Research On Technology Sourcing FDI Of China Auto Corporations

Technology sourcing FDI has developed so fast in recent years that it has become a new main form of FDI, standing out especially in the process of the internationalization of enterprises in developing countries, and related research both at home and abroad has been increasing. An empirical study abroad has fully proved the existence of technology spillover effects, and then proved the possibility and existence of FDI with the aim of gaining technology. Most domestic scholars affirm and emphasize the important meaning and effect of the technology sourcing FDI in developing countries in theory, but there is not much empirical research on technology sourcing FDI of enterprises in developing countries, especially in our country. Practice on technology sourcing FDI in Chinese automobile enterprises has quietly begun, and overseas acquisition of Nanjing Auto Corp is the most typical case. On the basis of summarizing existing research, this study has formed related model to give Chinese automobile enterprises theoretical interpretation in FDI, analyzed the case of Nanjing Auto Corp buying Rover and confirmed the inevitability and feasibility of technology sourcing FDI in the development of independent innovation of Chinese automobile industry. .Technology sourcing FDI is a kind of FDI behavior for the purpose of acquiring technology. Technology has become the strategic resource of transnational corporations. Technology monopoly and space binding determine that it is not so easy to gain technology as other productive resources. Technology sourcing FDI has provided an easy access to technology. Chinese automobile industry is faced with challenges from independent innovation and technological breakthroughs. In the past, Chinese automobile industry, particularly the car industry, widely adopted the joint venture model, so they didn't take the absorption of imported technology and the development of a new innovation seriously. Chinese automobile industry, particularly the car industry generally depended on foreign technology and large state-owned enterprises lacked the ability of independent innovation. Private enterprise for the representatives of domestic automobile enterprises which stressed the capability of independent innovation, have not got a strong support from policy. After a difficult period of entrepreneurship, they have had a good development momentum in recent years. There is still a big gap between the ability of independent innovation of Chinese automobile enterprises and that of leading enterprises in the world. In the way of independent innovation, our automobile industry belongs to the latter aspect. We have advantages, while facing many challenges. Except self-development and introduction of joint venture, we have a third option ----Technology sourcing FDI.The realization of technology sourcing FDI is conditional, asking for external conditions and internal conditions. External conditions include: technical differences, the proliferation of technology and technical characteristics. Internal conditions include: capacity of absorbing knowledge and capacity of building the network link. When enterprises have these conditions, they can achieve technology sourcing FDI. When enterprises have these conditions, causes which encourage companies carry out FDI are divided into three advantages: the domestic market advantages, technology absorption edge and technical elements of the advantage of location (Du Qun-yang, Zhu Qin 2004). For our automobile enterprises, to make international development, the Government's role is one of the important factors to consider, which can sometimes compensate for the lack of advantages of the three factors, and ultimately enable technology sourcing FDI to come true. .Patterns of technology sourcing FDI can be summarized into two categories: greenbelt investment and M & A mode. Greenbelt investment is setting new enterprises in the host country, including wholly-owned and joint venture of the two specific models. M & A mode is mainly investing in local existing enterprises, involving merger and acquisition. Of those, acquisition leads to the shortest period of investment and an easy access to technology. Therefore, acquisition mode of technology sourcing FDI is the most favorable to make our auto enterprises gain technology to promote independent innovation. Development of independent innovation of the auto industries in South Korea and Japan also fully proved the conclusion above, giving us enough inspiration. Both theory and practice have proved the inevitability of feasibility of technology sourcing FDI in the independent innovation of our automobile industry. . Nanjing Auto Corp successfully bought Rover, achieved a new absorption of technology and developed Rover project, to gain substantial increase in the overall R & D strength. Nanjing Auto Corp bought Rover to upgrade their competitiveness, first to receive international reputation of the MG brand and sales channels and second to master the core technology of production of high-class cars to turn domestic cost comparison superiority into competitive advantage. The success of acquisitions is favorable to expand the domestic and international markets. Competitions in the globalization of economy are characterized by brand competition. Started for international brands, Japan spent 30 years and South Korea spent 20. Nanjing Auto Corp successfully bought MG Rover, greatly reducing the time of creation of international brands and helping develop both domestic and international markets. The success of acquisitions is favorable to play the comparative advantages of the two sides. British classic brand "MG" has enormous influence in the largest European car sales market. It has brand, technology, distribution channels, and many other advantages. Nanjing Auto Corp bought MG Rover, meaning the own of global recognized brand, advanced products and technology platform. The success of acquisitions is favorable to cross technical barriers between Europe and the United States and get the access to its market access credentials. Along with the acceleration of the pace of economic integration, tariff barriers have been vulnerable, while technical barriers are blocking the disadvantaged enterprises to enter the international market, beyond the power of non-tariff barriers. So far, Nanjing Auto Corp by buying Rover has effectively promoted the ability of independent innovation, making progress in the development of a set, a new and original ways .It can be seen as a short-term success in independent innovation. .By the analysis of the case about Nanjing Auto Corp buying Rove, we can conclude: if conditions are met, technology sourcing FDI can promote the improvement of the ability of independent innovation of Chinese automobile enterprises. .