China and the Multinationals

China and the Multinationals

International Business and the Entry of China into the Global Economy

New Horizons in International Business series

Edited by Robert Pearce

This original and important book explores how the interaction between China and multinational enterprises has the potential to affect the future of the Chinese economy, the global economy, and international business.

Chapter 4: The Growth and Strategic Orientation of Multinationals’ R & D in China

Feng Zhang and Robert Pearce

Subjects: asian studies, asian business, asian economics, business and management, asia business, international business, strategic management, economics and finance, asian economics


4. The growth and strategic orientation of multinationals’ R&D in China Feng Zhang and Robert Pearce INTRODUCTION In a now familiar aphorism Terpstra (1977, p. 25) stated that ‘the last activity of the firm to be organised on an international basis – if it is at all – is R&D’. In fact by the mid-1970s both the extent of, and academic interest in,1 overseas research and development (R&D) in mature multinational enterprises (MNEs) was becoming significant. Subsequent investigation of MNE R&D soon suggested that, far from being a belated ad hoc add-on to the scope of their international operations, dispersed R&D had become part of carefully articulated technology strategies and programmes. As new firms embarked on strategic internationalisation, or when mature MNEs entered newly open economies for the first time, incorporation of R&D facilities early in their expansion profiles became a matter of routine consideration. A classic example of this speeding up of the functional sequencing implied by Terpstra has been the alacrity with which localised R&D has become part of the competitive scope of MNEs entering China (Von Zedtwitz, 2004; Zhou, 2005). This chapter seeks to provide some insights on this phenomenon. In the next section we provide some of the evidence on the extent of foreign firms’ R&D in China as it has emerged over the past decade. In the following two sections we then interpret website information on two leading MNEs with significant R&D in China, to review the...

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