Exploring the transfer of R&D to China

Abstract:

This master thesis explores the transfer of R&D activities from Western MNC’s to their Chinese subsidiaries and how companies can leverage key enablers to address main barriers in this process. The research project is conducted as a multiple-case study consisting of three case companies: the Danish pharmaceutical company Novo Nordisk, the Swiss/Swedish power and automation company ABB and the global food and beverage company Nestlé. The main rationale for conducting this study is that a significantly increasing level of foreign invested R&D is conducted in the Chinese environment with its increasingly important market. In order to preserve competitive advantages and secure global market penetration it could be necessary for other companies as well to undertake a similar process of transferring R&D.

The main barriers identified are the difficulty to find qualified employees in China, to train and retain the recruited employees and the language gaps that are present between the Western and the Chinese units. One key enabler applied to address these barriers is to organize activities at selected Chinese universities in order to attract skilled graduates. Utilizing expatriates and short-term traveling increases personal interaction between otherwise geographically distant employees together with providing training of increasing complexity are key enablers addressed to develop the Chinese employee’s knowledge. Language courses is the key enabler applied in order to decrease the language gaps, both Chinese courses for Westerners and English courses for Chinese.

In addition to identifying barriers and enablers and investigating their interrelatedness we propose a conceptual model for R&D transfer consisting of four elements to transfer together with implementation of the transferred knowledge at the receiving unit. In our view, the elements to transfer are physical objects, individual explicit knowledge, individual tacit knowledge and collective knowledge.