Forced Tech Transfers Are INCREASING In China, European Firms Say

“That is a key issue driving stress between China and its own trade companions and closing its persistence must be a priority for the federal government,” said Charlotte Roule, the chamber’s vice leader. Foreign ministry spokesman Lu Kang said the foreign-investment law stipulates that no administrative procedures can be studied to power technology transfer. China Aims to Placate U.S.

How China Systematically Pries Technology From U.S. “If those companies truly have such concerns, I hope they can offer concrete evidence. If their concerns are legitimate and fact-based, it can be tackled totally, because we clearly have this policy. But with no proof, you can not invent that from nothing just,” he said. Forced technology transfer is a central sticking point in the continuing U.S.-China trade fight.

U.S. professionals regularly complain they are pressured to share or hand out crucial technology in trade for usage of China’s market, and declare it undermines the competitiveness of international companies. China’s reliance on international technology remains substantial, according to S&P Global Ratings. More than half of suppliers to China’s tech-using sectors are foreign-based.

Most of those foreign suppliers supply intermediate goods China discovers hard to create. China’s largest goods transfer by value is semiconductors-more than 12% of total imports. Due to investment limitations on some sectors in China, many European firms’ only choice is to use through joint projects with domestic partners where the European partner can’t hold a managing stake.

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Some respondents reported they were forced at hand over sensitive technology to companions that later became competitors. The chamber mentioned that technology transfer requirements were especially obvious in joint ventures with state-owned businesses as partners, and that the nagging problem affects companies making everything from chemicals to medical devices. Government metrics reward local companies for attracting new international technology, while rules sometimes need a foreign company to produce its product in China to market it, making such transfers “a dependence on doing business in China,” respondents told the chamber.

“This is something that’s occurring now,” said Carlo D’Andrea, chairman of the chamber’s Shanghai chapter, noting a ban on such activity in China’s new foreign-investment legislation is essentially an acknowledgment forced transfer happens. One-quarter of European companies polled have came into into a relationship with a state-owned business in China before 24 months, based on the chamber.