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China’s Technology-for-Market Strategy

February 28th, 2004 · No Comments

WSJ writes about how China extracts its price from international companies seeking access to its markets:

Chinese scientists call it “technology for market.” Instead of selling toys, textiles and television sets, China wants to compete in telecommunications, health care, power generation and a range of other advanced manufacturing sectors. So it’s pushing for crown jewels of technology from companies that want access to China’s exploding marketplace.

“That’s the trade-off they have to deal with — short-term sales for long-term competition,” says William Reinsch, president of the Washington-based National Foreign Trade Council, a lobbying group for U.S. multinationals.

No party to the deals has accused China of violating WTO rules, and the Beijing government has consistently maintained that it fully complies with its trade agreements. At the same time, the lure of mammoth Chinese markets makes multinationals hesitant to raise the issue.

[For example], to be considered in the bidding for equipment contracts totaling several billion dollars, GE and its competitors were required to form joint ventures with the state-owned Chinese power companies. GE was also required to transfer to their new partners technology and advanced manufacturing guidelines for its “9F” turbine, which GE had spent more than a half billion dollars to develop.

Tags: Emerging Markets

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