Technology Transfer: A Mode of Collaboration Between the European Union and China

Abstract

BEING ONE OF THE EUROPEAN UNION'S MAIN TRADING PARTNERS-ranking fourth in terms of both imports and exports expressed in value-China has emerged as an indispensable market for any multinational enterprise willing to avail itself of the opportunities represented by one of the fastest growing economies at the turn of the century. In order to close the technological gap with the developed economies of the world, China launched its open door policy in the late 1970s, the priority of which was to acquire foreign technology, capital, skills and management, as well as to cut dependence on imports. Foreign direct investment (FDI) and collaborative ventures in China, as important channels for technology transfer, have consequently grown massively. Owing to its size and development requirements, the People's Republic of China is one of the largest importers of technology in the world. During the 1950s it used to import technology from the former Soviet Union and from other East European countries. Since the late 1960s the EU and Japan have been the main sources of Chinese technology imports. Today, the EU-15 is China's major supplier of advanced technology and equipment. The EU represents 43.8% of China's total imports of technology (US$764.4 million), a share which is well ahead of that of Japan (at 25.5%) and of the United States (18.3%).1 These figures need to be appraised against the background of poor EU performance in terms of FDI in China compared with its Japanese and American counterparts. Over the past 15 years total FDI from the EU accounted for less than 5% of total direct investment from overseas firms in China (Qian, 1998). Nevertheless, in the recent past a greater awareness among EU policy makers and businesses of the potential represented by the Chinese market has emerged. The Essen European Council of 1994 endorsed a 'new Asia strategy', which 'called for a higher profile of the EU in Asia' (CEC, 1995, p. 17) and which broadly involves developing a long-term relationship with China. A 'Technology Window' programme was emphasised in the policy, which encourages EU companies to embrace broadly the business opportunities on offer, and to transfer much needed technology to China. This article sees technology transfer (TT) as a practical and strategic means of increased collaboration between the EU and the Chinese economies. Research and studies that have touched on this issue are rare, mainly because the demarcation line between technology transfer and technology imports is blurred. Technology transfer differs from technology imports in conceptual as well as in real terms, as we discuss in this article. It goes along with FDI which requires a full involvement in occupying a new market. After an attempt at defining technology transfer and clarifying the optimal context in which TT can be performed, we shall briefly assess the positive impact of technology transfer from the standpoint of both the transferor and the receiver. We then provide a concise review of Sino-EU relations, with a specific emphasis on technology transfer in two selected industries.