Importing Success or Failure?

Introduction

Even though China has the second largest economy and the largest population in the world, they still have to import materials and knowledge to build their high speed railroad. Of all its industries and structural improvements, the Chinese government spends and invests the most money into the high speed railroad. Without the correct resources, technology, or knowledge, the Chinese must import materials from countries such as Canada, Germany, Sweden, France, and Japan to help them build the high speed railroad. 

Importing

Since the Chinese have never built a high speed railroad or have any previous knowledge about how to build one from the ground up, they contract with foreign suppliers to help them build their high speed railroad. The main items that they import are signaling system parts, track and supports, and control systems. China does in fact manufacture some of their own domestic supplies that are used for the high speed railroad, but the designs of these items were bought or stolen from other countries with (not as fast) high speed rail ways. With a current budget of $110 billion and plans to continually infuse money into the high speed rail, there are not many monetary restrictions for attaining materials and supplies for the high speed railway. 

Technology Transfer

Not only does China import materials, they also “technology transfer”. Technology  transferring means that a company will make a deal to give the design of their product or knowledge of their product for a price to be paid by the Chinese government. For example, Mitusbishi sold the design of their MT205 traction motor and ATM9 transformer to the Chinese government to be used in the building and development of their high speed rail. 

Technology transfer can build great relationships between multiple companies or foreign governments, it is a great way to share resources and knowledge. However, there are also many unfortunate disadvantages to technology transfer. 

Technology transfer opens up many doors for trade and partnerships across foreign countries. Trust is a very important factor that is involved with technology transfer. A company or government must trust the company they are receiving the designs or ideas from that they are not faulty or incorrect. The trust leads to lasting partnerships. In China, where Chinese businesses are strict with the companies that they do business with, it is very important to establish trusting relationships to further foreign trade, business, and potential investing opportunities. 

Unethical behavior comes with the territory of technology transfer. Hiding details, giving wrong information, or not being completely honest are risks that companies or governments must face when agreeing to technology transfer. The Chinese government claims that this is what caused the Wenzhou crash that killed 40 people and injured over 200 people. 

Crash at Wenzhou

The expansion and building of the Chinese high speed railway is so fast, that many foreign companies do not trust the model designed by the Chinese. They fear that the high speed railway was built too quickly, with not enough thought. Hitachi, a Japanese technology company that imports and technology transfers safety signal control products to the Chinese government for the high speed railway is one of the companies that feels this way. They sold their signal control technology to the Chinese but did not make it easy to use or understand. They were fearful that other companies would steal their technology to use for their own products. During testing, it was difficult to run and specifications were incorrect. This should have been a red flag to the Chinese government to change, but their expansion was so fast, they did not take the time to potentially save lives. 

The Chinese government claims that it was the failure of the safety signals that caused the crash at Wenzhou, in essence, blaming technology transfer. Whether or not this was the reason that caused the Wenzhou crash, it goes to show that putting people’s lives in danger out of fear of competition is no way to gain partnerships or more contracts. 

Conclusion

The Chinese high speed railway could not be the success it is today in transporting people quickly and efficiently if it were not for importing and technology transfer. However, like any major expansion, the Chinese government and companies involved should be aware of the pros and cons associated with using foreign products, technology, and intelligence. 

By: Brenna Bourie