ABSTRACT
This chapter discusses the analyse the relationship between firm-specific technological advantages and the foreign direct investment strategies of firms with different technological capabilities. The attitude of China’s leadership towards foreign investment has changed dramatically since the adoption of the open door policy. Firm Chinese Government (FDI) internalises the process of technology transfer across borders, risk of leaking advanced technology to potential competitors can be reduced and synergistic advantages can be fully exploited. The case of FDI in China on the part of small firms from NIEs and firms from Hong Kong in particular is very different. The argument in this chapter concerning investment motives is that investing firms will have one particular objective as their main aim in producing in a particular location, and that this objective must match the special characteristics of their technological capabilities. The technology imported by China was mainly the standardised technology of assembly lines and production facilities for mature products, especially durable household electrical goods.
