China's Price for Market Entry: Give Us Your Technology, Too
In his two decades pursuing contracts in China for General Electric Co., Delbert Williamson's strategy was always simple: Sell the most power equipment at the best price.
But by the time Mr. Williamson sat down at a banquet at the historic Diaoyutai State Guesthouse in Beijing last March, to celebrate the award of a $900 million contract for high-tech electricity-generation turbines, the formula for GE's success in China had changed dramatically.
In addition to offering a competitive price, Mr. Williamson had to agree to share sophisticated GE technology with two Chinese companies that wanted to eventually make the equipment themselves.
Mr. Williamson, then GE's president of global sales, was reluctant to open his company's technology vault. But GE had little choice. To be considered in the bidding for equipment contracts totaling several billion dollars, GE and its competitors were required to form joint ventures with the state-owned Chinese power companies. GE was also required to transfer to their new partners technology and advanced manufacturing guidelines for its "9F" turbine, which GE had spent more than a half billion dollars to develop.
"It was a difficult negotiation," says Mr. Williamson, 65 years old, who retired this month after 45 years with GE. "They're interested in having total access to technology and we're interested in protecting the technology that we made significant financial investment in."
Chinese scientists call it "technology for market." Instead of selling toys, textiles and television sets, China wants to compete in telecommunications, health care, power generation and a range of other advanced manufacturing sectors. So it's pushing for crown jewels of technology from companies that want access to China's exploding marketplace.
Those demands fall into a gray area of international trade law and economic development strategy. China officially agreed to phase out many tariffs and technology-transfer requirements as part of its entry in December 2001 to the World Trade Organization, the group of 146 countries that oversees the global trading system. But China didn't sign a key piece of the WTO agreement that would have prohibited its top planning agency from making such demands, and government negotiators have continued to ask foreign companies to transfer technology to local partners or to set up research centers to train local engineers.
"That's the trade-off they have to deal with -- short-term sales for long-term competition," says William Reinsch, president of the Washington-based National Foreign Trade Council, a lobbying group for U.S. multinationals.
No party to the deals has accused China of violating WTO rules, and the Beijing government has consistently maintained that it fully complies with its trade agreements. At the same time, the lure of mammoth Chinese markets makes multinationals hesitant to raise the issue.
In an effort to gain easier access to markets in China, Motorola Inc. has poured more than $300 million into 19 technology-research centers in the country. A Microsoft Corp. center in Beijing now employs more than 200 researchers. Siemens AG says it has spent more than $200 million since 1998 working with a Chinese academic institute to develop a mobile-phone technology that the government wants to be the country's standard, and which may be compatible only with phone systems in China.
REACHING EAST
General Electric's recent forays into China
Spending money...
Chinese investments
o $64 million in GE China Technology Center, a Shanghai research facility
o $26 million in GE Beijing Industrial Center, a medical diagnostic manufacturing facility
And making deals
Contracts with Chinese companies
o $3 billion to supply aircraft engines for regional jets
o $900 million for power turbines
o $300 million in partnership with France's Snecma Moteurs to supply engines for 737 aircraft
Trade experts say China isn't alone among developing countries in pushing for foreign technology, but the size of its new markets give Chinese negotiators enormous leverage. Japan demanded similar transfers in the 1960s and 1970s when it was rebuilding industries after World War II. The exchanges helped forge the economic and political alliance between the U.S. and Japan, but later haunted some U.S. companies when Japanese rivals went on to outpace their American partners in electronics and other industries.
Chinese competition isn't imminent in the most advanced industries. In the past, even after obtaining expertise from multinational corporations, state-owned companies lacked the depth of engineering expertise necessary to fully exploit the technology and become competitive in global markets.
Ted Dean, a consultant with BDA China Ltd., says the major telecom firms, including Nokia Corp., and Telefon AB L.M. Ericsson, were either pressured or required to form joint ventures with Chinese companies to manufacture telecom equipment in the past. But after the partnerships expired, many of the Chinese partners couldn't succeed independently, as cellphone and telecom technology rapidly advanced beyond the know-how they had obtained.
Some companies balk at the demands, too. U.S. companies sometimes can shield technologies through U.S. trade rules, which prohibit the export of particular technologies. China has pressed Intel Corp. to build a plant for its most sophisticated silicon wafer in the country for years, for example, but the U.S. government won't allow that. Similarly, those rules block GE from sharing a key element of its turbine technology.
Nonetheless, in the big power-generation contract, GE managers knew from the beginning that they would have to give up some high-end technology. The magnitude of China's power needs convinced executives that the market there was worth pursuing regardless of the technology demands.
The U.S. market for power-generation equipment currently is very weak, the result of a years-long spending spree to expand capacity by independent energy companies and utilities. China, on the other hand, is expected to spend more than $10 billion a year building power plants in the near future. GE also had licensed turbine technology previously, including as part of a now-defunct venture with the French company, Alstom SA. GE executives say they thought China would eventually get the technology one way or another.
China is rushing to satisfy booming demand for electricity, driven by surging economic and industrial development. The country's 1.3 billion residents often face brownouts with power supply running short by more than 10%, and total demand for electric power growing at 15% a year, according to energy experts. The government hopes to add thousands of additional megawatts of power-generation capacity in the next decade.
In 2002, GE, Mitsubishi Heavy Industries, Siemens and other foreign companies were invited to bid on contracts to supply 23 power turbines to six regional utilities. The demand for technology transfers was spelled out in the state planning office's request for bids.
GE has a long history in China. A GE steam turbine installed outside Shanghai in 1917 was only recently retired. When China first began opening its doors two decades ago, Jack Welch, GE's former chairman and chief executive, began looking to sell aircraft engines, power turbines, medical equipment and light bulbs. By the early 1990s, GE was assembling medical diagnostic machines in China. More recently, GE Chairman and Chief Executive Jeffrey Immelt opened a research center in Shanghai and expanded a medical manufacturing facility in Beijing.
GE's Mr. Williamson took his first business trip to China in the early 1980s. Soon, GE Power Systems, recently renamed GE Energy, was selling big coal- and natural-gas-fired steam turbines to China's electric utilities.
In simple terms, a turbine is any motor in which air, wind or steam spins blades on a shaft to create energy or perform a task -- from windmills that pump water to hydroelectric generators that use the force of water behind a dam to make electricity. Modern turbines such as the ones built by GE and its competitors are highly complex, 40-ton devices capable of generating enormous amounts of electricity using super-heated natural gas to spin the shafts. The precise shape of three rows of blades inside a turbine, temperatures reached by the fuel powering them, and the strength and composition of the materials used to make them dramatically affect the level of power each design produces.
For instance, the small gas turbines produced by a partnership between GE and a Chinese government-owned company in the 1980s were capable of generating about 40 megawatts of electricity per hour -- enough to power 40,000 homes. By contrast, the GE gas turbines sold by Mr. Williamson, while cheaper to install and cleaner for the environment, generate close to 300 megawatts, or enough to serve about 300,000 homes.
Before the deal with GE last year, Chinese manufacturers had mastered only the technology required for making much less efficient steam-powered turbines. That technology was acquired in part through previous joint ventures with companies such as the power systems division of Westinghouse Electric Co., now owned by Siemens. At least two Chinese companies now export turbines to Southeast Asia and the Middle East.
But the Chinese government wanted the technology behind the vastly more efficient gas-fired turbines. GE has been a leader in turbine technology developed jointly by its aircraft engine and power systems divisions in conjunction with the U.S. Department of Energy.
Liang Weiyan, a power-engineering expert with the Chinese Academy of Engineering who participated in the negotiations, says he and other Chinese officials hoped to get drawings for the entire turbine -- including the modeling and mathematics behind the shape of the turbine's blades, how the blades were cooled while rotating, the chemistry behind the blade's makeup, and the thermal protective coating on the first row of blades, where temperatures are the highest.
Negotiators for GE and the two Chinese companies worked at six different sites in China for more than three months to craft a deal. In the end, GE won an order for 13 of its advanced 9F turbines. Mitsubishi won a smaller deal to supply 10 power turbines, and as part of the agreement also agreed to share technology with Chinese partners.
Under terms of the turbine deal, GE agreed to let Harbin Power Equipment Ltd., a state-owned power company, assemble GE's turbines at its factory in northeastern China. Harbin will also manufacture most of the less sophisticated components in the turbine.
GE also formed a separate joint venture with Shenyang Liming Aero-Engine Group Corp., and will transfer technology for the combustion systems in the turbines to that partnership.
GE is permitting the Shenyang venture to manufacture the second and third rows of blades inside the turbine, technology that GE initially didn't want to give up, according to people familiar the negotiations. Included in the transfer are technical drawings of a key cooling system and the advanced metallurgy of the blades.
But the Chinese negotiators eventually accepted that they wouldn't get the most secret elements of the turbine, including the design of the cooling system for the first row of blades and the technology behind a thermal protective coating for those blades, say participants in the discussions. U.S. export rules prohibited GE from sharing that technology, because it is used both in power-turbine production and aircraft engines. Instead, GE will manufacture the first stage blades at one of its own plants in South Carolina and then ship them to the Harbin factory for final assembly.
Mr. Immelt says that as the majority partner in its joint venture, GE hopes to retain control over the most sensitive technology. He adds that China won't be able to fully exploit what it learns from foreign bidders until its engineers are able to replicate or build upon the advanced technology they obtain. "That's going to take some time," he says.
Moreover, Mr. Immelt says by the time Chinese companies accomplish that, GE will have developed significantly more complex new designs.
Mr. Liang, the Chinese Academy of Engineering official, concedes that point. "Even though Chinese companies can produce the gas turbines, they still have to buy the key parts from the international companies," Mr. Liang says. Another official, who participated in the Mitsubishi discussions, adds: "The foreigners are now agreeing to tell us how and where to dig a hole, but we still do not know why to dig a hole there."
Nonetheless, Mr. Liang says Chinese officials already are looking ahead to the next round of power-equipment bidding by GE, Mitsubishi and Siemens, when Chinese officials expect to strike even richer technology-sharing deals.
中国市场准入价码：带来你的技术
在为通用电气公司(General Electric Co., GE)开拓中国市场的20年奋斗生涯中，德尔伯特?威廉姆森(Delbert Williamson)的战略一向简单明了，那就是：以最好的价格卖出尽可能多的电力设备。
然而，到威廉姆森去年3月在著名的北京钓鱼台国宾馆为通用获得的9亿美元高科技发电机合同与中方合作伙伴一起举杯庆贺时，通用电气赖以在中国市场取得成功的方式已经发生了巨大的变化。
除了极具竞争力的价格以外，威廉姆森还需同意让两家中方合作公司分享通用电气拥有的尖端技术，以便它们最终能自行生产出同样的设备。
时任通用电气公司全球销售总裁的威廉姆森当时极不情愿开这个口，然而他几乎别无选择。通用电气和其他竞争对手在投标总价值数十亿美元的合同时，要想中标的前提条件之一就是，要与中国的的国有电力公司共同成立合资公司。招标方还要求通用电气向新的合作伙伴转让其投入5亿多美元开发出来的尖端"9F"涡轮机技术和制造工艺。
"那是一场艰难的谈判，"现年65岁、为通用电气工作了45年后刚于本月退休的威廉姆森回忆道。"他们想要的是得到全部的技术，而我们所想的则是保住我们投入巨大财力开发出来的这些技术。"
中国的科学家将此称为"以市场换技术"。中国不满足于向海外出口玩具、纺织品、电视机等这样的小打小闹，一心想同时跻身电信、医疗、发电和诸多其他先进制造业领域的国际竞争。因此它想方设法要从想开拓中国市场的外国公司那里获取技术皇冠上的宝石。
这样的要求是国际贸易法和经济发展战略中的盲区。作为其2001年12月加入拥有146个成员国的世界贸易组织(World Trade Organization, 简称WTO)的前提条件，中国已正式承诺逐步取消许多关税和技术转让方面的要求。但是入世协议中关于禁止成员国最高计划机构提出技术转让等要求的一个关键部分中国并未签字，因而中国的政府谈判代表得以一而再、再而三地向外国公司提出，要求它们向中国合作伙伴转让技术，或者建立研究中心培训中国的工程师。 美国对外贸易委员会(National Foreign Trade Council)主席威廉?兰什(William Reinsch)说："那是他们必须要做的交易：以短期的销售额换取长远的竞争力。"外贸委员会总部设在华盛顿，是一家服务于美国跨国公司的游说机构。
不曾有哪家协议方指控中国违反了WTO的规定，而北京政府也一贯坚持断言自己完全遵循了贸易协议的规定。同时，庞大的中国市场所产生的巨大诱惑力也使得许多跨国公司不愿贸然提起这个问题。
摩托罗拉公司(Motorola Inc., MOT)为给自己创造更加便捷的开拓中国市场的条件已投入超过3亿美元在中国各地建立了19个技术研究中心。微软公司(Microsoft Corp., MSFT)在北京的一个研究中心雇佣了200多名研究员。西门子公司(Siemens AG, SI)则表示，自1998年以来，公司已总计投入2亿多美元与中国一家研究机构合作研发一种移动电话技术。中国政府想让这种可能只跟中国的电话系统兼容的技术成为全国性标准。
贸易专家称，在发展中国家里，千方百计攫取外国技术者并非中国一家，但中国这个新兴市场的巨大规模为其政府谈判代表提供了无与伦比的讨价还价的砝码。在上个世纪六七十年代，著力战后重建的日本也曾向外国公司提出类似的技术转让要求。技术和市场的交换铸就了美国和日本之间紧密的经济与政治同盟，但之后，随著日本企业迅速成长起来并逐渐在电子和其他工业领域超过了它们的美国竞争对手，一些美国公司开始陷入了无边的梦魇。 在一些最尖端的行业，中国尚未构成现实的威胁。过去，中国的国有企业即便获得了外国公司的技术，却因为缺乏深度开发的经验和技能而终究无法充分利用所获得的技术使自己成为全球市场上强有力的竞争者。
电信业咨询顾问公司BDA中国(BDA China Ltd.)的咨询师迪恩(Ted Dean)说，包括诺基亚(Nokia Corp, NOK)和爱立信(Telephone L.M. Ericsson, ERICY,又名:易立信)在内的著名电信业跨国公司过去都曾被迫或按照要求与中国公司成立合资企业，在中国生产电信设备。但是合作协议到期后，许多中方合作企业无法独立继续经营，由于手机和电信技术的发展日新月异，中方公司先前得到的技术早已过时。
也有一些跨国公司对中国的这种技术要求表示拒绝。美国公司有时可以援引禁止出口某些技术的美国国家贸易法规为由避免转让自己的技术。举例说，多年来中国一直向英特尔公司(Intel Corp., INTC)施压，要求其在中国建立一个生产具有最高技术含量的晶圆工厂，但美国政府不允许它这么做。同样，美国的这一贸易法规也使通用电气公司得以避免让中国的合作伙伴分享其涡轮机技术中最关键的部分。
然而，通用电气的管理人员从一开始就已知道，既然接了这手大单，他们最终还是要放弃一些高端技术。但中国电力市场的巨大需求使得这些管理人员确信，无论中国有无技术上的要求，这个具有极大潜力的市场都值得他们去开发。
美国市场当前的发电设备需求非常疲软，这是多年来那些独立能源公司和公用事业公司疯狂扩张造成的恶果。而中国的形势截然不同。预计在不久的将来，中国平均每年要投资逾100亿美元大力发展发电厂。通用电气先前曾授权其与法国Alstom SA的一家合资公司（该公司目前已不存在）使用其尖端涡轮机技术。公司高层管理人员如今认为，中国迟早总会通过这样或那样的方式得到这一技术。
中国正在设法满足因经济和工业蓬勃发展而日益增长的电力需求。由于电力供给短缺10%以上，中国的13亿居民经常要面临停电，而据能源专家称，电力总需求仍在以每年15%的速度增长。中国政府迫切希望能在未来10年额外增加数千兆瓦的发电能力。
2002年，中国邀请通用电气、三菱重工业(Mitsubishi Heavy Industries)、西门子(Siemens)等外国公司参加投标，向6家地区性公用事业公司提供23台发电轮机。中国国家计划委员会在标书中提出了技术转让的要求。
通用电气在中国开展业务已经有很长的历史。1917年该公司在上海附近的一个岛上安装的两台蒸汽轮机前不久才刚刚"退役"。20多年前中国首次打开国门时，通用电气前董事长兼首席执行长杰克?韦尔奇(Jack Welch)就开始向中国销售飞机发动机、电力轮机、医药设备和电灯泡等。90年代初，通用电气开始向中国推销医疗诊断设备。最近，通用电气董事长兼首席执行长杰夫?伊梅尔特(Jeffrey Immelt)还在上海成立了一个医疗设备研究中心，并扩建了在北京的医疗设备生产基地。
威廉姆森在八十年代出首次踏入中国。不久以后通用动力系统(GE Power Systems)就开始向中国发电厂出售以煤炭和天然气为燃料的大型蒸汽轮机。通用动力系统最近更名为通用能源(GE Energy)。
简单的说，涡轮机是用空气、风力或水蒸汽来带动中心轴上的旋转片、以此产生动力的发动机。而通用电气等公司生产的这类先进的涡轮机则非常复杂，40吨重的使用高热天然气驱动的装置可以产生大量电能。涡轮机内三组旋转片的精确规格、燃料达到的温度以及材料的成分和强度都会严重影响到各产品的动力水平。
例如，通用电气和一家中国国有公司组建的合资企业在八十年代生产的一种小型燃气轮机每小时可发电约40兆瓦，可供40,000个家庭使用。而威廉姆森现在出售的通用电气燃气轮机安装成本更低、对环境的污染更小，而发电功率高达近300兆瓦，足以供300,000个家庭使用。
去年与通用电气达成交易前，中国的生产商只掌握了效力低很多的蒸汽轮机技术。该技术一定程度上是通过诸如与Westinghouse Electric的动力系统部门以前组建的合资公司等渠道获得的，Westinghouse Electric目前由西门子掌控。目前至少有两家中国公司向东南亚和中东地区出口涡轮机。
但中国政府还希望获得更先进的技术。通用电气在轮机技术方面一直领先，它的涡轮机技术是由其飞机发动机部门和动力系统部门与美国能源部(Department of Energy)共同开发的。
中国工程院(Chinese Academy of Engineering)的动力机械专家梁维燕当时参与了谈判，他表示，当时他和其他中国官员要求获得整个燃气轮机的图纸，包括轮机旋转片形状的模型和计算公式、旋转片如何在旋转时冷却、旋转片组成部分的化学成分等等。
通用电气和这两家公司的谈判代表在中国历时3个月、换了6个谈判地点才最终达成协议。最终通用电气赢得了提供13台高级9F燃气轮机的订单。三菱重工业获得了10台订单，遵照合同的部分条款，三菱重工业也同意与中国合作伙伴分享技术。
根据燃气轮机交易的具体条款，通用电气同意让中国国有企业哈尔滨动力设备公司(Harbin Power Equipment Ltd.)来装配这批轮机。此外该轮机上不太复杂的零部件大多也由该公司生产。
通用电气还与渖阳黎明航空发动机制造公司(Shenyang Liming Aero-Engine Group Corp.)组建了合资公司，并将向该合作伙伴转让发动机燃烧系统的技术。
通用电气允许沈阳黎明生产燃气轮机内部第二排和第三排旋转片，据熟悉谈判的知情人士称，起初通用电气并不想转让技术。最终通用电气转让了关键的冷却系统的技术图纸和旋转片采用的先进的冶金技术。
但中国谈判代表最终接受了通用电气不转让燃气轮机最高级的那部分技术，参与谈判的代表说，包括冷却系统的设计、第一排旋转片以及这些旋转片热保护层方面的技术均不转让。美国的出口条例禁止通用电气与合作伙伴分享这些技术，因为这些技术还应用于飞机发动机的制造。因此通用电气将在本公司位于南卡罗来纳州的工厂生产第一排旋转片，然后将其运往哈尔滨的工厂完成最后的装配。
伊梅尔特说，作为合资公司最大的股东，通用电气希望能够保留最敏感的技术。他补充说，中国还没有能力充分利用他们从外国竞标者那里学到的技术，除非有一天中国的工程师能够复制这些先进技术并将其应用于实际生产中，但这还有待时日。
此外，伊梅尔特说，等到中国工程师能做到这一点时，通用电气可能已经开发出更复杂的新技术了。
梁维燕对此表示承认，他说，即使中国可以生产燃气轮机，也将不得不从外国公司购买关键的零部件。另外一位参加三菱重工业谈判的官员补充说，外国人现在同意告诉我们在哪儿挖洞、如何挖洞，但我们仍然不知道为什么要在那里挖洞。
不过梁维燕说，中国官员已经开始筹划通用电气、三菱重工业和西门子的下一轮竞标，预计那时中国将能达成更诱人的能分享技术的交易。
