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China Briefings

Reports on China issued by Samsung Economic Research Institute

Foreign Car Companies' Technology Transfers

Foreign Car Companies' Technology Transfers

Samsung Economic Research Institute Beijing Office

Jan. 6, 2012

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Chinese companies have achieved great accomplishments in the technology industry, especially in telecommunications, high speed rail and medical equipment. The result is largely attributable to the technology transfer of foreign companies, which has provided both explicit and implicit knowledge to Chinese companies.

The effect of technology transfer is exceptionally pronounced in the auto industry. With the three requirements - foreign companies’ willingness to transfer technology, Chinese companies capability to learn, and the Chinese government’s support in the form of industrial policies – having been met, transfer efforts were successful. Recent global market changes prompted by fierce competition among foreign car companies accelerated the process, raising the need and possibility of Chinese car companies to become more independent.

To raise their competitiveness, Chinese car companies have obtained technology from foreign companies through various ways based on differences in capability between foreign companies and themselves. They established joint ventures, the ideal form of transferring technology and expertise.

China plans to nurture the IT industry intensively in an effort to make a shift in the economic model and resolve social issues such as population aging.  To achieve the goal, China needs to advance its technology by introducing explicit knowledge through partnerships with foreign companies and then expanding to acquire implicit knowledge, as this development mechanism may determine the future of the industry.

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