The Effect Of Multinational R&d In China

The overseas R&D of MNCs is becoming a trend in international investing activities. Recently, the movement to developing countries tends to meet MNCs' globalization strategies. In view of a host country cooperation, such activities in comparison to direct investments may stimulate the growth of economy due to the fact that the input of a MNC's R&D investments lead not only a broader and prompter output but also create added values in terms of technology exceeding. Consequently, it facilitates the improvement of resources allocation of the host country. Since the opening-up, China has been attracting a huge number of MNCs investing in R&D attribute to the growth of economics and the general scale of foreign founding. These R&D investments, however, have had a complicate impact on the high-techs development of domestic enterprises. In view of the domestic enterprises, the deficiencies are irrelevant to founding; rather, the relatively lower level of technologies barriers the achieving of added value margin of the Smile Curve. Some scholars pointed out that MNCs investing in R&D could promote the technological progress of Chinese enterprises, while other scholars called for vigilance of technology injection and brain drain.Based on the dramatic growth in MNCs investing in R&D in China, and the theory of complementary assets, the international product life cycle and the growth of technology development and understanding, the paper uses the comparative analysis method and the inductive method to give an in-depth analysis on the effect of Chinese enterprises. The whole paper is divided into five parts:Partâ… focuses on the background, the research methods and the structural arrangements, to summarize the whole idea of the paper.Partâ…¡focuses on the definition of basic concepts and theoretical framework. Firstly, to define R&D, MNCs investing in R&D, technological innovation, spillover effects, crowding and other basic concepts, followed by the summary of the research status in and abroad through the understanding of relevant theories.Partâ…¢, multinational R&D investments motives and status analysis. Firstly, systematically analyze the motivation and the status of MNCs investing in R&D in China, pointing out that the motivation of MNCs R&D activities abroad is to explore the international market, the expansion of industrial chain, approaching, resources and cutting costs, accomplishing a better performance of their technology competencies. At the same time, pointing out that the MNCs in China tend to establish wholly-owned R&D institutions engaged in applied research and in high-tech R&D investments. Secondly, analyze the impact factors of MNCs investing in R&D in China.Part IV, the performance of the effect generated by the MNCs investing in R&D. With the actual situation of domestic enterprises'technology level, analyzing the spillover effects and crowding-out effects of the R&D activities. On the one side, MNCs investing in R&D in China will no doubt promote technological progress of domestic enterprises through the demonstration effect, the flow of talent, competition effects and contact effects of technology spillover, to some extent fill the technology gap, improve the technological innovation capability and the international competitiveness. On the other side, disadvantages, such as the control and injection of technologies, which result from the exploitation of resources, the domination of intellectual property rights, the injection of products and the route locking in low-techs may jeopardize the domestic development in the field. As the technical ability of domestic enterprises is still relatively backward, R&D investments for technology spillover effect can not be effectively absorbed, yet some spillover has made domestic enterprises face more intense technological innovation competition.Part V, policies and proposals. For the two kinds of effects, put forward practical policy recommendations. Pointing out that our government and enterprises should correct the attitude of MNCs investing in R&D, on the one hand, actively introduce the MNCs investing in R&D. On the other hand, try to avoid the technology crowding-out effect on domestic enterprises, promoting domestic enterprises to make better use of technology spillover and avoid technical crowding-out, to comprehensively improve the technological level of domestic enterprises and to achieve the target of enhancing innovation capability.