Formal modes of technology transfer, e.g. contract research, patenting, licensing and spin-offs, are well established domestically, both in Belgium and China. When we add an international dimension to technology transfer, we see that technology transfer is present between industries. However, when we look at universities, we observe that an international technology transfer dimension is missing. This presentation sets the ground for EU-China university technology transfer.
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Technology Transfer with China: a University Perspective
1. 1
technology transfer with China
a u n i v e r s i t y p e r s p e c t i v e
Kevin De Moortel
Vrije Universiteit Brussel
2020 - Brussels
2. 2
content
p r e f a c e … p . 3
u n i v e r s i t y k n o w l e d g e
a n d t e c h n o l o g y t r a n s f e r … p . 1 0
EU-China … p. 4
Belgium-China … p. 5
VUB-China … p. 8
knowledge vs. technology … p. 10
university technology transfer … p. 11
t e c h n o l o g y t r a n s f e r m o d e l s … p . 1 6
existing technology transfer models … p. 17
EU-China university technology transfer … p. 28
i n n o v a t i o n i n C h i n a … p . 3 5
mission, vision, programs, and output … p. 36
innovation characteristics … p. 48
t e c h n o l o g y t r a n s f e r i n C h i n a … p . 6 1
Chinese technology transfer regulation … p. 62
Chinese university technology transfer ecosystem … p. 67
d o i n g b u s i n e s s w i t h C h i n a … p . 9 4
before you start … p. 95
conduct research … p. 110
business model … p. 118
entry strategies … p. 122
finding a partner … p. 132
selecting a partner … p. 134
IP protection and strategy … p. 139
actual business … p. 151
practicals … p. 153
c o l l a b o r a t i o n m o d e l s … p . 1 5 6
r e c o m m e n d a t i o n s … p . 1 7 1
roadmaps … p. 172
align stakeholders … p. 178
connecting ecosystems … p. 179
use of case templates … p. 180
s o u r c e s … p . 1 8 1
c o n t r i b u t i o n s … p . 1 8 5
P A R T 1 – T E C H N O L O G Y T R A N S F E R
B A C K G R O U N D
P A R T 2 – C H I N A B A C K G R O U N D
P A R T 3 – E U - C H I N A U N I V E R S I T Y
T E C H N O L O G Y T R A N S F E R
4. 4
EU-China
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…
• 1975: first diplomatic ties
• 1998: agreement on Science and Technology provides a basis for cooperative scientific and technological research and development activities. The
agreement
• Renewed in 2004 and 2009
• Will be renewed by the end of 2019 for another 5-year period.
• 2003: EU-China Comprehensive Strategic Partnership
• 2015: EU-China 2020 Cooperation Strategy to create synergies between EU 2020 Strategy & China’s 12th Five year plan.
• Peace & Security – Prosperity - Sustainable development - P2P exchanges
• China has been the third most important international partner country under the Framework Programme 7 (FP7) that run from 2007 to 2013
• 383 participations of Chinese organizations in 274 collaborative research projects and a total EU contribution of 35.24 million euros.
• China is an important partner in Horizon 2020, the EU’s research and innovation program, Running from 2014 to 2020 + Flagship Initiatives
• 227 applications from China were presented in 187 eligible proposals, with 60 participations of Chinese organizations in 33 main listed projects.
• Gatherings
• Annual high level strategic dialogue - the annual high level economic and trade dialogue - bi-annual people-to-people dialogue - EU-China summit
(e.g. 2015) - high level innovation cooperation dialogue (e.g. 2017, 2019)
5. 5
Belgium-China
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• Start: Belgium one of the first technology transfer partners of China
• 1979: bilateral agreement for economic, industrial, scientific and technical cooperation between the Belgian-Luxemburg Economic Union (BLEU)
and the People's Republic of China
• 12 cooperation projects approved
• Now: Technology transfer collaborations going deeper in all fields
• Rise of S&T and research centers
• China-Belgium Technology Center (CBTC)
• EU-China Higher Education Research Center
• Governmental projects
• Ministry of Science & Technology of China: research projects
• FWO
• Exchange agreements with Chinese Academy of Medical Sciences (CAMS), Chinese Academy of Sciences (CAS), Chinese Academy
of Social Sciences (CASS)
• Scientific and research cooperation with National Natural Science Foundation of China (NSFC)
6. 6
Belgium-China
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…
• Now: Technology transfer collaborations going deeper in all fields
• Creating synergies between universities, industry, and government
• 2017: 1st China-Belgium Innovation Dialogue
• Belgium was the first Western country to provide China with interest-free loans
• Joint funds
• 2004: Belgium is first country to establish an industrial cooperation fund with China: China-Belgium Direct Equity Investment Fund (focus
on health & medicine)
• 2017: Belgian membership in Asia Investment Bank (International infrastructure).
• Results in
• Over 70 S&T agreements signed
• Over 470 inter-governmental S&T projects
• Belgium is China’s 7th largest trading partner (mainly in machines, electric parts, and metals)
• China is Belgium’s 2nd largest trading partner (mainly in chemicals, pharma, and machines)
8. 8
VUB-China
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• 7,6% of international students is Chinese (2017)
• China in top 5 of incoming countries
• Brussels Academy for China and European Studies (BACES)
• 2014, Beijing: inauguration by Vice Premier Liu Yandong and EU Commissioner Androulla Vassiliou
• 2016: Confucius Institute at VUB
• Will not be prolongued in 2020
• Northwestern Politechnical University (NPU) is VUB’s first Privileged International Partnership (2014)
• 15+ active Chinese partner universities & wide ecosystem connection
• China related scholarship programs available
• Wide alumni network
• Other
• Visit of Vice Premier Madam LIU Yandong to VUB, 16 Sep 2015
• Prof. Jan Cornelis, Vice Rector International Policy received the National Friendship Award of China, 2015
• VUB China network platform
9. 9
VUB-China
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• UCIP project
• Innoviris-funded project
• 2016 - 2019
• “University-centered international platform on innovation & technology transfer”
• Project with four project partner universities
• Focus regions Brussels, Xi’an, Chengdu, Beijing
• Goals
• Assemble & disseminate knowlegde
• Workshops & research
• Conferences & events
• Support & establish real-life technology transfer cases
11. 11
knowledge vs. technology
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• Third mission of university next to teaching and research = Knowledge & Technology Transfer
• Broad definition
• KTT the flowback of knowledge and discoveries to the general public
• Often from a university context to non-academic environment
• Knowledge vs. Technology
• Technology: knowing how things are done; more explicit; usually in documents, blueprints... (e.g. the ability to control temperatures and pressures
to align grains of silicon and form silicon steel).
• Knowledge: knowing why things occur; more tacit; usually in the minds of people (e.g. understanding the underlying chemical and physical process
that produces the alignment).
• Note: some pose that technology and knowledge transfer activities are interrelated, others pose that the one encapsulates the other.
12. 12
university technology transfer
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…
• Knowledge transfer = Informal modes
• Mobility (students or staff)
• Internships
• Conferences & events
• Informal exchanges
• Trainings
• …
• Technology transfer = formal modes, concerned with the valorization and commercialization of inventions/products.
• Contract research
• Patents
• Publications
• Spin-offs
• Licensing
• …
KNOWLEGDE VS TECHNOLOGY TRANSFER
WE FOCUS ON
TECHNOLOGY TRANSFER
13. 13
university technology transfer
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…
• Innovative research with valorization
potential
• Hovering the applications
• Proving feasibility
• Technology & testing development
• Towards proof-of concept / prototype
STAGES AT UNIVERSITY
RESEARCH STAGE TECHNOLOGY STAGE SPIN-OFF STAGE
• Technology demonstration
• Data gathering
• Initial sales/licensing
• Clear application(s) in mind
• University spin-off
• Technology – product ready
• Clear market(s)
• Growth
14. 14
university technology transfer
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STAGES AT UNIVERSITY
RESEARCH STAGE TECHNOLOGY STAGE SPIN-OFF STAGE
15. 15
university technology transfer
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STAGES AT UNIVERSITY
RESEARCH STAGE TECHNOLOGY STAGE SPIN-OFF STAGE
22. 22
existing technology transfer models
NOTE ON INTER-REGIONAL TECHNOLOGY TRANSFER
• China’s overall innovation capability has improved, innovation capabilities, R&D resources, and technology transfer performance vary across China’s eastern, central,
and western areas due to uneven economic development.
• The eastern coastal provinces, especially those in the Yangtze River Economic Circle, the Pearl River Economic Circle, and the capital city of Beijing, are the
most innovative areas in China. As an indication, the total amount of patent applications originating from these three areas constituted 48.22% of the total
amount of patent applications in 2015
• Chinese inter-regional knowledge transfer is relatively weak, while it plays a key role to improve innovation capabilities of less favored Chinese regions.
• Like a “bridge” connecting different regions, inter-regional knowledge transfer becomes an important way to realize the cross-region spreading and sharing of
innovative resources and to promote technological progress in underdeveloped regions.
• Findings
• On an inter-regional level, our findings point to steadily increasing knowledge transfer activity,
which is key to overcome the underdevelopment of some Chinese regions.
• the percentage of isolated Chinese regions in the university knowledge transfer network
decreases from around 90% to less than 5% with a steep drop in 2009.
• Suggestion
• Governments could cultivate regional interpersonal networks by encouraging inter-regional
mobility and subsidizing joint research and development projects or joint regional conferences
• Similar effort, although in a cross-country setting, is found in Europe with the introduction
of the ‘European Research Area’ in 2000
23. 23
existing technology transfer models
NOTE ON INTER-REGIONAL TECHNOLOGY TRANSFER
• Example in practice
• The Greater Bay Area (GBA) is a key strategic component of China’s national development blueprint. It aims to promote in-depth cooperation
among nine cities in Guangdong Province and the Special Administrative Regions of Hong Kong and Macau, with the aim to develop a world-
class city cluster by way of reforms, innovation and opening-up
• On February 18 2019, China’s central government authorities issued the Outline Development Plan for the Guangdong-Hong Kong-Macao
Greater Bay Area (GBA), commencing a new phase of economic and social integration for the Pearl River Delta region
25. 25
existing technology transfer models
ecosystem ecosystem
BELGIUM
CHINA
FOREIGN DIRECT INVESTMENT
JOINT VENTURE & ALLIANCES
WFOEs
SUBSIDIARIES
26. 26
existing technology transfer models
ecosystem ecosystem
BELGIUM
CHINA
FOREIGN DIRECT INVESTMENT
In 2016, China invested 36.9 billion euros in Europe,
while EU companies invested 7.7 billion euros in China.
27. 27
missing technology transfer models
university
ecosystem
university
ecosystem
BELGIUM
CHINA
“EU-China university technology transfer”
28. 28
EU-China university techtransfer
BOTTOM-UP NEEDSINTERNATIONALIZATION
supporting researcher
initiatives
logical extension of existing
research and innovation
activities
UNUSED IP
considerable amount of
intellectual property is left
unused across the world
30. 30
EU-China university techtransfer
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They have a unique
intonation.
Our platforms helps
physiotherapists to
monitor their overload
of patients from a
distance.
High mortality rate due
to accidents with large
vehicles. We could
prevent that from
happening.
… …
33. 33
EU-China university techtransfer
OPPORTUNITIES CHALLENGES
market – continent
speed
experimentation
cheaper
need our technologies
global
access
increasing labor cost
transparency
IP awareness
competition
accommodate interest
?
34. 34
EU-China university technology transfer
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High mortality rate due
to accidents with large
vehicles. We could
prevent that from
happening.
…
…
AND IT INCREAISNGLY
GOES BOTH WAYS…
36. 36
innovation in China
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NATIONAL VISSION
• Xi Jinping: national objective to increase China’s GDP and economic development through innovation & IP
• IP protection system as essential tool
• Opinions of State Council: Building powerful IP nation under new conditions (2015)
• National and International Technology Transfer as main driver for further development
• Li Keqiang: “Mass Entrepreneurship & Innovation”
• Ministry of Science and Technology (MOST): National Strategy of Innovation-Driven Development – 2020, 2020, 2040
• Develop China into an innovation-oriented country by 2020
• Place China amongst the top innovation-oriented countries by 2030
• Turn China into a technological innovation powerhouse by 2049 (the 100th anniversary of the founding of China)
• More than 80% of the population are satisfied with the current political leadership of the country.
• The “visible” economic growth is a sign for the people that the country’s leadership is functioning.
• Positive influences on the Chinese science, technology and innovation (STI) landscape
37. 37
innovation in China
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(13th) Five-Year Plan - research & innovation priorities (2016-2020)
Medium and Long Term S&T Development Plan 2006-2020
The National Plan for Building Indigenous Innovation Capabilities
Purpose of promoting the development of technological innovation in domestic firms, eventually leading to the ownership of their own core IP rights.
“Smart & Home Made” - Made in China 2025
Upgrade the manufacturing capabilities of Chinese industries into a more technology-intensive powerhouse
PLANS & PROGRAMS
Quantum communications and computation - Brain research - National cyberspace security - Deep space exploration - Clean, efficient use of coal -
Industrial, medical and military robots - Applications of gene science - Big data applications - Deep-sea experimental platform - New Arctic observatory,
Antarctic station
38. 38
innovation in China
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…
• China’s growth
• China’s share in the world economy from 1.8% in 1978 to 15% in 2015.
• GDP in 2018: $13.35 trillion
• Investment & export driven growth
• Boost services share in GDP to 60% in 2015
• But… GDP/Capita ($PPP, 2018) – still room to grow.
• China: 18,109.8
• Belgium: 48,244.7
• GII 2018: China ranks 17th, making it the first and only middle-income country ever to reach the top 20 of innovative countries.
• Geography of innovation is shifting from high-income to middle-income economies
• “Moving from a successful middle-income economy with innovation potential into an innovation powerhouse remains hard; an innovation
glass ceiling exists that divides middle & high-income economies. Most of the drive to break through that ceiling comes from China”
SURGE OF INNOVATION OUTPUT
39. 39
innovation in China
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• Patents
• In 2011, China became the top country in terms of number of patent applications with over 56 million patent applications
• In 2016, China received more patent applications than the combined total for the United States of America, Japan, the Republic of Korea and
the European Patent Office.
• Yearly growth rate in patent and trademark applications by 20%
• WIPO China shares 42.8% of total patent application in 2016
• Mostly domestic filings
• Intellectual property in general
• China maintains top ranks in Patents by origin, Industrial designs, and Trademarks by origin as well as High-tech net exports and Creative
goods exports.
• BUT high reliance on IP
• Too much reliance dangerous?
• IP quality? No consensus yet.
SURGE OF INNOVATION OUTPUT
40. 40
innovation in China
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• R&D expenditure
• R&D spending share of the GDP is continuously rising
• China’s R&D expenditure surpassed the European Union in 2015 and, at a growth rate for R&D expenditure of 7.1% (in 2017), China’s R&D is
expected to surpass U.S. by 2026 R&D investments have been rising as well
• In 2016
• China's R&D expenditure was about 1,567.67 billion yuan.
• R&D expenditure intensity reached 2.11%. (As a benchmark, the OECD countries average R&D expenditure intensity was 2.40% on
average, that of EU15 is 2.08%)
• But
• The quality in R&D in China is still poor in some areas, but the overall R&D performance has increased.
• Some technology areas China is still very dependent on foreign know-how, but this has to be considered case-by-case – opportunity
for collaboration
• Chinese national dept higher
• Trade war with US
• Shifting focus from innovation quantity to innovation quality remains a priority
SURGE OF INNOVATION OUTPUT
41. 41
innovation in China
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patents
industrial
design &
trademarks
2011
world leader
today: top
ranks
China’s
growth
2018
GDP $13.35
trillion
R&D
expenditure
2015
surpassed the
European
Union
global
innovation
index
2018
17th position
first & only
MIC in top 20
SURGE OF INNOVATION OUTPUT
42. 42
innovation in China
We need vocal data
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intonation.
…
patents
industrial
design &
trademarks
2011
world leader
today: top
ranks
China’s
growth
2018
GDP $13.35
trillion
R&D
expenditure
2015
surpassed the
European
Union
global
innovation
index
2018
17th position
first & only
MIC in top 20
too much?
per capita? dependency?
stuck?
SURGE OF INNOVATION OUTPUT
43. 43
innovation in China
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SURGE OF INNOVATION OUTPUT
44. 44
innovation in China
UNIVERSITY OUTPUT
R&D expenditure
2008: 0.4 million yuan
2015: 1 billion yuan
2017: 1.2 billion yuan
2016
17,1 % of scientific papers
second in the world
46. 46
innovation in China
UNIVERSITY OUTPUT
Strong growth in the patenting activity of less-experienced Chinese universities
Amount of patent applications (2004-2014) Annual average growth rate (2004-2014)
Top 5 Last 5 Top 5 Last 5
Zhejiang University: 24,926 Yunnan University: 743 Xinjiang University:
175.78%
Shanghai Jiaotong University:
14.12%
Tsinghua University:
19,636
Lanzhou University: 631 Northwest A&F University:
160.84%
Tsinghua University: 13.86%
Shanghai Jiaotong University:
13,688
Xinjiang University: 325 National University of Defense
Technology:
118.43%
Nankai University: 12.64%
Beihang University: 12,404 Minzu University of China:
62
Peking University:
81.07%
Ocean University of China: 11.05%
Southeast University:
12,316
Renmin University of China:
6
Sun Yat-Sen University: 77.65% Fudan University: 10.59%
47. 47
innovation in China
UNIVERSITY OUTPUT
• Although the number of patents has increased dramatically, the growth of licensing has been far slower
• Spin-offs also quiet low as mechanism
• Generally
• In some cases an outstanding intensity in the university-industry collaboration can be reported. A couple of shinning examples are the China
University of Geosciences or the China University of Petroleum, who have managed to establish successful collaboration strategies with
industry partners.
• However, according to the Asia 100 report these extraordinary collaborations are unfortunately not representative, as most organizations
analyzed in the report were demonstrating much lower intensities in their collaboration with the industry in China
48. 48
innovation in China
…
CHARACTERISATION
• 1978: Reform & Opening up
• Past 40 years
• From independent country to global open oriented.
• “China wades across the river carefully groping for the stones under its feet Deng” – Deng Xiaoping
• 2001: China joins World Trade Organization = milestone in Chinese history
• State Council Document No. 5 or Circular 5: notice on Several Measures on Promoting Further Openness and Active
Utilization of Foreign Investment (2017)
• Take further steps to open up to the outside world.
• Further create an environment of fair competition.
• Further strengthen efforts to attract foreign investment.
• Also global universities
OPEN & GLOBAL
TALENTS &
RETURNEES
CUSTOMER &
EFFICIENCY
49. 49
innovation in China
…
CHARACTERISATION
• Belt & Road Initiative
• Global development strategy adopted by the Chinese government involving infrastructure development and
investments in 152 countries and international organizations in Asia, Europe, Africa, the Middle East, and
the Americas
• "Belt" refers to the overland routes for road and rail transportation, called "the Silk Road Economic Belt"
• “Road" refers to the sea routes, or the 21st Century Maritime Silk Road.
• Cultivate a new economic growth point of the world, to promote regional cooperation, to strengthen the
connection between Chinese and the world economy, and narrow the development gap between China’s
eastern and western regions
• Regional infrastructure upgrade
• Connectivity (physically through block train and ports)
• Universities in the Belt & Road Initiative
• Methods to engage in this are joint graduate schools, new international spin-off companies, and
the university as a neutral platform or think-tank.
• Connectivity in the academic world should not be neglected (IP, laws…). Connections between
universities need to be strengthened
OPEN & GLOBAL
TALENTS &
RETURNEES
CUSTOMER &
EFFICIENCY
50. 50
innovation in China
…
CHARACTERISATION
• Belt & Road Initiative
• Focus areas
• Transport & logistics
• Energy
• Pharma
• Advanced manufacturing.
• Challenges
• Security and safety
• Sustainable development
• Mutual trust
• The American attitude (reluctant to the possibilities)
• Competition getting overhand on cooperation
• Level plate field (all sides should have equal and shared chance to benefit form cooperation)
OPEN & GLOBAL
TALENTS &
RETURNEES
CUSTOMER &
EFFICIENCY
52. 52
innovation in China
…
CHARACTERISATION
OPEN & GLOBAL
TALENTS &
RETURNEES
CUSTOMER &
EFFICIENCY
• Programs support the free movement of students and researchers
• ‘Returnees’ = Chinese researchers returning to China from abroad after longer research stays
abroad
• Returnees are seen as an important source of knowledge and a number of programs
have been introduced to attract them to come back to China.
• For Chinese citizens, the Thousand Talents program is one of rather few opportunities to go
abroad.
• But very often, it is difficult for Chinese STI stakeholders to go abroad
• Approval and visa processes are very complex
• The organizational ratio behind very high.
53. 53
innovation in China
…
CHARACTERISATION
OPEN & GLOBAL
TALENTS &
RETURNEES
CUSTOMER &
EFFICIENCY
• Favorable conditions to foreigners
• Sub-national governments frequently offer site location services and tax credits to attract
foreign high-tech firms.
• China became more ‘open’ than ever, especially for working with global talent.
• “Great people attract great people”
• E.g. Baidu has a tech talent pool of hundred of great engineers in US and ten thousand in
China.
• Investments
• “Better serving investors to attract foreign capital” - China Daily editorial
• “China vows easier market access for foreign investors, on course for greater opening-up”
• Example: Zhonghuancun Science Park
• Zhonguancun will set up science parks along belt and road countries!
• Collaboration with international academics, universities, and think-thanks
• International joint R&D programs and joint labs
• International co-incubation and TT
55. 55
innovation in China
…
OPEN & GLOBAL
TALENTS &
RETURNEES
CUSTOMER &
EFFICIENCY
• main innovation drivers
• Customer-focused: internet economy
• Huge scale! A niche in China can be larger than a major industry in another economy
• Efficiency-driven
• Manufacturing, reducing costs, improving quality
• E.g. Shenzen’s ecosystem advantage
• “very low cost & high scalable”
• The productivity improvement imperative: urgency to address pain points with innovative solutions.
• Example
• As economic drives lure more and more Chinese into the cities, who are spending their money more than ever
before, so urbanization and rapidly increasing consumer wealth if you want, “lifestyle diseases” started to take
a heavier toll. Beijing’s legendary one-child policy began to backfire: while it helped slow down population
growth, it heavily shifted the country towards an aging society – with all its health-related troubles
• 2015: 9% of Chinese population = 65+
• By 2050: 24% of Chinese population = 65+
CHARACTERISATION
57. 57
innovation in China
…
OPEN & GLOBAL
TALENTS &
RETURNEES
CUSTOMER &
EFFICIENCY
• other innovation drivers
• Science-based: build upon R&D institutions
• Lagging behind in R&D, although large investments made
• US > CH in promoting startups
• Engineering-based: industrial value chain
• Strong governmental support (e.g. high speed rail and wind turbines)
CHARACTERISATION
58. 58
innovation in China
SECTORS
Leading in sectors
Security
Entertainment
Social Media
Retail
Second phase
Finance
Automotive
Smart Manufacturing
Third phase
Micro-electronics
Chemics
New materials
Biotechnology
59. 59
innovation in China
SECTORS
What about Artificial Intelligence?
Presence in all sectors:
Smart health
Smart automobile
Smart education
Smart finance
Smart manufacturing
Smart security and surveillance
Smart entertainment
Smart home
Smart retail
Smart transportation
China aims to become the world leader in A.I. by 2030, aiming to surpass its rivals technologically, and build a domestic industry worth almost $150 billion.
60. 60
innovation in China
OVERALL
From export to export and import
From FDI now also invest outside china
From east to all regions
From manufacturing to service sectors
Internal first focus
Sustainability
62. 62
Chinese technology transfer regulation
…
IP PROTECTION: PATENTS
Patent law (revision 2008)
Implementing Rules of the Patent Law of the PRC (Revised in 2010)
Interpretations of the Supreme People‘s Court Concerning Certain Issues on the Application of Law for the Trial of Cases on Disputes over
Infringement on Patent Rights (2009 & 2016)
Several Provisions of the Supreme People's Court on Issues concerning the Application of Law in the Trial of Patent Dispute Cases (Revised
in 2015)
Several Provisions of the Supreme People's Court on the Issues Concerning the Application of Law to Terminating Infringement upon
Patent Prior to Litigation
IP PROTECTION: TRADEMARKS
Trademark Law of the PRC (Revised in 2013)
Implementing Regulations of the Trademark Law of the People's Republic of China (Revised in 2014)
63. 63
Chinese technology transfer regulation
…
IP PROTECTION: COPYRIGHTS
Copyright Law of the PRC (Revised in 2010)
Implementing Regulations of the Copyright Law of the PRC (Revised in 2013)
Regulations on Computer Software Protection (Revised in 2013)
Regulations for the Implementation of International Copyright Treaties (1992)
Regulations on the Protection of Rights to Information Network Communication
(Revised in 2013)
IP PROTECTION: OTHER IP
Regulation of the People's Republic of China on the Customs Protection of Intellectual Property Rights (2010 Revision)
Anti-Unfair Competition Law of the People's Republic of China (2017 Revision, Draft Amendment is soliciting public opinion)
Interpretation of the Supreme People's Court on Some Issues Concerning the Application of Law in the Trial of Civil Cases
Involving Unfair Competition
Regulations on the Protection of Layout-Designs of Integrated Circuits
64. 64
Chinese technology transfer regulation
TECHNOLOGY TRANSFER LAWS & REGULATION
Science and Technology Progress Law of 1993 – “establishment of TT”
1996: Law on Promoting the Transformation of S&T achievements to regulate and promote transfer into real productivity,
promote advancement of S&T.
Contract Law of People’s Republic of China (1999).
Regulations on administration of technology import and export (2002 & 2019)
2017 – Construction plan of National Technology Transfer System
2017 – Guidelines on the construction of national S&T Achievements Transfer and Transformation Demonstration Area
2018 – Technical Transfer Service Specification
2019 - On March 2, 2019 the State Council by its decision No. 709 in paragraph 38 deleted several provisions of the
Regulations of the People's Republic of China on the Administration of Import and Export of Technology (“TIER”) which have
been at the center of problems for foreign IP owners when engaging in technology import to a Chinese entity. This change
opens up technology imports to more free negotiation without having to consider these mandatory restrictions which
previously protected the Chinese entities in such agreements.
65. 65
Chinese technology transfer regulation
IP LAWS & REGULATION
since 2008: strengthened
intellectual property protection is no longer a
(structural) problem in china; managing IP
requires specific attention
dedicated IP courts resolving disputes; most
disputes are domestic
IP promotion and protection is a top priority
for the Chinese authorities since they have
own IP to protect now
TECHNOLOGY TRANSFER LAWS & REGULATION
since 2015: strengthened
reaction on national innovation initiatives
rules on what (not) & how to import or export
UNIVERSITY TECHNOLOGY TRANSFER LAWS & REGULATION
greater autonomy
in research
activities
weakened
ministry control
1996
Law on Promoting the
Transformation of S&T
achievements
clarification role
universities
• independent
• profits
• individuals
infrastructure
incentives & initiatives
awareness &
encouragement
2020
66. 66
Chinese technology transfer regulation
• MOST (Ministry of Science & Technology): issued action to promotor S&T transformation at universities!
• Top level design and internal collaboration of colleges and universities
• Establish system of TT and KT,
• cultivate group of specialized S&T achievements,
• build service organization,
• stimulate researchers to engage in UIC
• improve quality of scientific research
• Ministry of Human resources & Social Security: guidance on supporting and encouraging researchers in institution to
innovate and start business (e.g. participation in industry projects, part-time jobs, leaving and coming back…)
• National TT Initiative: by 2020 TT system ready. encourages universities to focus more on TT and to think how their
research can benefit public.
UNIVERSITY TECHNOLOGY TRANSFER LAWS & REGULATION
67. 67
Chinese universities
China has around 2,000 formally recognized universities,
ranging from small private highly specialized institutions
through to large, comprehensive universities falling under the
direct control of the Ministry of Education (MOE)
The Double First Class University Plan is a Chinese
government plan conceived in 2015 to comprehensively
develop a group of elite Chinese universities and individual
university departments into world-class universities and
disciplines by the end of 2050.
42 first-class universities (36 Class A schools & 6 Class B
schools)
• A: Tsinghua University, Tongji University, Renmin University,
Sichuan University, University of Science & Technology
• B: Hunan University, Xinjiang University – potentially world-
class
9 elite universities
• Tsinghua University
• Peking University
• Zhejiang University
• Nanjing University
• Fudan University
• Shanghai Jiao Tong University (SJTU)
• Xi’an Jiaotong University (XJTU)
• University of Science and Technology of
China (USTC)
• Harbin Institute of Technology (HIT)
68. 68
TRADITIONAL ENVIRONMENT
Chinese universities
clear division between intellectuals & business men
no self-employment formed in university; unique cases
academic entrepreneurship ignored or even considered not doing the right thing
Renewed perception on technology transfer and entrepreneurship
• source of revenues since pressure on budgets
• creates jobs
• also a way to build reputation
Changing incentive system
• encouraged to be involved in technology transfer activities and create spin-off
companies
• permission to work part-time or quit current positions
• financial incentives (revenues, shares, dividends, royalties) – examples:
• 20% of the incomes from technology transfer should be given to
Inventor(s) as rewards; this ratio should be raised to > 50% for state-
owned institutions.
• In 3-5 years after a scientific and technological achievement is put into
production, Inventor(s) can have > 5% of the annual net income gained
from such achievement.
• Incentives in terms of equity shares and dividend rights are carried out in
state-owned high-tech enterprises.
• National: Inventor share of royalty increase from 15% to 70% in 2015
(e.g. Stanford is 28.3%).
• Regional: Inventors share 99% of royalty in Wuhan & Hubei
CHANGING ENVIRONMENT
70. 70
Chinese professors
often considered advisors of government
profile of Chinese academic entrepreneurs
• young scholar (ambitious)
• senior (time & experience).
• Majority still focuses on education (#students) & research
(#funding, research).
individual level factors
• status
• social network & relation vis a vis government
• experience in entrepreneurship (“prior knowledge”)
• perceived quality of invention or patent
• political risk (e.g. before 2015, scholars who act as university
party committee member should not hold equity)
• funding
“Some of our team members already did
scientific research in universities or
research institutes for many years before
setting up the company. Inevitably, some
research achievements were made in
their scientists’ careers, but they did not
think too much about the possibility of
applying these achievements in
commercial uses…”
INTERVIEW WITH CHINESE SPIN-OFF
72. 72
Chinese professors
Leverage on the the good
students, creating long-
term connections.
Students commercialize
the products.
Departments have improved the support system of university student
entrepreneurship and local laws and regulation have been formulated,
mainly on three aspects
1. Tax reduction and financial preferential policies
• e.g. Employment Entrepreneurship certificate
• entrepreneurship graduates loan and discount, exemption
from admin frees and charges (e.g. guaranteed loans, waiving
administrative fees social security, field rent,…)
2. Provide public services to student to start their businesses
• free services and guidance,
3. Promote reform of I & E education in universities
• cultivate the talents (interdisc. courses), E related courses,
online MOOCs, in practice (e.g. connection with SP,
entrepreneurial bases, labs??? all open to students),
competitions, reform teaching systems (use of credits, status).
73. 73
Chinese students
professors increasingly leverage on the good students to commercialize products and
inventions; creating long-term connections.
after classes, some students go work on their own entrepreneurial projects in student
incubators.
new generation of students are considered to become academic entrepreneurs. They
receive a high amount of governmental support
• policies to support & encourage students to start business (e.g. guaranteed loans,
waiving administrative fees social security, field rent,…)
• participate in government procurement
• 2014: Ministry of Education, Ministry of Finance & Ministry of human and social affairs
issued documents on entrepreneurial work of students
• “education promotion plan of action for 21st century” points the entrepreneurship
option to graduates
• improved department support system & local regulations (e.g. provision of services,
practical exercises in science parks, student competitions…)
Entrepreneurship rate of Chinese
university graduates (2018)
3%
(average in developed countries = 1.6%)
74. 74
Chinese students
professors increasingly leverage on the good students to commercialize products and
inventions; creating long-term connections.
after classes, some students go work on their own entrepreneurial projects in student
incubators.
new generation of students are considered to become academic entrepreneurs. They
receive a high amount of governmental support
• policies to support & encourage students to start business (e.g. guaranteed loans,
waiving administrative fees social security, field rent,…)
• participate in government procurement
• 2014: Ministry of Education, Ministry of Finance & Ministry of human and social affairs
issued documents on entrepreneurial work of students
• “education promotion plan of action for 21st century” points the entrepreneurship
option to graduates
• improved department support system & local regulations (e.g. provision of services,
practical exercises in science parks, student competitions…)
SURVEY AMONGST CHINESE STUDENTS
main reason
not to start
own
business?
1. ability / experience / knowledge
2. funding / money
3. steady job / risk / normal life
4. too young / personality / not good leader
5. no specific idea
6. support from family
75. 75
Chinese students
Universities start to introduce entrepreneurship as an option to graduates when conducting employment guidance
- Cultivation of Innovation & Entrepreneurship talents is part of national strategy: “education promotion plan of action for 21st century” (1999).
- Summarized as:
- based on employment guidance course of university students, the education of I & E is carried out;
- carry out i & E education on the platform of university student entrepreneurship base parks
- set up special organization to promote development of I & E education
- promote development of I& E education based on employment guidance courses
- take innovation experimental area of talent training as pilot project to train innovative talents
- set up curriculum system that supports
- integrate talent training plan,
- carry out in an all-round way
- eg TU: 2O challenging learning demonstration courses at the school level
- Position of courses: not compulsory - but available
76. 76
university
incubators
+ 4,000 incubators in china (private & university)
often located at universities and supporting technology transfer
mostly run by state-owned real state companies (asset management company)
play an increasing role in the promotion of innovation clusters, technology transfer and commercialization of
research results in china
NPU FEITIAN CREATOR SPACE
• Conditions:
• free acces and space + structural
funding: 3.000 RMB - 100.000
RMB per team
• collaborations with surrounding
ecosystems (parks, zones…)
• match entrepreneurial tutor
(one-on-one)
• Flexible statute
• Platform
• 7600 quark meters
• undergraduates student
innovation center
• Graduate innovation center
• Creator Bar
• Creat plus square (life service,
commercial projects,
• Creative incubators
• VC accelerator
77. 77
university
incubators
+ 4,000 incubators in china (private & university)
often located at universities and supporting technology transfer
mostly run by state-owned real state companies (asset management company)
play an increasing role in the promotion of innovation clusters, technology transfer and commercialization of
research results in china
NPU FEITIAN CREATOR SPACE
• won up to 10 Shaanxi province
“most intimate incubator of
the year”
• services: consulting, business
registration, investment, and
financing, comprehensive
services!
• 59 incubated companies
• 78 start-up teams
• focus on robotics, 3D-print, AI,
new materials, new energy
78. 78
asset management
company
a TTO may be internal to the institution, attached to the university
or faculty authorities, or externally created via a separate agency,
foundation or university-owned company
Reasoning
• university is public institution, state-owned
• concentrates on education & research
• not taking commercial minds
operates as state-owned property in name of the university
takes shares within the university spin-off
• share participating (less than 50%)
• share holding (+50%)
• wholly-owned subsidiary be full (100%)
NPU asset investment management co., ltd. was
founded to help students and staff to transfer their
technologies
“to effectively transfer NPU technologies to the
market so as to generate benefits for the
academics, university and the society”
• incubate promising technologies
• start & invest in new company
• manage companies’ equity
• secure additional government funding
79. 79
asset management
company
a TTO may be internal to the institution, attached to the university
or faculty authorities, or externally created via a separate agency,
foundation or university-owned company
Reasoning
• university is public institution, state-owned
• concentrates on education & research
• not taking commercial minds
operates as state-owned property in name of the university
takes shares within the university spin-off
• share participating (less than 50%)
• share holding (+50%)
• wholly-owned subsidiary be full (100%)
Beihang University Technology Transfer Center
• a central pivot of BUAA innovation ecosystem
• operation of BUAA national science park at Beijing
capital region
• construction and operation of BUAA joint S&T
incubator spaces for mass entrepreneurship at
provincial regions of china
• intellectual property service (application,
agenting, navigation,...)
• technology transfer
• industrial incubation of new and high technology
80. 80
asset management
company
a TTO may be internal to the institution, attached to the university
or faculty authorities, or externally created via a separate agency,
foundation or university-owned company
Reasoning
• university is public institution, state-owned
• concentrates on education & research
• not taking commercial minds
operates as state-owned property in name of the university
takes shares within the university spin-off
• share participating (less than 50%)
• share holding (+50%)
• wholly-owned subsidiary be full (100%)
Beijing Technology Market Association
the association actively explores new models to
promote technology transfer and transformation,
and promotes the internationalization of
technology transfer. Since 2014, around the "One
Belt and Road" BTMA carried out international
exchange activities with Tsinghua University, Peking
University (…)
(…) the international alliance for Technology Transfer
and Innovation in China was launched jointly with
the International Economic Cooperation and
Investment Corporation of Beijing to organize
international exchanges between technology
transfer agencies in Beijing.
81. 81
science parks essential ingredient of the Chinese national innovation system
large governmental support
usually by topic
attract large companies to settle there – they are even building cities around them, as they attract
other service providers and the staff of these new companies can live nearby.
ZHONGGUANCUN SCIENCE PARK TUSSTAR
82. 82
science parks essential ingredient of the Chinese national innovation system
large governmental support
usually by topic
attract large companies to settle there – they are even building cities around them, as they
attract other service providers and the staff of these new companies can live nearby.
83. 83
demonstration
bases & zones
Regional demonstration bases will help promote the building of service-oriented governments,
improve policies and measures, expand investments in start-up businesses, and create a sound
environment for mass entrepreneurship and innovation.
University demonstration bases should deepen education and technological reform. This will
allow these bases to turn their talent and technological advantages into industrial and
economic advantages and promote the transformation of sci-tech achievements.
84. 84
government
S&T is key governmental driver of economic development
authorities involved in technology transfer are
• SIPO - SIPO is the Chinese patent office.
• MOST - MOST is a ministry which coordinates science and technology activities in
the country
• MOFCOM - MOFCOM is the agency responsible for formulating policy on foreign
trade, export and import regulations, foreign direct investments, consumer
protection, market competition and negotiating bilateral and multilateral trade
agreements.
• NRDC - NRDC is management agency which has broad administrative and planning
control over the Chinese economy.
• SAIC - SAIC is the authority responsible for advancing legislation concerning the
administration of industry and commerce in the People's Republic
Terminology might be confusing
Zones, districts, area’s, demonstration base, city, …
85. 85
government
different regions, different strengths – start small; focus
The central region of China is in need of economic development compared to other
urbanized areas
Tier one
• Strong S&T
• Internationally active and open
• Higher GDP (most economically advanced)
• Regions
• Beijing
• ICT, electronics, finance
• Most active in domestic technology transfer
• Shanghai – AI & Big data, Biotech
• Most active in cross-border innovation and technology transfer
• Guangdong (Shenzhen, Guangzhou)
• Textile, consumer goods, electronics
• Close link to Hongkong
• Beijing - ICT, electronics, finance
• Chengdu - life sciences, service industry
• Shanghai – AI & big data, biotech
• Guangdong - textile, consumer goods
• Xian - aviation, military
• …
86. 86
government
Tier two
• Chengdu
• biotech & life sciences, services, energy
• national R&D
• Xian
• aviation & military
• Belt & Road
• Hebei
• around Beijing
• industrial + ports
• Chongqing
• Yangtze river –> clean water
• Other cities of interest:
• Wuxi, Tianjin, Suszhou, Hangzhou, Xiamen, Nanjing, Dalian, Shenyang
95. 95
before you start
AWARENESS
• Political landscape
• National & local
• Long term & short term
• “Politics trumps business”
• Evolution and trends in China
• World bank: China = 5th place on “ease of doing business”
96. 96
before you start
CULTURAL ROOTS
• Very complex – don’t even try to crack it
• “Water is the last thing a fish sees”
• Most people are so strongly immersed in their
own culture that they often fail to see how it
affects their patterns of thinking or their
behavior It is only when we are “out of the
water” that we become aware of our own
cultural biases and assumptions.
• Characteristics
1. Confucianism
2. Taoism
3. War Strategems
97. 97
before you start
CULTURAL ROOTS
1. Confucianism: moral ethics & relations
• 1949: introduced
• Communism is the ideology for practice (top of iceberg)
• Values
• Moral cultivation: be a good person
• Inter-personal relations (guanxi)
• Family!
• Respect & authority/seniority
• Harmony & conflict avoidance (vs. Twitter Trump)
• Loosing face (mianzi): dignity
98. 98
before you start
CULTURAL ROOTS
2. Taoism: harmony
• Creativity of life & Harmony with nature
• Two changing forces Yin and Yang, the negative and
the positive
3. War Strategems
• The 36 Stratagems was a Chinese essay used to
illustrate a series of stratagems used in politics, war,
and civil interaction
• The marketplace is a battlefield - Business is like war
99. 99
before you start
CULTURAL ROOTS - IMPLICATIONS FOR BUSINESS
• Contextual factors
• High vs. Low context culture
• China = high: intuition, language valued less, relationship before business, agreements founded in trust , contract less important
• EU = low: logical, linear , business before friendship, credibility through expertise and performance, negotiations efficient,
agreements by contract - then friendship
• Talent (china) vs independence (EU)
• Looking at fairs! Mass events, top universities
• Macro vs. Micro
• The sequence of thinking may cause difficulty or misunderstanding. A typical example is the westerners may think that the
Chinese are going around the key points without addressing them deliberately
• Examples: Pictures, Adresses
101. 101
before you start
CULTURAL ROOTS - IMPLICATIONS FOR BUSINESS
• business factors
• Aspiration vs. Action
• EU: aspire with heart and take action with brain
• China: aspire with brain and take action with heart
• Money (china) vs. brand (EU)
• Government VC for example provides a lot of funding to Chinese start-ups & Chinese capital is moving to the west
• Market-oriented (china) vs technology-oriented (EU)
• See global shopping festival
• Red ocean (china) vs blue ocean (EU)
• Shared bikes example
• User centric (china) vs. Data driven (EU)
103. 103
before you start
CULTURAL ROOTS - IMPLICATIONS FOR BUSINESS
Chinese e-commerce giant Alibaba's Singles'
Day shopping frenzy has broken records in its
11th year. The world's biggest
online shopping event raked in more than
$30.8bn (210bn yuan; £23bn) in sales in 16.5
hours of trading, surpassing last year's all-time-
high. (11 nov. 2019)
104. 104
before you start
CULTURAL ROOTS - IMPLICATIONS FOR BUSINESS
• business factors
• communication
• Opinions & decision making
• EU: straight
• China: Chaos & longer -> more meetings & interactions required, but trust building, less risky, more context, more personal
• The Chinese discuss all topics (price, quantity, delivery conditions, etc.) not topic by topic
• harmony & conflict avoidance/handling (vs. Twitter Trump)
• EU: direct
• China: indirect
• Loosing face concept - mianzi
• Rather lie then say no
• they will use everything to avoid and go around
• Multiple layer communication
• Critical to undestand
• Giving face promotes reaching an agreement: paying compliments or praising their work in front of a superior etc.
105. 105
before you start
CULTURAL ROOTS - IMPLICATIONS FOR BUSINESS
• organizational factors
• Organizational culture
• china: watch employees closely and coach
• EU: trusts to deliver
• Agile (china) vs meaningful (EU)
• Consistent team (EU) vs non-consistent team (China)
• especially at universities!
• Hierarchy
• Chinese group speaks with one voice
• Do not speak up
• Contact the right one in line, by the right one (e.g. not assistant to leader)
• Leader more important in China
• More comfortable with clear tasks
• Respect & authority/seniority
• General tastks (EU) vs. Specific tasks (China)
• Organizational structure = “Little kingdoms” phenomenon (e.g. Technology transfer company at universities or data analysis of neighboring science park)
106. 106
before you start
CULTURAL ROOTS - IMPLICATIONS FOR BUSINESS
• HR factors
• Networks
• EU: Individualistic
• China: Guanxi (It is not equal to networking!!)
• = Relationship in which individuals support and promote each other to other individuals or organizations, forming a network which
permeates through both the professional and personal aspects of their lives
• Without it -> extremely difficult for researcher to receive funding or even be able to network and meet new collaborators within China.
• With it -> “standing on the shoulders of giants”.
• Look for a partner with guanxi
• Implicit mutual obligations – reciprocity: implicit and without limits (Help your Chinese counterpart !)
• Personal (china) vs. Business (EU)
• Open (china) vs. Private (EU)
107. 107
before you start
CULTURAL ROOTS - IMPLICATIONS FOR BUSINESS
• Look at delegations
• Meetings
• Who attends?
• Who is not there?
• Keep track!
• Organize pre-meetings
• Observe & listen
109. 109
before you start
CULTURAL ROOTS - IMPLICATIONS FOR BUSINESS
• Life Style factors
• party
• EU: loners
• China: social - holidays together
• Restaurant
• EU: Quiet
• China: hectic, loud, business done at last five minutes at the table
• Holidays – Chinese often take holidays in large groups
• Example: Li Jinyuan - TIENS Group
• Booked 140 hotels in Paris
• 4760 rooms in 79 four/five star hotels in Cannes and Monaco
• Took 147 busses to take the tourists from their hotels to the promenade des Anglais in Nice
• France is expected to be 33 million euros better off
111. 111
conduct research
UNDERSTAND CHINA
• Uncover & become aware
• Is there a market?
• Define your region -> focus on one region and operate locally
• Start small, but effective. Don’t get distracted by all possible opportunities.
• China is not a single market; it’s a continent - choosing the right location is important
• Remember different cities, different strengths -> identify the right innovation cluster
• Extremely dynamic market
• Chinese consumers crave for novelty, new ideas and market players pop up all the time, market moves very fast – old world innovation process
moves too slow – market searches for shortcuts all the time!
• very impulsive buyers & buy a lot once
• brand conscious not not brand loyal
• Personalization!
• Is there a demand? Identify problems to solve!
• Map the context
• Competition? Role of government?
• Understand the short-term priorities of the Chinese government and the transferee and their long term goals;
113. 113
Local vendors were so taken back by
Groupon’s aggressive sales tactics that they
often told the company’s sales people to calm
down and come back later with more realistic
expectations. Groupon insisted on using mass
email marketing, despite being warned that
Chinese people seldom read that type of
email. Such an approach had been successful
in Germany, but Groupon ultimately found out
the hard way that it didn’t work in China.
conduct research
UNDERSTAND CHINA
114. 114
conduct research
UNDERSTAND CHINA
• Many will find opportunities
• Cheaper
• 50% cheaper smartphone, yet offering comparable or better hardware features
• 10~30% manufacturing labor and science researcher cost vs. counterparts in developed countries
• Faster
• 5x faster prototyping process by design firms in Shenzhen
• 700 million Internet users enabling rapid commercialization (vs. 210 million in the US)
• Global
• 7 out of 10 largest pharmaceutical companies with R&D sites in Shanghai
• 7,500 researchers employed by a Chinese CRO to support research at global scale
116. 116
conduct research
UNDERSTAND YOU
• what you want to do in China
• Realize the distance, time and cost
• Mapping of strengths and overlapping areas
• How dedicated are you?
• Resources? Human and financial
• Willingness?
• Commitment?
• Translator?
• Skype Call
• Install Wechat?
• Ensure that your China development projects receive constant attention, strong commitment and effective support from the highest levels of your company
• There is no quick fix solution; the only constant is change, you must be flexible and be able to review and adapt a strategy overnight; you will need strong
local management which stands constant communication with the company’s top management.
117. 117
conduct research
UNDERSTAND YOU
“I feel bad about this one way
communication and I am very
disappointed by the research team.
Our feeling is to withdraw the patent in
case no concrete collaboration is settled
with you by the research team by 28/06
(email in annex). Our Valorization
Committee has already confirmed this
position so lets wait a few more days
and forget about this file if no input
from research teams by then.”
118. 118
business model
• Not identidal! No copy-past
• Localize and open up to adapt your product or service accordingly.
• What works in the western will not apply directly into Chinese Market
• May lead to dramatically changed the standardize product or service. As well as, given the local branch enough authority to change
• Structure, parameters, check
• Know your weaknesses & strengths
• You will never be cheaper of faster than Chinese competition. Focus on quality.
• Example: UZ Brussels
• logistics model
• investment model
• service model
121. 121
business model
Groupon’s China head seemed to think that
all international markets were alike – what
worked in Germany would work in China.
One example is Groupon’s sales team in
China. At first Groupon insisted that its
partnering vendors split profits 50-50,
without taking into account the realities of
China’s group-buying environment. Given so
many existing players in the market, vendors
have the upper hand when negotiating with
group-buying operators and typically leave
their partner only 10 percent of the profits
instead of 50 percent.
122. 122
entry strategies
Entry strategy dependent on
• Nature of products
• Previous experiences and networks
• Business conditions and regulations
• Need for phyisical represention (e.g. after sales)
• Need for control and IPR protection
• Time and resources
Dimensions
• E-commerce
• Platform models
• O2O models
• Free models
• Ecological models
• Sharing economy
Start-ups & SMEs
Scale-ups & MNC
123. 123
entry strategies
• The shipment of goods
• Provision of service across borders
• Transfer of technology from one country to another directly
to the end customer
DIRECT EXPORT
INDIRECT EXPORT
• = overseas agent/distributor
• Company’s direct representative and help represent and sell
your product
• An agent works more closely with you whereas a distributor
works more closely with your customers
• In China, you cannot hire an agent as an employee from
overseas but can enter into a service contract
124. 124
entry strategies
• Method of distributing products or services
• The franchisor, who lends his trademark or trade name and
a business system
• The franchisee, who pays a royalty and often an initial fee for the right to do business under the franchisor’s name and system
• E.g. Starbucks
FRANCHISING
LICENSING
• Licensing is a permission granted by an exclusive owner of Intellectual Property Rights to another party to use
• IPR owner continues to retain ownership of the IPR
• BUT different definition of licensing
• In China: final goal = to take over the technology
• In europe: maintain control over technology
125. 125
entry strategies
• LT strategy to enter china
• Relatively easy and fast (couple of months)
• Not a legal entity
• Rather a liaison office for the company’s headquarters’ in the home country
• Illegal to employ people outside a formal Chinese employer, BUT most employees in China prefer formal employment that entitles them to
important social benefits à through agency / hosting services
• Prohibited from engaging in profit-making activities
• Undertake limited activities
• Often limited to: market research, promote products of its headquarter
REP OFFICE
FOREIGN INVESTED PARTNERSHIP
• In recent years FIPs have become the easiest and most convenient way for foreign investors to set up a business in China
• In addition to be open to all “encouraged” sectors of the Investment Catalogue and restrictive sectors subject to reviews
• FIPs have been particularly attractive for private equity funds
127. 127
entry strategies
• WFOE is a limited liability company owned by foreign nationals and capitalized solely by one or more foreign investors
• Whose main activities in China are manufacturing and selling products or provide services
WFOE
(EQUITY) JOINT VENTURE
• Joint operations and ownership of a limited liability corporation
• Interesting to have less shares - support Belgian government
• Companies in an EJV share both revenues and risks according to their
respective registered capital contributions
• At least 25% of the registered capital (with exceptions)
• Relatively cheap – 15.000 euros
• Patent portfolio within the venture
• One part within venture focusses on commercialization
• NDAs
• Finding right partner is crucial here
128. 128
entry strategies
(EQUITY) JOINT VENTURE
• imposition of creating a JV, as it is currently mandatory in certain sectors,
• Sharing know-how and IP of the foreign cooperation partner is sometimes a deciding factor against a JV – and can even mean a missed market
opportunity.
• When highly sensitive and crucial know-how and IP are at stake, thus strategies to protect them have to be seriously considered. Merging the
work culture between European and Chinese companies is also not always an easy task.
• This has effects and is relevant for all company departments starting from different recruitment processes and requirements of new staff, going
through sales, production and marketing strategies
• Sino-foreign joint venture universities
• Responsibility of the Chinese Ministry of Education (MoE)
• Reasoning:
• popularity among Chinese students’ to spend their studies outside of China and the common belief that studying at prestigious foreign
universities in China might provide them the necessary kick-off impulse when entering the labor market
• For foreign universities being present in China is an opportunity to promote their name and gain additional revenues
• Examples: Xi’an Jiaotong-Liverpool University, University of Nottingham Ningbo or the New York University Shanghai, as well as Kean
University-Wenzhou and Duke Kunshan University
132. 132
finding a partner
• Pitching – learn to pitch, not only tech
• Focus on story
• Impress with numbers
• Confidentiality clauses
• Chinese government will need to be a partner too.
• Chinese government monitors to a ridiculous extent (eg, gsk: bribing doctors -> put in jail -> but all organization did this - is this fair?)
• Rules and agreements can be made for negotiations, and a method and work instrument developed. A special coach or team of coaches (integration
office) can be appointed to enable group processes, changes, and other services if needed. What exactly will be negotiated? What cannot be changed?
What can be changed? What should change? One person or an integration office on who/which all parties have agreed can facilitate negotiations
• many marriages end up in divorce - different agendas -> build your own team now
• Do you need a partner?
• Find a reliable and truly professional partner who really understands what you are talking about when you are talking shop and has a proven track
record in your business or at least in an associated field of your business in China.
133. 133
finding a partner
• The British pharmaceutical giant has admitted that executives in their
Chinese branch have broken Chinese laws by their involvement in a bribery
scandal involving up to $489 million dollars. Thus far four Chinese
nationals: the head of the legal department, two vice presidents and the
head of business development and a handful of foreign employees have
been detained.
• Foreign companies operating in China now need to review their operations
meticulously as executives based in China who are found to be involved in
unlawful practices will face arrest, travel bans and possible detention in
Chinese prisons.
• But everyone was doing it…
• Now: The GSK case sends a powerful message to the medical industry and
to multinational companies operating in China; that bribery and corruption
will no longer be tolerated and it’s time to clean up their acts.
134. 134
selecting a partner
• Ownership
• Do not sell, stay in control and develop
• Chinese people will build your success. Collaborate with trust-worthy people.
• Picking wrong partner / ignoring right one
• Utilize local experts, knowledge and networks
• Local partner often has competing business
• Picking a good local partner but then failing to take advantage of their resources
135. 135
selecting a partner
• Ignoring the right partner….
• Groupon made a very smart decision in partnering
with Tencent, which next to Alibaba Group, is a
true leader in China’s Internet space.
• Where Groupon went wrong was not making use
of the numerous advantages a partnership with
Tencent has to offer. For example, as mentioned
above, rather than rely on Tencent’s local market
expertise, Groupon instead chose to hire expats to
run its operations all over the country. And for
Tencent, the Gaopeng joint-venture was the least
of its concerns or priorities. The firm already
operated a number of other group buying portals
in China prior to the partnership – Gaopeng was
one of many.
136. 136
selecting a partner
Right partner? --> business terms
• Trust & Common Interest
• Capable
• Mutual benificial relationship & mutual exclusive
• Make sure you need each other, BUT Cooperation is a means, not an end. Let the other side win, but win more
• What can they do that you cannot?
• supply china
• source material
• Production
• Design
• market access
• initial resources
• Speed
• network of distribution (eg medical devices)
• What can you do that they don’t?
• develop business outside China (they are still in export mode)
137. 137
selecting a partner
wrong partner? --> IP terms
• Warning signs
• The company wants you to move fast
• Offer low price than market average
• Website details - consistent CN / EN
• Calling fixed line few times
• Office structure
• Bank account: check these are they the same, documents, invoices…
• Fake licenses,
• Fake inventory
• Fake competences
• …It’s all out there
138. 138
selecting a partner
• Conduct Basic Due Dilligence
• While performing basic research on Chinese entities is harmless, one should note that in-depth due diligence, e.g. through hiring a private
detective, is illegal in China.
• Confirm: existence & have license for the activities they want to conduct.
• Tools
• Internet!
• Common sense
• Initially distrust all the information a university or company provides.
• vs. Outsource: Embassies, chambers of commerce, private agencies
• Tech collaborations -> be involved
• Meetings! Go to China if possible
• observe practices, leaderships styles, and daily activities.
• Do not focus too much on country differences in terms of culture or work climate
• Instead, look for signs that do not feel or seem right, like employees or researchers being pressured to have you signed
agreements
• When confronted with different potential opportunities and partners,
• go for the partner where you feel most comfortable with naturally.
• Imagine yourself in the West and go for the partner that you would choose when doing business in Germany, Belgium, or the U.S. Instinct
• Common sense are key here.
139. 139
IP protection & strategy
• S&T Agreement between the PRC and the European Union (1998)
• Cooperative activities shall be conducted on the basis of appropriate protection of Intellectual Property Rights (IPR)
• However, there is risk for foul play on IP
• High demand for innovation in market
• Huge market with high potential yields
• Relatively low chance to get caught
• Three action points to develop IP strategy (for research groups & companies)
• Conduct basic due diligence – see partner selection
• Drafting a good contract,
• Register Intellectual Property (IP)
140. 140
• Content: structured and written in a way that the Chinese partner is convinced it will do better with you than without you.
• Contracts in China: more fluid, more malleable, more dynamic
• Then why necessary?
1. Clarity (e.g. delivery time for some components to two weeks, you should know if the Chinese counterpart will be able to deliver upon this agreement. Perhaps
they will, but not for 100% of the time. Perhaps for 80% of the time? )
2. Enforcement
• China = 6th in contract enforcement (according to World Bank) - higher than people would assume, has to do a great deal with the efficiency in the Chinese court
• Chinese court is not weak either and has the power to actually enforce contracts to a Western benefit.
• They are a lot fairer than we would realize & often look for solutions that create harmony, which is closely related to one of their cultural roots.
• China has a dual track system of enforcement.
• The administrative process, which involves making a complaint to the Administrative Authorities who regulate various IP laws, and have their own powers
to investigate and penalize acts of infringement.
• The judicial route involves filing a complaint to a judicial civil court.
• Before involving any authorities, it is worth considering less formal steps first.
• Not all Chinese infringement is deliberate and not all Chinese infringers are aware of the gravity of their offense.
• Negotiation and mediation are very much a part of the Chinese business approach; Many IPR cases are solved through dispute resolution
• Corruption, if any, typically does not take place in the court system ;Chinese government is very mindful on how to position themselves towards foreign countries
DRAFTING CONTRACT
IP protection & strategy
141. 141
DRAFTING CONTRACT
Enforcement…
3 Special IP Courts are installed in Beijing (Nov 6, 2014), Guangzhou (Dec 16,2014) and Shanghai (Dec 28, 2014)
423 IP tribunals have been established (Data end of 2016)
IP protection & strategy
142. 142
• So, what’s a good contract?
• One language
• takes away a possible layer of ambiguity on terminology, deadlines, requirements
• When using multiple languages, one should be carefully of different interpretation of certain words.
• A common practice is to indicate which contract is dominant over another.
• Ideally, in the language where any dispute will be resolved
• You want this to be in China since China will a priori not enforce any foreign judgements
• As detailed as possible
• Court arbitrators typically do not pay attention to the meaning of certain words.
• Apply physical measures when possible, develop and use protocols and provide training to your personnel and partners on IP
protection measures;
• “If it is in the contract, it is in the contract.”
DRAFTING CONTRACT
IP protection & strategy
143. 143
• Commonly used contracts
• Non-Disclosure Agreements (NDAs)
• Chinese variant of such agreements are called Non-disclosure, Non-use, Non-circumvention agreements (NNNs).
• Using the Chinese variant over the Western one, increases the your chances of enforcements when needed.
• Product ownership agreements
• When techn/innovation collaborations are at the core,
• Typically in case of JVs or research centers
• Good practice is to license your name, product, or technology to the newly created entity instead of giving that (Chinese) entity ownership
• Distribution agreements or employment agreements
• especially when you have an entity in China
• Including confidentiality and trade secrets clauses
DRAFTING CONTRACT
IP protection & strategy
144. 144
• Commonly used contracts
• MoUs
• In china: more legal binding & commitment
• Strategic vision
• Starting point of future collaboration
• Let partner start with an ititial draft
• Ceremonial importance
• As internal and external marketing purpose
• There are no universally accepted definitions of "background", "foreground" or "sideground".
• Use: preamble "definitions" section.
• background IP” means any intellectual property which is held by participants before a project in question was started. “Foreground IP”
refers to the IP arising from the results of a collaborative project agreement, whether or not it can be protected. We do not use the term
"sideground" but note that this term is sometimes used to refer to IP that one party might develop outside a project but during the same
time as the project in question.
DRAFTING CONTRACT
IP protection & strategy
146. 146
• Just like in all other countries in the world, registering your IP is a must.
• As in the West, copyright in China arises automatically upon the creation of a copyrightable work.
• Patenting procedures are also similar as elsewhere.
• The Chinese State Intellectual Property Office (SIPO) is the authority that receives and examines patent applications.
• There are three ways to file a patent in China:
• Filing directly in China. It this case, you must use a local patent agent to handle the filing of a patent application.
• Filing in a foreign country first and then in China within 12 months, claiming the priority of the first application.
• Filing an international patent application under the Patent Cooperation Treaty (PCT), naming China as one of the designated states
• Trademarks
• “first-to-file” instead of “ first-to-use” rule applies.
• Example: Gucci, when entering the Chinese market, faced a Chinese company owning hundreds of “Gucci” stores all over China. Gucci has sued this
Chinese company many times and lost every single time.
IP REGISTRATION
IP protection & strategy
147. 147
• Licenses
• Should be registered and are regarded as the best bet to protect IP (rather than transferring ownership)
• limitations and restrictions - > list of prohibited, restricted, and allowed activities:
http://cys.mofcom.gov.cn/aarticle/al/201009/20100907166511.html
• Senstive areas prohibited: communication, military, films, or medicines…
• Strategies
• Modular
• using different Chinese suppliers to source different components of your product so that no single supplier can make the final
product.
• Adaptive
• In the framework of research collaborations -> "phased implementation" where a partner is first tested out with limited licensing
before licensing / transferring additional technology.
• Agreements
• In case of a close collaboration requiring prompt availability of results and hence to share technology more broadly, the solution
will rest in inserting the licensing in a comprehensive IP agreement, clearly identifying the role of each partner and dealing with the
whole range of IP issues accordingly.
IP REGISTRATION
IP protection & strategy
148. 148
• Compulsory Technology Transfer
• Local legal obligations to enter a joint venture with a local partner in order to be allowed to do business in China
• Such joint ventures are typically deemed an equivalent to foreign companies. As a result, they follow the same rules on importing technologies or
product to China
• Register anything useful and do it as soon as you can;
• Deal in detail with terminations terms.
• Practical note: get paid (partially) upfront
• Seriousness
• Activities are legal & licensed
• Government on board
• international transfer limitations and fees
• how to get money out of China”
IP REGISTRATION
IP protection & strategy
149. 149
Additional advice
Do not let mere legal considerations about so called inevitable risks, determine your decision to engage in technology transaction with China; if China wants /
needs /craves for your technology it will manage to lay its hands on it, whether or not you like it or are a part of it - the mono hence is : if you can’t beat them,
join them ... but try to be smart about it !
Make a clear long-term risk analysis with respect to the technology transfer for the business of the company. Which technology can be licensed, which technology
should stay in-house? Is the technology to be transferred outdated in a few years and replaced by new technology of the transferors due to continued innovation
of the transferor
IP REGISTRATION
IP protection & strategy
151. 151
• Perseverance: bide your time, LT!
• Understand continuously seek for advice and intelligence
• build internal alliances
• remember your roots, always
• Think as a start-up company, even when you’re not anymore.
• Keep up with the china speed
• Just in time choices & decision making
• Interaction is an on-going process that never reaches a full end-state; the process must be facilitated and renegotiated at regular intervals.
• Cross-cultural communication and cooperation is not something that comes about automatically. It can only be successful when fully supported by a sponsor
and resources addressed to it
actual business
152. 152
• Human resources
• the very competitive Chinese market makes talent recruitment quite challenging
• While locally established companies can use diverse channels to find capable employees, newcomers have fewer options.
• The first employee you need to recruit is usually a sales or business development manager. This position is critical to your success.
• Interviews! Many questions considered politically inappropriate in Western countries are acceptable in China: family status, plans regarding marriage
and childbirth, occupation and health status of parents, salary expectations etc
• The basics: hire good people, provide training, design good work flows and ensure that your employees follow them. Written regulations are a must
in China. Many “given” western concepts in the workplace will not be so obvious here.
• Using a single contact at headquarters and a single contact in China will deprive you of key departmental professional wisdom and critical
“knowledge transfer”.
• do general business operations, including the relationships between departments, employees and management. Set up control mechanisms over
your operations in China, e.g. an external company that can audit diverse business aspects.
actual business
153. 153
• Go after everything.
• Assume that things will go wrong.
• Leverage on guanxi
• Leverage on strategic plans (e.g. 5 year plans)
• Attend high level events now and then
• When in China
• Use WeChat
• Use VPN (e.g. GMAIL issue); Great Firewall of China
• Filtering or blocking of IP addresses and TCP ports
• DNS request filters
• Blocking of circumvention tools (e.g. VPNs)
• Blocking of social networks (e.g. Facebook, Twitter, all Google services such as Youtube...)
practicals
154. 154
• Sim card – Chinese --> Data
• Offline maps + navigation
• Chinese addresses (e.g. booking)
• Payments
• Before: need Chinese bank card or cash
• Now: WeChat offers integration with foreign VISA/MasterCard
• Polychronic time set + Chinese holidays
• “Year of the…”
• Language may be a barrier – intermediary
• Clear & concise
• Business cards
• Gifts
practicals
160. 160
EU-China university techtransfer
1.Case study
2.Looking for
Projects
3.Applications of
Technology Transfer
1Estanblished Case
Library
2.Technology Transfer
Research
3.Trained Students
1.Sharing data and projects
2.Exchange visits
3.Cooperative research
1. Established Case Library
2. Publish Case Study Book
3. Held International
technology Transfer Case
Study Seminars
4. Project Research
5. Applied National base
Support &
Membership Support & applications
technology transfer
Technology Transfer New Practice
Researcher Investors Government
Research Institute
University
Investors
Government
Spin-offs
+ +
Cash
IP
Cash
Cash Cash
Technology
Incubator
Patent portfolio within the venture
imposition of creating a JV, as it is currently mandatory in certain sectors
164. 164
EU-China university techtransfer
Chengdu municipal foreign & overseas Chinese affairs office
“To research bringing in overseas talents and investment to
Chengdu and put forward policy proposals and carry out
bringing in overseas Chinese capital, technology, and talents;
to serve for the overseas enterprises in Chengdu and
coordinate overseas Chinese related economic complaint and
protect oversea Chinese legal interest.”
- Division of Economy and Science Technology
170. 170
EU-China university techtransfer
INDIRECT UNIVERSITY COLLABORATION
INDIRECT ECOSYSTEM COLLABORATION
High mortality rate due
to accidents with large
vehicles. We could
prevent that from
happening.
RESEARCH STAGE TECHNOLOGY STAGE SPIN-OFF STAGE
RESEARCH COLLABORATION
DIRECT ECOSYSTEM COLLABORATION
DIRECT UNIVERSITY COLLABORATION
resources!
trust
& guanxi!
understand you!
understand china!
business model
pain points
commitment (from both sides)
long term
IP strategy
172. 172
University roadmap
Mid-term
Add IKTT in a strategic
mission and review
incentive system.
International KTT
mindset.
Allocate resources and
funding to develop and
support IKTT activities.
Develop structured IKTT
mechanisms and provide
an internal unit.
Long-term
International
technology &
opportunity
awareness.
Foster and expand
international
collaborations.
Short-term
Trainings to create
awareness & spread
knowledge, especially
on IKTT and cross-
cultural collaborations.
Set IKTT goals and
communicate them
clearly, internally and
with partners.
173. 173
Government roadmap
Mid-term
Add IKTT as a priority
on a governmental
level.
Allocate funding to
TTOs and/or IKTT a
ctivities.
Long-term
Fund IKTT projects.
Dedicated support
services and policies.
Foster and expand
international
collaborations.
International
technology &
opportunity
awareness.
Short-term
Provide support to
IKTT efforts of
universities.
Communicate clearly
on existing
international
partnerships and
opportunities.
174. 174
Mid-term
Add IKTT as a priority
on a governmental
level.
Allocate funding to
TTOs and/or IKTT a
ctivities.
Long-term
Fund IKTT projects.
Dedicated support
services and policies.
Foster and expand
international
collaborations.
International
technology &
opportunity
awareness.
Short-term
Provide support to
IKTT efforts of
universities.
Communicate clearly
on existing
international
partnerships and
opportunities.
university
roadmap
Mid-term
Add IKTT in a strategic
mission and review
incentive system.
International KTT
mindset.
Allocate resources and
funding to develop and
support IKTT activities.
Develop structured IKTT
mechanisms and provide
an internal unit.
Long-term
International
technology &
opportunity
awareness.
Foster and expand
international
collaborations.
Short-term
Trainings to create
awareness & spread
knowledge, especially
on IKTT and cross-
cultural collaborations.
Set IKTT goals and
communicate them
clearly, internally and
with partners.
government
roadmap
DEDICATE RESOURCES
CAPACITY BUILDING
FOSTER
GROW
175. 175Dimension
v
Category FACULTY TTO MANAGEMENT
POLICY IMPLICATION at
University level
POLICY IMPLICATION at Government
level
Resources
Time
constraints,
lack
of human
resources
Priority on education
and research
Lack of time or human
resources to deal with
IKTT activities, priority on
regional (national) KTT
IKTT not set as
priority
Include IKTT in the strategic mission
of university, add IKTT in KPIs
for government funds; review
incentive system
Funding to finance a TTO manager
for IKTT activities (increase an industrial
research fund?)
Financial
constraints
No financial support for
IKTT, not able to
allocate
financial resources to
IKTT
Origin of subsidies (e.g.
regional), no
additional funding to
engage in IKTT
No dedicated
budget to IKTT
Preview it in the budget for next
years, co-finance a part of IKTT
activities, search for industry funding
Develop government and EU-funded
programs for IKTT, incentivize brain gain
(and not brain drain).
Network Limited network outside of Belgium
Embeddedness
within region or
country
Connect TTOs across countries to
share experience, build networks and
create a link of researchers
with potential stakeholders abroad
Develop government and EU-funded
programs for IKTT, secure bi-lateral
relations with different countries in
overarching agreements
Knowledge
constraints
Limited knowledge or
capabilities to engage
in IKTT (IPR, business
conditions, procedures
...)
Limited knowledge or
expertise on IPR , foreign
legal systems,
distribution of
income (especially
outside EU). Available
knowledge is
decentralized. Unclear or
different foreign
KTT structures and
procedures.
Uncertainty
on value, fear
to damage
university
reputation
Basic knowledge – organize training
for TTO staff, researchers
Specialized knowledge –
provide training or hire an expert
(e.g. legal expert
on international IPR )
Secure funds to cover risks
Communication and agreements between
government IP Offices, support in solving
IPR issues in other countries
Not aware about possible market or business
opportunities of IKTT. Not a priority: regional or
national focus.
Not a
priority: regional or
national focus.
Include IKTT in the strategic
mission of university and TTO, create
an international mindset
Include IKTT in priorities
for internationalization of HEIs, scan
technologies outside for potential
application
M
M
L
S
M
L
L
S
L
M
176. 176
Dimension Category FACULTY TTO MANAGEMENT
POLICY IMPLICATION at
University level
POLICY IMPLICATION
at Government level
Distances
Geographical
distance
Limited amount of personal
meetings or difficult to
meet, tacit knowledge diffic
ult to transfer
Coordination and
execution of KTT
projects across borders
is more challenging
Geographical
distribution of
international
collaborations, im
portance of reputa
tion
Develop specific mechanisms for
transferring technology to other
countries, focus on new forms of
communication
Allocate a specific amount of flight
tickets (e.g. 20 per year) to go to
China, Vietnam etc.
Develop government and EU-
funded programs for IKTT, incl.
Mobility of Faculty/TTO staff for
IKTT projects
Cross-cultural
barriers
Difficult communication
(e.g. language), different
interpretation of concepts
and habits, different legal
systems
Difficult
communication (e.g.
language),
different interpretation
of concepts and habits,
different legal systems
Different
management
styles and
leadership,
administrative
burdens, red tape
(bureaucracy)
Organize training on intercultural
differences & communication,
Provide legal support overseas (find
an expert here or in other countries)
Preview and allocate enough time
and resources to deal with administr
ative burdens
Develop government and EU-
funded programs for IKTT,
Allocate funding for legal support
overseas and intercultural
communication
Cross-
organizational
barriers
Differences in norms, values, ways of working, routines.
Different approaches towards KTT.
Clarify and find common goals for
IKTT, adapt to each other ways of
working etc.
Develop/review policies to
standardize the main processes for
IKTT
M
S
S
L
L
L
177. 177
Dimension Category FACULTY TTO MANAGEMENT
POLICY IMPLICATION at
University level
POLICY IMPLICATION at Government
level
Precondition
Trust
Bad experiences, distrust,
impact on future career,
ties & relations
Uncertain about
trustworthiness of
counterpart.
Fear of damaging
international reputation
Clarity, communication in uniform way
(e.g. existing missions vs state security)
Interact regularly on organizational level (university), build trust with potential
(university) partners, build international relations
Willingness
Lack of incentives for
IKTT (e.g. not considered
in evaluation system,
limited financial
reward...), control over
knowledge and
technology
No willingness to
engage in IKTT
Not showing
willingness to engage
in IKTT (e.g. through
internal
communication), not
fostering (existing or
new) international
collaborations.
Review incentive
mechanisms
Set IKTT as a priority on government level
Set up connectors
Traveling, going abroad, ...
Commitment Lack of follow-up on opportunities
No actions to foster
IKTT activities, both
internally and
externally,
internationalization on
the agenda
About dedicating resources … go
through with existing and put
resources
Funding sources to support IKTT projects
Organizational
structure
Entity available to
support IKTT
Implement IKTT in
internal structure
Investigate how/if
restructuring is
needed, and how IKTT
influences external
relations.
IKTT receives a place within the
university's organizational
structure.
Encourage universities to implement a
dedicated IKTT unit.
L
S
S M
MM
M
M M
179. 179
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