CHINA CATCHES UP: How did China acquire so much technology so quickly?

Here’s how it usually works:

  1. HUGE MARKET OPPORTUNITY Companies succumb to the “Give me the technology or you will miss the 1.3 billion people marketplace” threat.
  2. LET’S COOPERATE We will work with you in a Joint venture. We will share the risk and the profit with you. We will work with you if you bring the latest technology and sufficient capital. We will bring the labor, land, market, and inputs. When you get here, I want to know all about all your related technology, management know-how, and processes. Bring me to your country for training on the latest technology.
  3. COMPETITION FOR THE LATEST. Trade shows: making deals so Chinese acquire the latest technology. You tend to give in too much technology because you are going against competitors at technical industry showplace. Two rooms negotiation.
  4. SELL TO ME SO I CAN COPY. You can sell directly. Provide parts, provide training. You teach the Chinese how to use, how to repair, how to substitute. You send them to your factories for training. They then re-engineer everything and try to replicate. They try to copy the technology.

EXAMPLE OF TRADE SHOW TECHNOLOGY ACQUISITION AND RESULTS

Trade show acquisition: Double whammy: Chinese managed to not only get the latest refrigeration technology BUT they also got the trade show.

Changes in the refrigeration industry resulted from the CR China refrigeration exposition and conference. Exposition means exposing foreign products to an audience.

China’s first international exposition and conference focusing on the latest technology was launched October of 1987 by a new HK based China Marking Services company called Asia Team Communications Ltd. The exposition, China Refrigeration 87 can be used to demonstrate how access to technology changed an industry and helped China “catch up” actually leapfrog several stages of development to become world leaders in record time.

It started in 1986 when a newly formed Asia Team Communications Ltd, a joint venture with China’s Xinhua News Agency subsidiary, China Media Development Inc., approached the Chinese Refrigeration Association to find out about the status and technological level of development of their industry and to determine what the industry might need to produce high-quality durable refrigeration systems, industrial and consumer to satisfy domestic needs.

At that time, the refrigeration industry in China was woefully undeveloped and the Chinese did not have the appropriate technology to produce high quality, durable refrigeration systems for industry or consumer use. In fact, refrigerators weren’t able to last more than 2 years as a rule. This was a time during China’s development that China was now able to produce enough food to feed its population but was not able to get the food from the agricultural center of China, primarily in the South of China, to the heavily populated North of China, including Beijing, the nation’s capital.

After meeting with the Chinese Association of Refrigeration in 1986 and identifying the most important needs in the refrigeration industry, we found that the Chinese could not produce the quality of steel necessary to contain Freon, the material used to refrigerate, for long periods of time. We also found that the Chinese could not manufacture the small-specialized compressors needed to operate a refrigerated compartment for any length of time. We also discovered that there was a need for refrigerated train cars and other specific items. But it was mostly about technology and these were just two of the technologies we identified that the Chinese refrigeration industry needed.

As a result, we agreed to organize China Refrigeration 87, the first heating, air conditioning, and refrigeration exhibition and conference ever held in China. More than 250 companies from 30 countries came to China to help this industry develop. Famous companies from the U.S. such as York and Amana, and companies from Japan, such as Mitsubishi and Hitachi, from the United Kingdom, France, Australia, Canada, Sweden, Denmark, Germany, Italy, and others brought the latest technology to satisfy the needs of the refrigeration industry. At the exhibition, more than 30,000 engineers from around China came to meet and discuss their needs and how the technology could benefit them with foreign refrigeration experts that visited from around the world to buy products, create joint ventures, and in other ways acquire the latest technology.

One result of this exposition was that the Chinese were fast learning about the latest technology and about gaining knowledge about the industry and learning which technology was needed to acquire at the exhibition and specialized technical conference. As a result, the Chinese were able to develop the latest refrigeration technology in a few years and today are able to make the most advanced refrigeration equipment in the world. The most notable example is the Chinese company Haier, which is now the world’s largest white goods manufacturer (and largest refrigeration manufacturer), that entered the US in 1990, just three years after participating in China Refrigeration 87 as a Qingdao refrigerator factory. Not only Haier, but other Chinese companies benefited from having access to the latest American, German, Japanese, British, and French and other foreign companies they met at China Refrigeration 87 exposition and conference.

Finally, it should be noted that the Chinese Council For International Cooperation and Trade (CCPIT) the co-organizers of China Refrigeration “87 also benefited by acquiring the technology necessary to organize China Refrigeration every year since 1987 as it is in its 30th year of operation

About Dr. Ian Gladding

Dr. Ian V. Gladding is Director of the Lewis University International Business and Contemporary Global Studies Program

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