Study On Technology Transfer Pricing Strategies For Defence Institutes

National defense science and technology industry is a strategic industry. And it is the foundation and support of promoting the new military changes. In order to meet the needs of national defense and the national economic construction, national defense science and technology industries must speed up the transformation and upgrading. Therefore, accelerated the mutual transfer of military and civilian technologies is the inevitable requirement for the transformation and upgrading of defense technology industry. And it is also the effective strategies to strengthen the national defense and promote the economic development. On the one hand, using two technologies mutual transfer, it can promote the development of weapons and equipment and establish the defense industry new system; On the other hand, it can promote the economic development, and can service to national economic. Therefore, in our country, the mutual transfer of military and civilian technologies will become an inevitable trend. However, Chinese military technology transfer still has some problems, such as the input and ownership of military researches, the transfer of research results that involve national security, national interests and major social and public interests, paid for military research may lead to the cost rising of military, and the management system of military research and production and so on. And the most important problem is the military technology transfer pricing strategy.Chinese current military research and production management system were established by conference the management system of the former Soviet Union. Under the conditions of planned economy, the defence institutes and production enterprises are directly managed by the state, and the research results were used without payment. This management system of research and production separating has played a certain role. But with the establishment and development of the market economy, the research environment of defence institutes has changed. such as military research practice limited competition and contract management, research tasks need defence institutes themselves to strive for, and part of the fund need the institutes to solve. In such conditions, if still require technology free transfer, the research institutes will no enthusiasm for technology transfer. Therefore, the state has implemented the technology transfer with payment. But in the process of the technology transfer, the transfer pricing methods that the institutes have used are mostly traditional pricing methods of intangible assets, such as market pricing, cost-plus pricing, Income Present Value Method etc., which can not reflect the value of the technology, so defence institutes have no enthusiasm to practice technology transfer. In our research, as much as 90% of the defence institutes choose to product the goods in their own factories. Sporadic research institutes try to transfer the technology, but because of the defects of transfer pricing mechanism, the research institutions and enterprises all haven't active to control costs and lead to the serious waste of resources.This paper is precisely in such a context, uses two-part tariff to solve the military technology transfer pricing problems, as well as, the incentives and risk-sharing issues of the research institutes and the enterprises. Our idea is: the technology transfer pricing is consist of fix fee and variable fee. At the beginning of the technology transfer, the transferee pay a fixed fee to the technology transferor, and in the future enterprises operational process the transferor get a certain proportion of the actual volume or revenue. This approach eases the capital pressures of the transferee that caused by one-time payment, and links the benefits of the transferor and the transferee to the future market, and then achieves the interests and risk sharing of the transferor and the transferee. In this paper, we put forward the two-part technology transfer pricing strategy: based on sale volume technology transfer pricing and based on revenue technology transfer pricing.Based on sale volume technology transfer pricing strategy requests when the technology transfer the transferee pay a fixed fee to the transferor at first, and then pay a variable fee according to the actual sales volume during the future operation. The paper analyzes the pricing strategy of the technology proprietary transfer and the technology franchise transfer respectively. Start with the general demand function, the paper analysis and get the analytical expression of the enterprise profit maximization. Then uses linear demand function as an example, the paper analyzes the optimal fee changes, the final product price, and the characteristics of the transferee and transferor's profits. Finally the paper analyzes the variables change trend by numerical examples. Based on revenue technology transfer pricing strategy requests when the technology transfer the transferee pay a fixed fee to the transferor at first, and then pay a variable fee according to the actual revenue during the future operation. The paper analyzes the pricing strategy of the technology proprietary transfer and the technology franchise transfer respectively. Start with the general demand function, the paper analysis and get the analytical expression of the enterprise profit maximization. Then uses linear demand function as an example, the paper analyzes the optimal fee changes, the final product price, and the characteristics of the transferee and transferor's profits. Finally the paper analyzes the variables change trend by numerical examples.Finally, the paper applies the technology transfer pricing methods that we have gotten by a real case, and analyses the specific operational process and application conditions.