized 2. Externalized
 Full ownership  Technical assistance
 New affiliate  Manufacturing
 Acquisition of local arrangements
firms  subcontracting
 Monitoring joint
ventures

8. Determinants of mode of transfer
Nature of technology
Business strategy of TNCs
Capabilities of buyers
Host government’s policy
 Absorptive capacity of host countries

9. Technology diffusion
Local firms trying to imitate technology
Cooperation between foreign affiliates and
domestic suppliers and customers
Labor mobility

10. Conflicts….
Host countries
May not transfer technology
Deter technology transfer
Exploitation of natural resources and labor
Home countries
Heavy tax
Barriers in expansion of business

11. Conflict resolution, Win-Win situation

12. Win –Win situations
For host countries
Introduction of new technology
Improvement in R&D sector
Economic growth
For home countries
Tax and other incentives
Expansion of business
Export to home country and other market

13. Encouraging transfer of technology
 Regulatory approach
collaboration between in particular developed
and developing nations
 Market based technology approach
transfer by whatever means it sees fit
incentives by home countries
 Intra regional technology development
agreements between regional developing co
untries

14. Transformation of Chinese automobile
industry
1989 first family cars
Progressive immergence of ICAMs
CHERY, Geely, Great Wall, Hafei e.t.c.
 Global automakers are having, Sino-foreign JV
ICAMs obtained basic technological capabilities
in R&D, manufacturing and sales
CHEERY sold 119,800 units overseas in 2007

15. Role of international technology transfer in the
Chinese Automotive Industry
Sino-foreign JV
(manufacturing &sales)
Direct pathway
CHERY & Geely (ICAMs)
( R&D, manufacturing)
Spreading sides
Indirect pathway ICAMs
(Spillover) (R&D, manufacturing ,sales)

16. Conclusions…
FDI main source of technology transfer
Policy support in both countries is essential
Create win-win situation
Host countries should improve their
infrastructure & absorptive capability

17. Thank you!