China, the country with incredible fast-growing speed of development, now is becoming more attractive to Western investing companies than ever. China governments know that and they try to take advantage over that point by forcing the multinational companies to share technology in the exchange of future investing opportunities. This strategy has created a lot of argument and discontent between China government and foreign companies.
China government recognized the importance of technologies and investment in R&D in the processing of becoming the world’s top five economies. They developed three-pronged plans to solve this problem, mainly by investing in certain industries, by learning and generating economics scale, and by receiving technologies from foreign partners. Chinese government also know that it is possible to lose their foreign partners’ investment to other emerging countries while they still depend much on technology of Western and developed countries( Japan, Korea).
Many strategies are processed by government to limit the control of the foreign companies over the domestic market and to support their own players. For instance, multinational companies only could hold 49% of the equity stake of new company or 70% of each system had to be locally. In the software industries, government decreases tax for domestic companies, they require the foreign software has to disclose their source and requires the software version for China. Local banks even give loans with below-market rate to domestic companies. However some certain industries of China are still unable to compete with strong and competitive foreign companies.
The conflicts between China and the U.S. have been raised due to China’s policies. The author mentioned that the main reason is because of the basic difference of policy and culture: China focuses on saving for future and U.S. cares about current consumptions....