Research On The Motives Of Transnational Companies Founding R&D Organizations In China

In the recent years, as the continuous acceleration of economy globalization, transnational companies began to strengthen the investment on R&D abroad, build global R&D net, and gave birth to the new phenomenon of R&D globalization. By its advantage of huge market and rich resources, China is attracting more and more transnational companies to found R&D organizations there. It is becoming one of the transnational companies' important R&D bases abroad.Based on such unconventional phenomenon, this article reviews the traditional theories about international investment and trade. The Product Life Cycle Theory of Vernon figures that the transnational companies develop new product in motherland with its technical advantage, then explore product and found factories abroad. New product will be developed in motherland until this one finishes its product cycle. This theory cannot explain the reality that many products come into the world market at the same time, or why many transnational companies localize its basic R&D organizations abroad. The Overlapping Theory of Linder figures trade and investment will take place between countries with their product demand overlapped. Such theory cannot explain the phenomenon that the western transnational companies invest on R&D and found R&D organizations in developing countries like China. The Internalization Theory figures that transnational companies found C abroad to reduce the transaction cost, internalize the R&D resource. This theory can explain well that transnational companies tend to found single proprietorship R&D organizations abroad, but cannot why the transnational companies' R&D organizations will cooperate with the R&D organizations in host country and R&D outsourcing. Thus, it is necessary to study the motives of transnational companies' passion on founding R&D organizations in China.Then, through the empirical analyse, this article sum up the status in quo of transnational companies' R&D organizations in China. Based on it, this article points out the behavior of transnational companies founding R&D organizations in China should be cognized oriented from the market competitiveness, and make general cost-benefit analyse on such behavior with three dimensions of cost of R&D (C), timeliness of technology (T) and products and sustainability of R&D (S). In the market today, transnational companies must make the new technology "produced" by R&D organizations own adequate market competitiveness to pursue the profit maximization. So, via founding R&D organizations in China, transnational companies not only make use of the rich and low-price R&D human resource and favorable policies and regulations to reduce the R&D cost, but also focus the advantage of neighborhood market to make new technology and products to come to market timely to get rich refund, and make use of the huge Chinese market to apportion R&D cost and keep the sustainable function of R&D. At the same time, with the analyse of real world, this article reexplains and perfects the Internalization Theory and the Product Life Cycle Theory under new condition. The C-T-S analyse frame is basically validated in the following case research of Microsoft and Lucent investing on R&D and founding R&D organizations in China.Finally, this article sums up the ambilateral effects on the Chinese technical innovation brought by transnational companies founding R&D organizations in China, and points out that, based on the principle of restraining the abuses and developing the advantages, one hand, we should create a better environment to encourage the transnational companies to found R&D organizations in China, and native companies should study harder to improve the ability of absorbing the technical spillover of transnational companies' R&D organizations. In the other hand, we should strengthen the cultivation of independent innovation ability to turn the disadvantageous condition of distortion of the appropriation of profit in R&D cooperation.