An Study on the Technology Spillover Theory and the Technology Innovation of Indigenous Enterprises in China

Based on broad literature review about the theories of technology spillover effects and rethinking on the policy of "exchanging technology with market" since 1990s, this paper describes the condition of domestic markets in China, and the modes and results of the technology import, absorption and assimilation made by indigenous enterprises. From the research there finds a paradox that though MNCs by FDI have occupied or even monopolized some of China's domestic markets, they do not bring healthy spillover effects on the technology innovation to indigenous enterprises. It argues that FDI can not necessarily make technology spillover effects on its host countries, and is not good for the market competition environment if the host countries can not overcome the "technology lock-up" strategy practiced by most MNCs. Moreover, the indifference of indigenous enterprises to assimilation and re-innovation or their inability to do that will most possibly result in the absence of technology spillover effects.