Technovation 21 (2001) 175188 www.elsevier.

com/locate/technovation

Technology transfer from higher education institutions to industry in China: nature and implications
Hong Liu
b

a,*

, Yunzhong Jiang

a China Business Centre, Manchester Business School, Booth Street West, Manchester M15 6PB, UK Ofce of International Co-operation and Exchange, Tsinghua University, Beijing, Peoples Republic of China

Received 4 April 2000; received in revised form 23 April 2000; accepted 10 May 2000

Abstract Increasing the effectiveness of technology transfer has strategic implications for both nations and companies. Despite considerable research on technology transfer from higher education institutions (HEIs) to companies in Western countries, research cannot be found on such an important issue in the context of China. This paper introduces a conceptual framework that addresses major determinants of technology development and transfer in China. The determinants include the economic system, government policy and initiative, and constraints and impetus. An overview of technology transfer in China indicates that Chinas HEIs have already become a major source of new technology. A case study of technology transfer at Tsinghua University suggests that successful practices of technology transfer already exist. Research and practical implications are discussed. 2001 Elsevier Science Ltd. All rights reserved.
Keywords: Technology transfer; Higher education institutions; Science and technology policy; Strategy; Government; Economic system; China

1. Introduction Technology plays a signicant role in economic development as well as providing companies with strategic advantages (Price, 1996). In the last two decades, there has been considerable interest in technology transfer from higher education institutions (HEIs) to industry on the part of world-wide governments as well as academics (MacBryde, 1997; Mian, 1994; Liyanage and Mitchell, 1994). Since the early 1980s, HEIs in many countries such as those in the USA, UK, Germany, France, and Japan have witnessed a transformation by broadening their traditional mission of teaching, research, and public service and becoming a more active participant in their regions economic development (Main, 1997; The National Economic Development Councils Innovation Working Party, 1998). In some universities this practice can be traced back as early as 1948, for example, MIT developed its Industrial Liaison Program in this year.

* Tel.: +44-161-2756351; fax: +44-161-2756489. E-mail address: h.liu@fs2.mbs.ac.uk (H. Liu).

Over the past 20 years, China has seen a period of rapid development in terms of both GDP and technological advancement. Until recently, research institutions in China were mostly separated from industry. However, most technology is developed in research institutions, including HEIs. Transferring technology, therefore, from research institutions to industry has always been a strategic issue for the Chinese government. In the last few years, as it has focused on economic development as part of central government policy, the Chinese government has attached more importance to the role of the transfer of technology from research institutions to industry in economic development. In the course of technology development and transfer in China, there are some unique problems and characteristics as well as similar patterns or problems to those experienced by industrialised countries in the past and present. Although there has been considerable research on technology transfer from HEIs to industry in the West, little has been understood about the pattern and nature of such activities in China. To ll this gap, as an initial step, this paper provides a framework for examining the nature and evolution of technology development and transfer, and determinants and inuences of such devel-

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opment and transfer. The paper rstly presents a literature review and then develops a framework for technology development and transfer in China. This is followed by an overview of the current pattern and nature of technology transfer from HEIs to enterprises in China. After that, a case study of technology transfer at Tsinghua University is presented to illustrate some best practices of technology transfer in China. Finally, both practical and research implications are discussed.

2. Technology transfer: a view from the West 2.1. Types of technology transfer Technology transfer is any process by which basic understanding, information, and innovations move from a university, an institute, or a government laboratory to individuals or rms in the private and quasi-private sectors (Parker and Zilberman, 1993). There are different forms and degrees of technology transfer, ranging from a pure transfer of knowledge through exchanges of staff to the transfer of complete plant with support for implementation and start-up (Corsten, 1987). A number of forms of technology transfer between university research centres and private companies in Western countries can be identied: 1. The spin-offs of university research centre through (1) individuals who were former employees of the research centres and (2) a core technology that is transferred from the research centres (Rogers and Steffensen, 1998). This type of technology transfer emerged in the 1980s and mostly occurred in high technology sectors (Rogers, 1986). A study showed that MIT graduates and faculty have spun-off 3998 high-technology companies, which employ 1.1 million people and have annual world-wide sales of $232 billion (Rogers et al., 1999). 2. One study has viewed technology transfer from two different perspectives. The rst perspective regards technology transfer as a buyerseller transaction at market prices between university research centres and private companies. The second considers technology transfer to be a collaborative activity occurring within an established network of formal and informal relationships, namely the relationship perspective. The latter accounts for the majority of technology transfers (Harmon et al., 1997). Clearly, most new technology development requires a team effort, using a team consisting of members from engineering, research, marketing, manufacturing, sales, and nance to reach a joint consensus on features, performance, and cost as they accomplish all the necessary tasks (Dorf and Worthington, 1990). 3. Over the past 15 years, there has been rapid growth

in real estate developments associated with HEIs, such as innovation centres, science parks and technology parks, with the major objective of facilitating technology transfer between HEIs and private businesses (Quintas et al., 1992; Sunman, 1987). A study undertaken in Western Europe has identied several broad categories of physical development: (1) Innovation centres are intended primarily for new technology-based rms. (2) Science parks are developed for both new and mature rms. (3) Technology parks contain a concentration of knowledge-based rms, but their links to a university are more tenuous (Sunman, 1987). 4. Research publications (mainly journal articles) by staff from university research centres. This form of technology transfer is most frequently used, and can potentially reach the largest number of individuals with the least effort per individual reached. However, its ineffectiveness is also well recognised, because scientic journal articles are written for fellow scientists and thus these articles are neither effective in reaching practitioners nor easily understood by them (Rogers et al., 1999). 5. Personal contact. This is considered a critical element in technology transfer (Corsten, 1987; Dorf and Worthington, 1990). Transfers occur principally through relationships between inventors and contacts in the business community, and those contacts exist prior to the transfers (Harmon et al., 1997). Matkin (1990) has examined technology transfer in the USA from an evolutionary perspective. Traditionally, the strong link between American research universities and industry has been established through knowledge transfer. That is, knowledge is transferred to the commercial world through the education and graduation of students, the publication of the results of research for use by scientists and practitioners, and the consultation of faculty members by industry. The late 1970s witnessed the set of activities labelled by Matkin as technology transfer, namely patent policies and administration, equity ownership in research-based companies, industrial liaison programs, and regional economic development including incubators and technology parks. 2.2. Obstacles to technology transfer Technology transfer is a high-risk process since there is no guarantee that a technology development project will result in successful product launch or the investment will generate sufcient return (Dorf and Worthington, 1990; Eldred and McGrath, 1997a,b). This characteristic would lead to resistance to technology transfer. There are also other major obstacles that have been identied in the literature. Many research ideas and results generated in univer-

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sity research centres often fail to align with rms business strategies or the timing is inopportune in relation to product launch. There are tendencies towards riskavoidance and/or indecisiveness, lack of access to sales targets, and problems of reselling ideas or results that originally had problems (Lever, 1997). There are particular problems for small and mediumsized enterprises, where technology transfer is much more frequently problem-solution-oriented rather strategic in nature, and based less on conceptual or pure research (Corsten, 1987). Top management often introduce incomplete technology into the product development process, fail to view technology development as a separate process from product development, and underestimate the time and effort required to accomplish the transfer and incorporation of new technology into a product development effort (Eldred and McGrath, 1997a,b). Corsten (1987) has found the following obstacles to technology transfer from an academic perspective: (1) attitude of many professors, (2) inclination towards perfectionism, (3) lack of practicality, (4) lack of realism and hostility to compromise prompted by the search for scientic truth, (5) lack of regard for deadlines and protability, (6) communication difculties, and (7) condentiality problems. 2.3. Impact of government on technology transfer A comparative study of technology transfer practices in the UK, the USA, France, Japan, and Germany has found that the governments in all ve countries are increasingly emphasising and attempting to facilitate infrastructure industry technology transfer. Considerable emphasis has been placed on technology transfer to small and mediumsized rms (SMFs). There has been signicantly greater involvement by regional authorities in Germany, France, Japan, and the US than in the UK. Financial commitment from the central governments in Germany, Japan and France, towards the establishment of technology transfer and diffusion mechanisms appears to be greater than in the UK (The National Economic Development Councils Innovation Working Party, 1998). In the last two decades, the US government has taken steady steps to improve technology transfer within US institutions. These include the Patent and Trademark Amendments of 1980, the National Co-operative Research Act of 1984, the Federal Technology Transfer Act of 1986, and Executive Order 12591, directing federal departments and agencies to improve the transfer of technology produced in government laboratories (Moore, 1988). The governments of Singapore, South Korea, and Taiwan, following in the footsteps of Japan, have invested heavily in building up an infrastructure for creating hightechnology products that aim at being competitive in glo-

bal markets. Such an effort primarily involves collaboration between industry and government agencies that specialise in technology. One of the keys to success is the development of technology parks. Although varying in size, shape, and capital, technology parks in these three economies share a common crucial element: they bring government institutions, universities, and large and small companies together in a joint effort to create new high-tech products having an impact on world markets (Gwynne, 1993).

3. A conceptual framework for technology transfer in China Fig. 1 presents a model of technology development and transfer in China. As can be seen, there are a number of factors that affect technology development and transfer in China. One of the most important factors is the economic system, which is determined by the government (policy and ideology). The government itself has a direct impact on technology development and transfer, as is the case in Western countries (Moore, 1988; Gwynne, 1993; Bozeman and Crow, 1991). Technology development and transfer are also subject to some constraints (obstacles) (Corsten, 1987; Eldred and McGrath, 1997a,b; Lever, 1997) and impetus (Corsten, 1987; Harmon et al., 1997; Dorf and Worthington, 1990). 3.1. Technology development and transfer and the economic system From the 1950s to early 1980s, China primarily adopted a planned economic system that determined the nature and characteristics of Chinas technology development and transfer during this period. 1. Technology development and transfer were governed by vertical administration from the central government through industry ministries and regional governments to research institutions. Horizontal links or interaction between research institutions in different systems hardly existed. The missions of research institutions were mainly to serve the ministerial governments and enterprises within their industry. For instance, the Ministry of Metallurgical Industry had its own universities and research institutions that were mainly engaged in research and education in the eld of metallurgy and related sciences. Technology development and transfer were mainly carried out within the industry. 2. Research institutions received R&D projects and tasks as well as funding from the ministerial governing bodies, to which the results of research were delivered. Research institutions had little autonomy, and

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Fig. 1.

A framework for technology development and transfer in China.

could not decide or choose their research projects or how to deal with the results. 3. Knowledge and technology were not merchandise, and could not be bought or sold in the marketplace. The government owned all the technological breakthroughs and innovations and decided how to use them based on central plans. 4. Research was isolated from the marketplace or industry. It was unnecessary for researchers to consider if the results of research were applicable to any production or manufacturing processes. Neither did enterprises have views or suggestions on what they needed in terms of R&D requirements. The tasks of both enterprises and research institutions were to complete government plans (Ma, 1982; The State Science and Technology Commission of the Peoples Republic of China, 1986). Since the economic reform, initiated in 1979, China has been moving from a planned to a market-orientated economic system. Thus, the overall administrative system concerning technology development and transfer has gone through various reforms. In the early 1980s, the government started the reform by emphasising that scientic research should meet the needs of national economic development and every research institution should develop their R&D projects by using the mechanism of competition (The State Science and Technology Commission of the Peoples Republic of China, 1987). The specic reform measures can be divided into two stages: Stage 1, which started in 1986, included the reform of the science and technology management system. It covered many areas such as changing the funding system, opening

up the technology market, promoting the integration of science and technology with production, enhancing the ability for enterprises to absorb new technology, reforming the personnel management system etc. Among these measures, the reform of the funding system was considered as one of the key factors to have had a major impact on Chinas technology development and transfer (The State Science and Technology Commission of the Peoples Republic of China, 1987). In February 1987, the State Council made the following major decisions: Research institutions formally under the administration of central or regional governments were encouraged to join large and medium-sized enterprises and be responsible for their own prots and losses. These enterprises were to increase their R&D budgets annually and pay for the research carried out by newly attached research institutions. The budgetary allocation from the central government to these now enterprise-related research institutions remained the same. Those institutions remaining under government control, due to their obligations to complete the research projects commissioned before the reform by the central government or local governments, were also permitted to undertake research projects from other sources and make prots (The Development Research Centre of the State Council of PRC, 1987). Stage 2 took place in 1995, when the government announced the Ninth Five-year Plan of Domestic Economy and Social Development. Emphasis was placed on strengthening the reform of the science and technology system, speeding up the reforms and establishing the mechanism which bound scientic research, development, production and marketing tightly together. The

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organisational structures of research institutions were to be optimised. Mergers and collaborations between academics, HEIs and enterprises were to be consolidated. Research institutions that mainly engaged in applied technology development were to be pushed to join large industry groups or be converted into high technology rms. Large and medium-sized enterprises were to be encouraged to run their own technology development centres (The Development Research Centre of the State Council of PRC, 1995). As a result of the two-stage reforms, the following changes have emerged in Chinas technology development and transfer system. 1. The vertical administrative relations from the government to research institutions have been weakened, while the horizontal links or interactions between various institutions, especially between research institutions and enterprises have been strengthened signicantly. 2. Research institutions have gained more autonomy or become completely independent of the government. Now, the institutions can, and have to, decide what research projects to take and how to raise funds for projects and salaries. Both freedom and pressure have increased. 3. Research institutions can undertake cross-sector projects without being bound by the industry to which they belong. HEIs now have more opportunities to take part in research and technology innovations sponsored by the government and industry. 4. The government no longer allocates research projects and operational expenses for research institutions, which have to get research projects and funding from the government through competition with other competitors on an equal footing. 5. Scientic knowledge and technology are now merchandise. They can be sold and bought in the marketplace. To date, China has passed and implemented many laws and regulations on marketing the ndings of research or innovations, such as the Patent Law.

3.2. Technology development and transfer and the government From the above, it can be seen that the government has had a major (indirect) effect on technology development and transfer through its policies on the reform of the economic system. However, the government is also a major (direct) force in driving technology development and transfer, as in the case of the USA, France, Germany, the UK, Japan, Singapore, Korea and Taiwan. The science and technology (S&T) policy of the Chinese government has affected the direction and behaviour of HEIs technology transfer in a signicant manner.

Before 1980, government S&T policy was to shorten the huge technological gap between Western countries and China as soon as possible. Thus, more emphasis was placed on basic and theoretical research such as mathematics, physics and chemistry and the areas related to national defence and heavy industry such as, nuclear technology, space technology, and chemical and metallurgical industries. As a result of this policy, China did indeed make signicant progress in these target areas and educated and trained a large number of S&T research personnel. However, the overall backward S& T situation in consumer industry remained unchanged. Since the early 1980s, government S&T policy has shifted to economic development and has stressed the transfer of results of S&T research to productivity and consumer industries. Therefore, the focus of S&T research in most research institutions has become economic-effect-orientated. In 1996, China issued the Law of Promoting Technology Transfer and began to award those who have made great contributions to technology transfers. According to the Department of Policy, Regulation and System Reform of the Ministry of Science and Technology, 70% of technological discoveries in China on average are shifted into production or market each year. This indicates that technology transfer in China is lower than that of developed countries. The State Council, therefore, has approved the establishment of a technology innovation foundation for medium-sized and small enterprises, which comprise 90% of Chinas industrial enterprises. Regional governments have also set up foundations to help accelerate technology transfers. In 1998, the ministries of science and technology and foreign trade and economic co-operation sponsored an international symposium for technology transfer laws and regulations, which attracted 100 specialists from China, Australia, and the USA. In late 1995, a programme known as Project 211 was set up and supported by the ministries of education and nance, and the State Development Planning Commission. It is aimed at using technology developed in universities to promote Chinas economic and social progress. The project has stepped up technology transfer from universities to local economic sectors and promoted information and technology sharing among universities and economic sectors nation-wide. The project costs US$1.57 billion, and has been the largest of its kind related to HEIs since the founding of the Peoples Republic of China in 1949. 3.3. Technology development and transfer and constraints As mentioned above, the number of research discoveries that have been turned into production or markets is quite low. Another study revealed that China completes

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over 20,000 large research projects each year and only 10% of them can be applied to industry or markets effectively (Li and Hu, 1998). This low rate of application is largely due to many barriers that exist to technology transfer from HEIs to enterprises. 3.3.1. Obstacles from an enterprise perspective Enterprises are the receivers of technology, and in general, many of them are not active in seeking for technology due to the following reasons: 3.3.1.1. Lack of strategic perspectives Generally, technology transfer is a strategic measure for the company, and is also a long-term project. In China, managers generally put an emphasis on short-term performance. This may be largely due to government policy or general practices which mean that managers usually have a limited period of ofce. Thus, they are interested in mature technology that can produce a short-term effect. In China, on the whole, most technology in consumer industries is 1020 years behind that in developed countries. Even obsolete technology in developed countries can still bring some advantages compared to the technology being used in China now. Thus, for many enterprises, importing mature technology from developed countries is a shortcut that can result in fast short-term performance. In addition, some small and medium-sized State enterprises are reluctant to pay for technology transfer. 3.3.1.2. Lack of R&D capabilities Technology transfer is not a one-way process and it needs collaboration and absorption from the enterprise side as well. However, in China, many enterprises lack R&D capabilities, especially those small and medium-sized enterprises (SMEs) (Guo, 1995). In the process of technology transfer, they are mostly passive receivers instead of active participants. This often affects the effectiveness of the transfer. After a transfer process is completed, it is difcult for these enterprises to maintain a healthy collaborative relationship with HEIs or develop the new technology further. As the government push most research institutions to become engaged in applied technology research for enterprises, capabilities in large enterprises will improve. But for most SMEs, the situation will remain almost unchanged. The problem of this nature determines the fact that technology transferred to SMEs should be mature. 3.3.1.3. Lack of nancial resources Lack of nancial resources is a common problem facing many enterprises in China. Adopting new technology needs heavy investment and entails a high degree of risk. China has not established effective investment systems to support risky high-technology development, although the effort towards this is being sped up. According to a survey,

among the technology that has been successfully transferred, 56% of investment was self-nanced, 23.8% was appropriated by national R&D plans, and only 2.3% came from risk investment (Li et al., 1997). Therefore, to be able to have new technology, many enterprises have to rely on self-nance. For many fund-starved enterprises, having new technology remains a dream. 3.3.1.4. Lack of effective communication with HEIs In the past, most enterprises in China were subordinates of certain state ministries or local governments, and obtained information mainly from their regulators. The government then decided almost everything for them through planning. Now, even in many completely deregulated sectors, enterprises are not accustomed to contacting HEIs directly. Although some R&D staff in enterprises do have some relationships with HEIs, these often appear informal and sporadic. During R&D collaboration between HEIs and enterprises, more often than not, enterprises merely ask HEIs to help them solve specic problems. Strategic co-operation between HEIs and enterprises is far from established. 3.3.2. Obstacles from an HEI perspective In general, most universities in China suffer from budget constraints. Through technology transfer, they can replenish their budget and raise salaries for their staff. It can also enhance their position in securing funding in national R&D projects and economic development. Hence, most HEIs are actively pursuing technology transfer activities. However, there are still many problems hindering technology transfer processes. As indicated before, Corsten (1987) has identied a number of obstacles to technology transfer from an academic perspective, and some of these can also be found in HEIs in China. 3.3.2.1. Attitude of HEI staff It is well known that the evaluation of performance at universities is quite different from that in enterprises. HEIs pay more attention to the amount of R&D funds and academic value while enterprises stress economic benet more. A large amount of R&D or high academic value might not lead to excellent economic performance. On the other hand, R&D results with signicant economic benets might be considered as having lower scientic value. Many universities are mainly interested in conducting academicorientated research programmes which are not necessarily linked to market demand. 3.3.2.2. Different perspectives on technology In general, R&D activities at universities are completed in laboratories, and most of them only involve core technology. To apply these to production or markets, it is necessary to carry out a great deal of research on relevant auxiliary technology (Eldred and McGrath,

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1997a). This relevant auxiliary technology contains less scientic but more practical elements. It is, therefore, often considered a low level of scientic research. This leads to few people being willing to undertake this kind of low-level research. However, in enterprises, especially in SMEs, capabilities for these developments are inadequate, and thus technology transfers often fail because of the lack of auxiliary technology. 3.3.2.3. Distribution of benets In pursuing technology transfer, many HEIs are greatly concerned about gaining research funds and researchers nancial rewards, and thus pay close attention to the nancial benets generated from the transfer. In most cases, transferring technology from an HEI to an enterprise is a oneoff incident while the benets from the technology tend to be long term. The recipient not only benets from the technology itself, but also from the work and operations brought about by the technology. The share of benets, therefore, is often unbalanced between HEIs and enterprises. The latter gains much more than the former does, and thus, this greatly discourages the involvement of HEI staff in technology transfer. Instead, many researchers seek other ways of getting benets for themselves from technology. 3.3.2.4. Protection of intellectual property rights The protection of intellectual property rights is a major problem in China. Enterprises in China have a very short history of operating in a market-orientated environment. The notion of intellectual property rights was introduced in China less than 20 years ago. Although China has passed several laws on the protection of intellectual property rights, these laws are far from satisfactory in meeting the needs of technology transfer. Many people, including enterprise managers, have not yet developed the concept of the protection of intellectual property rights. The laws themselves are yet to be perfected. Disputes about intellectual property rights have frequently occurred between HEIs and enterprises in the last few years. When legal action is taken on these disputes, HEIs nd themselves in a disadvantageous position because of their relatively fewer resources, and thus most research staff would rather pursue commercialisation of technology by themselves. 3.4. Impetus to technology transfer Despite various obstacles to technology transfer, it is recognised that the role of HEIs in technology transfer is increasing. According to the Ministry of Education, in 1998, about 63% of the national programmes for theoretical scientic research were completed by Chinas 1020 colleges and universities. For instance, a new oil extraction technique, developed by Tsinghua University, has been successfully applied in a number of major oilelds, and it

has helped to increase the annual output of crude oil in these elds by an average of 300,000 tons. There are some impetus or mechanisms to promote technology transfer. 3.4.1. Recognition and non-nancial rewards As mentioned above, in many cases, nancial rewards for transferring technology cannot be compared to the gains of the receiver of enterprise. However, the possibility of transfer becoming a huge success story is a great incentive for researchers to commit to transfers. In China, if researchers have achieved such success that is recognised by the media or higher organisations, this kind of non-nancial reward is seen as signicant. A recognised researcher would normally get intangible benets such as promotion, better welfare, and more opportunities for grants and research funding. 3.4.2. Financial rewards Given the unbalanced nancial benets between the provider and receiver of the technology transfer, the phenomenon of HEIs spin-offs has emerged in technology transfer. In this way, researchers, as well as the HEIs where the technology is developed, can get satisfactory nancial benets. As a result, universities have created thousands and thousands of businesses, and some of them have become the symbols of Chinas high tech development. For instance, Beijing University established the Founder Group that has monopolised Chinas publishing business and the Tongfang Company of Tsinghua University and Neu-Alpine Company of Northeast University have become the most inuential businesses among the 400 companies listed on the Shanghai Stock Exchange. 3.4.3. Networking There are two kinds of networking: hard and soft. Soft networking indicates a close (formal or informal) relationship between HEIs and enterprises. China is still a relationship-based society, and thus, because of a kind of special relationship between an HEI and enterprise or between researchers, technology transfer can often take place although nancial or non-nancial rewards may not be as signicant as expected. Even in Western countries, relationships between researchers of HEIs and companies are considered important for technology transfer (Corsten, 1987; Dorf and Worthington, 1990). By hard networking we mean a national network for technology transfer (hardware) initiated by seven universities, Tsinghua, Beijing, Fudan, Nanjing, Zhejiang, Shanghai Jiaoda and Xian Jiaoda, and approved by the State Education Commission (it is now renamed as the Ministry of Education). The network establishes links between enterprises and HEIs, and is aimed at providing technology transfer services to enterprises and institutions across the country. It is loaded with information on whatwe-have technological research ndings from univer-

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Table 1 Number of HEIs in China classied by type in 1996a Type Total: Universities with multiple disciplines Science and engineering colleges Agriculture colleges Forestry colleges Medicine colleges Others
a

Number 1032 79 280 53 10 123 487

The State Statistical Bureau (1998).

sities to meet what-we-need requests by enterprises. Through this network, managers of enterprises can now obtain information on technology transfer without having to step out of their ofces. By the end of 1998, 30 of Chinas 1020 colleges and universities had joined the network and more were expected soon.

ling 545 schools, were engaged in education and research in the area of science and technology. Less than 100 of them, labelled as the premium HEIs, have sufcient ability to pursue research activities. Most of the premium universities are under the jurisdiction of the State Education Commission and central ministries. Others mainly undertake professional education and training and contribute little to scientic and technological research. The premium HEIs generally have two centres: an education and a science and technology (research) centre, while other HEIs have only an education centre. Table 2 indicates that Chinese universities are separated by invisible administrative systems and more than half of Chinas universities are under the administrative systems of local governments. 4.2. The changing role of HEIs in technology transfer There have been some views that HEIs have traditionally been the weakest of all research institutions in terms of their contribution to scientic research (Saich, 1989). This conclusion was largely based on the fact that there have been some long-term problems in balancing the levels of teaching and research in HEIs. The disposition that placed teaching in contrast to scientic research and accentuated teaching was very popular in the past. On the other hand, some HEIs had relatively strong capabilities in research, in some cases, even stronger than many independent or specialised research institutions. A document published by the State Education Commission in the mid 1980s has described some HEIs as having superior capabilities in science and technological research (The State Education Commission of the Peoples Republic of China, 1987). Thus, it was the governments belief that HEIs ought to contribute more to Chinas science and technological research. HEIs were seen as having two tasks to train highlevel qualied personnel with professional skills and to develop science, technology and culture. And it is the development of scientic research that helps the development of higher education, especially the improvement of the competence for teaching and content of courses, the reform of conventional specialities, the increase of new specialities, the formation of new disciplines and overlapping disciplines, etc. (The State Education Commission of the Peoples Republic of China, 1987). A reform plan that has been carried out since the mid 1980s at colleges and universities has covered three points: (1) The strengthening of horizontal link and the promotion of the three-in-one combination of education, scientic research and production (social application). (2) The reform of the system of appropriation for science and technology funding management. (3) The gradual establishment of some open-type research laboratories

4. Technology transfer from HEIs to enterprises in China: an overview 4.1. Types of HEIs in China By 1996, there were 1032 higher education institutions in China.1 These HEIs can be classied into more than 12 different types: universities that encompass multiple disciplines (comprehensive), science and engineering colleges, agricultural colleges, medical colleges, etc. In terms of administrative structure or accountability, they can be divided into four categories: responsible to the State Education Commission, to specic ministries of the government, to local governments, and others. Table 1 presents the numbers of HEIs in China by their types in 1996 and Table 2 displays the numbers of HEIs in China based on their accountability relationships. In Table 1, the HEIs in the rst ve categories, totalTable 2 Number of HEIs in China by subordinated relationship in 1994a Under the jurisdiction of: State Education Commission Central Ministries Provincial or Municipal Authorities Total
a

Numbers of institutions 36 331 713 1080

The World Bank (1997).

1 The total of the number of universities at the end of 1996 was different from that at the end of 1998, because, during the 2 year period, a number of universities were merged, with a resultant reduced total number.

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Table 3 Distribution of State Key Research Labs in top 10 HEIs in Chinaa Universities No. % 9.68 9.68 6.45 6.45 7.10 3.23 1.29 1.94 4.52 2.58 100

Tsinghua University 15 Beijing University 15 Nanjing University 10 Zejiang University 10 Xian Jiaotong University 11 Fudan University 5 Southeast University 2 Huazhong University of Science 3 and Technology Haerbin Institutes of Technology 7 Science and Technology 4 University of China National Total 155
a

general indicator of research competence and capabilities, and this further demonstrates the important position of HEIs in science and technological research in China. Fig. 2 displays three major national awards for the excellence of scientic and technological research in 1996 and the percentage won by HEIs. As shown, HEIs account for at least a quarter in each award. Now, it can be concluded that HEIs have already become a major player in the science and technological system and a major source of technology transfer in China.

5. Technology transfer in HEIs: the case of Tsinghua University Tsinghua University is one of the leading State universities having disciplines of natural sciences, engineering, management and social sciences with more strengths and national reputation in its engineering areas. As one of the important national bases for higher learning and scientic research and technological development, Tsinghua University has educated and trained a large number of high-level talents for the country, including top government ofcials and nationally renowned scientists, and contributes a great deal to national economic development. Great attention is paid to the transfer of technology to industry at this university. An overview of technology transfer at this university, therefore, would throw light on some of the best practices of technology transfer in China. In terms of technology transfer, Tsinghua University has its own advantages: 1. High Quality Research Staff. Tsinghua University has 4000 teaching and research staff, 38 of which are fellows of the Chinese Academy of Sciences (CAS) and the Chinese Academy of Engineering (CAE), 830 of which are professors, and 1598 of which are assistant professors. With 2000 full-time research staff, Tsinghua has 3000 postgraduate students. Many members of the university staff enjoy a national reputation for research.

There are total 155 State Key Laboratories in China. These data is quoted from the web sites of each universities.

and engineering research centres (The State Education Commission of the Peoples Republic of China, 1987). In addition, the State Science and Technology Commission (namely the current Ministry of Science and Technology) has set up many key state laboratories (SKLs) at some premium universities, where research of strategic importance or high technology is carried out. Many of them become a base for state science and technological research projects. Table 3 shows 10 universities in which SKLs have been placed. As seen in the table, SKLs at these universities account for more than half (53%) of the total nation-wide. This reects the strategic role being played by HEIs in Chinas science and technological research. Table 4 presents the number of universities that were awarded funding of over 2 million yuan RMB from the National Natural Science Foundation of China (NSFC) in 1998. The NSFC is one of the most important science and technological research foundations in China. To be sponsored by the NSFC, a research proposal has to be presented and compete with proposals from other institutions under equal conditions. Only the best proposal will be selected and funded. Therefore, the award is a
Table 4 Research grants sponsored by NSFC 1998a Research Institutions Unit No. Multi-discipline and science and engineering universities Agriculture and forestry colleges Medicine colleges Institutes of CAS and specic ministries Total
a

Grants (m RMB) % 58.18 7.27 18.18 16.36 100 No. 151.44 14.74 39.04 22.74 227.96 % 66.43 6.32 18.43 8.89 100

Project No. 1217 116 338 163 1834 % 66.36 6.32 18.43 8.89 100

32 4 10 9 55

National Natural Science Foundation of China (1999). Note: Only the HEIs that secured over 2 million RMB are listed.

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Fig. 2.

Number of national prizes won by HEIs in 1995.

2. First-class Research Conditions. Recently, Tsinghua rmly established itself as a base for many key state research projects. These include three R&D bases for nuclear-energy technology, microelectronics technology, high-speed internet, four state engineering research centres for CIMS, laser disk and application systems, cleaning combustion technology of coal, and CAD, and 15 key state laboratories. Only a few universities in China can match the conditions of Tsinghua. 3. A Home for Many Important R&D Projects and Tasks. The university undertakes, on average, 1500 research projects each year. Many of them are among the key state R&D projects. There is also a great deal of collaborative research with enterprises. Over the past decade, the university has rmly secured the premier position as the recipient of state research funding, over all the universities in the country (Table 5).

the companies and the formation of liaison networks between the university and the companies, the circulation of R&D information and the collection of information on demands from member companies, the establishment of R&D and training centres with the companies, the direct training of senior staff for the companies or training through other means such as information technology, distance learning etc.

5.1. Methods of technology transfer at Tsinghua University Since 1995, a number of measures to pursue technology transfer have been taken by Tsinghua University. 5.1.1. Establishment of the UniversityIndustry Cooperation Committee of Tsinghua University (UICCTU) The committee was established in 1995. Recently, 96 large Chinese and multinational companies, including IBM, Siemens, Motorola, Hitachi, and NEC, have joined the UICCTU. The university provides various services for the member companies through different channels. The services cover the dispatch of special liaison ofcers to

5.1.2. Technology transfer through collaboration with local governments As a result of economic reform, the effect of the central government on enterprises has been weakened, while the inuence of local governments has been strengthened. Establishing co-operation with local governments is expected to improve technology transfer from HEIs to industry signicantly. In recent years, the central government has placed more emphasis on the role of science and education in economic development, and thus the enthusiasm of many local governments to collaborate with HEIs, especially with top universities such as Tsinghua, runs high. This has been an unprecedented opportunity for Tsinghua University to develop collaborative relationships. Up to now, Tsinghua University has signed collaborative contracts with eight provincial and municipal governments, including Beijing, Guangdong, Hebei etc., and 40 county-level governments such as Daqing, Changzhou, Shenzhan etc. Although these schemes are non-commercial based, its operations follow the laws of markets. The collaborative contracts contain three main contents.

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Table 5 Ranking of universities research funding in China in 19951997 (unit: million RMB)a Rank 1995 School 1 2 3 4 5 6 7 8 9 10
a b

1996 Fund 231.0 86.7 76.5 75.7 72.8 66.8 62.1 60.6 59.0 52.7 School Tsinghua Beijing Shanghai Jiaoda Southeast Huazhong Zhejiang Tianjin Nanjing Tongji USTCb Fund 256.2 104.1 98.0 93.7 91.2 89.2 86.4 61.5 56.7 54.1

1997 School Tsinghua Zhejiang Shanghai Jiaoda Tianjin Tongji Beijing Fudan Huazhong USTCb Southeast Fund 300.7 272.1 230.3 172.4 157.2 132.7 119.2 113.6 110.3 103.3

Tsinghua Zhejiang Southeast Tianjin Shanghai Jiaoda Beijing Huazhong Nanjing USTCb Tongji

The Ministry of Education of PRC (1998). USTC, Science and Technology University of China.

The transference of new technology to enterprises with local governments as the medium. This mainly deals with the problem of lack of information exchange between the university and enterprises governed by local governments. With the help of local governments, the University can expand the channel of communication with local companies. The establishment of R&D risk investment foundations in collaboration with local governments. This mainly deals with the problems of lack of mechanism and capital of risk investment in technology transfer in China. Local governments provide funding for the foundations, which are jointly run by the governments and the university. Until recently, Tsinghua University has established 10 foundations of this kind with local governments such as Guangdong, Beijing, Hebei etc. The total amount of investment has exceeded 200 million RMB (US$24 million). The establishment of technology transfer bases in collaboration with local governments. In the process of establishing technology transfer bases, local governments generally provide land and policy, while the University invests in technology and management. These bases play the role of incubation centres for new technology, distribution centres for R&D information, and training centres for specic technicians. To date, the university has founded a number of such centres: (1) BeijingTsinghua University Industry Development Institute and Tsinghua Science Park, in collaboration with Beijing municipal government, (2) ShenzhenTsinghua University Institute, in collaboration with the Shenzhen municipal government, and Tsinghua (Miyun) High Science and Technology Industry Park, working with the Miyun county government in Beijing.

5.1.3. Establishment of high technology companies in partnership with enterprises In recent years, more and more HEIs have begun to establish high technology companies jointly with enterprises. Generally, enterprises input capital while HEIs invest in technology and become a shareholder by converting technology into capital. This method can solve the problems of both benet sharing and the protection of intellectual property rights. Therefore, it is now considered an ideal way for HEIs to transfer technology to industry. However, its long-term effect remains to be seen. So far, Tsinghua University has established 28 high technology companies in partnership with enterprises in such a manner. It appears that most of them have performed well. 5.1.4. Building-up a Science and Technology Cooperation Network of Chinese Universities (UNITECH) Tsinghua University is exploring the ways of transferring R&D information through the Internet. In May 1998, seven universities including Tsinghua and the Science and Technology Development Centre of the State Education Commission set up the Science and Technology Co-operation Network of Chinese Universities(UNITECH). It is an inquiry system for information about research ndings and enterprise demands, built on the Internet. Its purpose is to build a bridge between HEIs and enterprises to improve the transfer of R&D results. The services provided by UNITECH include the provision of information about R&D ndings and enterprise demands, key laboratories in HEIs, local high technology development zones, government industry policies and etc. The clients of UNITECH are all the HEIs and companies that have access to the Internet. With 30 members of HEIs in

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UNITECH, information about the results of 3857 R&D projects has been made available. Until recently, about 60,000 visits to the website had been registered. 5.1.5. Collaboration with enterprises Collaborating with companies to undertake joint projects is an effective way of technology transfer in Western countries (Corsetn, 1987Rogers and Stefensen, 1998). Tsinghua University has a tradition of collaboration with enterprises, and it has been one of the great success stories at the university. Keeping such a tradition, Tsinghua is making great efforts to use this means of technology transfer. Table 6 shows the amount of funding used for collaborative research, and this has an indication of the level of collaborative effort. As can be seen in the table, the percentages have been quite high in the last few years. In addition, the university has also spun off a number of highly successful companies owned by the university, and works directly with enterprises to materialise technology transfer. The practices of technology transfer at Tsinghua University have been among the best in China and, until now, have proved to be successful. Because of the unique position and conditions of Tsinghua University in China, whether these methods are transferable to other Chinese universities remains to be seen. The reason for us presenting this case is to show where the best practices of technology transfer in Chinas HEIs stand and how different they are from those in the West.

6. Conclusion The importance of technology in national economic development and the development of a competitive edge for companies can never be over emphasised. It is evident that HEIs have been a major source of technological advancement in many developed and developing countries. How to make an effective technology transfer from HEIs to industry or companies, therefore, has been a central concern on the part of governments and companies and an interesting research issue on the part of academics for over two decades. Despite considerable
Table 6 19951998 Tsinghua University funds for collaborative research Year Total fund Collaborate fund a Percentage (%)b
a

1995 231 89 38.53

1996 256 120 46.88

1997 301 131 43.52

1998 411 175 42.58

The amount of fund for collaborate research with enterprises. The percentage for collaborative research in the total University research funds.
b

research on technology transfer in Western countries, there has been no research found on this issue in the context of China. This paper is intended to lay a foundation for future research by providing a framework for technology development and transfer in China and provide some practical guidelines for enterprises and governments concerned. The framework developed in this paper addresses the central issue of what factors inuence HEIs behaviour in terms of technology development and transfer in China. Based on this framework, the following points can be made: HEIs behaviour in technology development and transfer is a function of the economic system which is determined by government policy (and fundamental ideology). China has been making the transition from a planned to market-orientated economy, and thus the management structure and system of research institutions have gone through several changes and so has the behaviour of HEIs. Chinas economic system is still at a transitional stage, with a mixture of market-orientated and government controlled economy. Thus, Western theories and practices and policy frameworks concerning technology transfer may be applied in China with caution. New theories and policy frameworks may need to be developed and tested. Since Chinas economic system is still evolving, the search for the best practices of technology transfer should be of a dynamic nature. An important way of nding such practices is trial and error. Because of the changing economic system, many traditional channels of communication and relationships between government, HEIs, and enterprises have been interrupted or altered. HEIs, as well as enterprises, should endeavour to nd new ways of establishing collaborative relationships or communication channels. A more sophisticated environment dependence model in the context of China may be expanded. It appears that different governmental departments have a role in co-ordinating and facilitating technology transfer in their own systems, such as the Ministry of Education and Ministry of Science and Technology. It may be necessary to have a joint committee between different departments to develop and implement policies concerning technology transfer. Such a committee can regularly review the best practices of technology transfer at various HEIs and other research institutions in China and disseminate these practices among all HEIs and institutions. The case study of technology transfer at Tsinghua University indicates that many successful practices already exist and these can be summarised and disseminated. The top management of both HEIs and enterprises should be seeking ways of overcoming barriers to technology transfer. From an HEI perspective, researchers should be given more autonomy and more nancial and non-nancial benets than they currently receive through

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their work of technology transfer. From an enterprise perspective, top management should take a strategic view of technology transfer, and thus be willing to invest in technology transfer. A fairer share of benets should be considered for the provider of technology transfer and the protection of the intellectual property rights of the technology provider should be taken more seriously. An overview of technology transfer from HEIs to industry in China has shown that HEIs have already become an important part of Chinas science and technology system and a major source of new technology. At present, China suffers from a low rate of commercialisation of new technology, and thus nding ways of increasing the effectiveness of technology transfer has strategic implications for both Chinese and foreign governments. From the point of view of the Chinese government, China would accelerate its economic development and shorten the gap between itself and developed countries. From the perspective of foreign governments, it means that they are facing an increasingly stronger competitor.

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H. Liu, Y. Jiang / Technovation 21 (2001) 175188 Hong Liu joined Manchester Business School in 1992, with a background in engineering and economics. He completed his Ph.D. at Warwick Business School, having been awarded a marketing scholarship prize. He consulted for the OECD, the Brunei government, the Chinese government, and a number of major companies. He is the Director of China Business Centre, and has been awarded a number of grants from the British Government and United Nations for research and management training. He has published widely on business strategies in China. Yunzhong Jiang is the Deputy Director, the Ofce of International Co-operation and Exchange at Tsinghua University. With a bachelor degree in Management Information System, he was previously the Deputy Director of Undergraduate Affairs Ofce and the Ofce for Hong Kong, Macao and Taiwan Affairs at Tsinghua University. Between 1998 and 1999 he was undertaking research at Manchester Business School as a visiting researcher.