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TECHNOLOGY EXPORTS

AND JOINT VENTURES

TECHNOLOGY EXPORT
Technology export can be - technological disclosure, technical
guidance, technical assistance, technology assignment, and
licensing. Technology export is normally implemented by
concluding various types of technology transfer agreements.
Although there is no fixed interpretation or definition of a technology
transfer agreement, Article 30 of the Foreign Transactions and
Foreign Trade Act ,which sets out the provisions regarding
technology introduction contracts -a type of technical assistance
agreement ,which pertains to the transfer of patent rights and other
industrial property rights related to technology, the establishment of
the license and the right to exploit and use these rights or guidance
on technology related to business management.

Technology export includes:


1) Transfer of industrial property rights and other rights
related to technology (know-how)
2) Granting of licenses pertaining to industrial property
rights and technology (know-how)
3) Guidance on technology related to business management.
4) Granting of licenses pertaining to patent rights and utility
model rights
5) Granting of licenses pertaining to currently claimed
inventions and devices
6) Granting of the right to use know-how

Technology export license


1) Who is involved? Parties to the agreement, agent,

patentee, owner of know-how


2) What is licensed? License targets (patent, knowhow, etc.) Patent right, right to obtain a patent, knowhow, copyright
3) What is the content? Forms and conditions of the
license
4) Legal grounds/regulations binding the agreement?
Acts involved.
5) Negotiations? Negotiations between the
parties/representatives.
6) How is the agreement signed and managed?
Contract management

Objectives of Technology Export


1) Avoid infringement of anothers patent rights and other intellectual
property rights.
2) Enable access to know-how, which is normally information kept secret by
the other party.
3) Earn royalties, make business safer, and raise cost performance (buy
time).
4) Opportunities for licensing agreements When, where, and how.

Need of Technology Export


1. Offer Technical Assistance (licensing-out)
2. Receive Technical Assistance (licensing-in).

Offering technical assistance (licensing-out)


1) Technology transfer offers another useful means of earning besides the
production and sales of products (= open innovation).
2) Companies can receive a higher reputation for their technological power
that they can offer to other companies as technical assistance.
3) Surplus or idle technologies can be commercialized to reimburse
technological development expenses and maintenance fees incurred for
those technologies.
4) Companies can receive a grant-back for improved technology developed
by their licensees.
5) Technology transfer plays an important role in international strategies.

Receiving technical assistance (licensing-in)


1) Cost performance increases because there is no need for
technological development.
2) Time required for technological development can be reduced,
and the companys position as the head starter can be secured.
3) Infringement of other companies rights can be avoided by
obtaining a license.
4) Companies weak points can be made up for.
5) Access to and the right to use other companies secrets and
useful information can be obtained.

Technology Exports Development


Organisation
TEDO, a unique Public-Private Partnership project between Confederation of Indian
Industry (CII) and Department of Scientific and Industrial Research (DSIR),
Ministry of Science & Technology, to enhance market linked technology
competitiveness of Indian Industry.
Started in the year 2000. The main objective is to promote Indian Technical Know How,
Technology Intensive Products/Services/Projects in global markets.
Since its inception TEDO has served approx 870 organizations (both public and private,
R&D, Academic & Industry) in terms of Capability Building to Enhance Export
Competitiveness and promoting there strengths in the international market.
Major Activities- Capability Building -through training programmes/workshops/lecture
series/industry visits and to upgrade existing plants to world-class
facilities with cost effectiveness.
- Training ProgrammesIT Application in Manufacturing
International Business
Effective Trade Fair Participation

Indian SMEs are supported by TEDO.


Major International Trade fairs where TEDO support SMEs Hannover Fair, Germany
ACHEMA, Germany
Euro mold, Germany
Made in India Show in Mangolia
Made in India Show in China
Made in India show in Belarus
Exportable Technologies/Products/services Light Engineering
Chemical & Pharmaceuticals
Agro and Food Processing
Indian System of Medicine

ADVANTAGES OF TECHNOLOGY EXPORT

Can create fortunes worth billions of dollars for the exporters


as well as the early adopters .

Technology can be adopted by developing countries to improve


living standards and security .

Turn key projects can enable to exploit the expertise without


investing much in R&D and enable them to save on time.

Exports of technology by developing countries can serve as an


indicator of their technological development

It encourages local technological capabilities of the importer .

DISADVANTAGES OF TECHNOLOGY
EXPORT

One negative aspect of licensing is that control over the


technology is weakened because it has been transferred to an
unaffiliated entity .

In certain developing countries, there also may be problems in


adequately protecting the licensed technology export from
unauthorized use by third parties .

It is not feasible to export all the technologies..eg developed


countries are cautious while exporting nuclear power related
technologies and products to developing countries .

Adopters may innovate and surpass the actual technology


exporting entity

CONTINUED
European Union & other western nations have strict
protectionist laws that affect technology licensing .
Restricts the copying of patents , technology know-how
and other intellectual property rights .
Because of the potential complexity of international
technology licensing & exporting agreements, firms
should seek qualified legal advice.
do not reveal the whole range of technical progress under
way in the exporting countries, but do provide examples
of technical learning where the technology has been
assimilated, reproduced,

CASE STUDY : EXPORT OF AWACS TO


INDIA BY ISRAEL

ISRAEL exported 3 AWACS ( Airborne Warning & Control


Systems) for $ 1.1 bn

India joined the global ranks of the AWACS operators .

To provide broad spectrum crystal clear scan of air threats and


illegal Indian airspace entry even in worst climatic conditions .

The system can receive transmissions from other air and


ground stations to round out its surveillance picture, and uses
sensor fusion to provide a complete picture of the battlespace
out to 500 kilometers.

Joint Venture is a win /win collaboration


between two or
more people, sharing resources to solve
common
problems and achieve goals.
No limits, no catch, no selling, no
manipulation, no risk.
It can be called a Strategic Alliance or
Partnering as well.

Joint Venture
HOME
COUNTRY

MNE

HOST
COUNTRY
LOCAL

Inpu
ts
Share of
Profit

Inpu FIRM Share


of
ts
Profit
Joint Venture
Company

DEVELOPING JV

Finding ideas or partners


In the era of the Internet, finding opportunities for
exploiting an idea is sizeable together with remote, or
advertised, communicating.
There are also the blogging networks as well the social
networking sites and search engines.
There are also other venues to find a JV partner such as
seminars, exhibitions, directories and the plain
newspaper advertising of opportunities.
One should not forget websites which have become
prosperous like eBay and Amazon.com, Wikipedia,
YouTube to name the most obvious. Forming JVs with
distributor and marketing agencies is possible in this
flat world to market a product. But finding an
entrepreneur for a JV is another task.
Nonetheless,
there
are
risk-takers-venture
capitalists,angel
investorsand
venture
managers
(see:Carried interest) especially in the high-tech
industries like IC chips orbiotechnology.

Preparation
One can here only underline the steps or
information that will be needed by the JV
candidate. They are:
the objectives, structure and projected form of the
joint venture, including the amount of investment
and financing arrangements and debt
the JV's products, their technical description and
usage
alternate production technologies
estimated cost of equipment
estimated technology transfer costs
foreign exchange projections (where applicable)
staff requirements and trainingfinancial projections
environmental impact

SELECTING PARTNERS
The ideal process of selecting a JV partner
emerges from:
screening of prospective partners
short listing a set of prospective partners and
some sort of ranking
due diligence checking the credentials of the
other party
availability of appreciated or depreciated
property contributed to the joint venture
the most appropriate structure and
invitation/bid
foreign investor buying an interest in a local
company

INCORPORATION
A JV can be brought about in the
following major ways:
Foreign investor buying an interest in a
local company
Local firm acquiring an interest in an
existing foreign firm
Both the foreign and local entrepreneurs
jointly forming a new enterprise
Together with public capital and/or bank
debt

SHAREHOLDERS
AGREEMENT

This is a legal area and is fraught with difficulty as the laws of


countries differ, particularly on the enforceability of 'heads of' or
shareholder agreements.
For some legal reasons it may be called aMemorandum of
Understanding. It is done in parallel with other activities in forming
a JV.
Some of the issues in a shareholders' agreement are:
Valuation of intellectual rights, say, the valuations of theIPRof one
partner and,say, the real estate of the other
the control of the Company either by the number of Directors or its
"funding"
The number of directors and the rights of the founders to their appoint
Directors which shows as to whether a shareholder dominates or
shares equality.
management decisions - whether the board manages or afounder
transferability of shares - assignment rights of the founders to other
members of the company
dividend policy- percentage of profits to be declared when there is
profit

EXECUTE AND
REAP THE
REWARDS!

CASE
STUDY

Shanghai BOC (SBOC)


Established in 1988
Between Wusong Chemical and
British Oxygen Company (BOC)
Production of industrial gases
In 1995
net profit 5%
turnover growth 8.4%

SBOC (continued)
Organization structure
a board with 8 rep (half-half), one
foreign and one local general
manager.

Skills
seek good employees with good
training

Successful factors

Planning for future growth


not able to meet 8 year payback but
patience
one half of the revenue used for R & D
Raise additional capital of $30 million
bank loan to build gas processors at the
customers cites as marketing strategy

Learning from the foreign partner


able to learn new technology and
practices
focus on quality of product
decisions are based on consensus and
consultation

Problems
Increasing need for capital -thread for
wholly-owned subsidiary from BOC
FX imbalance low foreign earnings
due to low volume of exports
Sourcing and retaining staff
below market salary

Cultural differences
- expatriate cannot speak Chinese

Successful factors for Joint


Venture

Partner selection
Additional financing flexibility
Modern management practices
Technology transfer
Location
- labor, materials,
transportation

Sony-Ericssonis a joint venture by the Japanese


consumer electronics company Sony Corporation and
the Swedish telecommunications
companyEricssonto make mobile phones. The
stated reason for this venture is to combine Sony's
consumer electronics expertise with Ericsson's
technological leadership in the communications
sector. Both companies have stopped making their
own mobile phones.
Virgin Mobile India Limitedis a cellular telephone
service provider company which is a joint venture
between Tata Tele service and Richard Branson's
Service Group. Currently, the company uses Tata's
CDMA network to offer its services under the brand
nameVirgin Mobile, and it has also started GSM
services in some states.

Not so successful cross


border ventures.
Mahindra-Renault joint venture
In a joint venture between the two
companies, 51 per cent of the stake is
held by Mahindra and Mahindra while the
rest of 49 per cent is being held by French
car maker Renault. But their first
carLoganwas a failure because of
technical reasons as well as stiff
competition from other makers. So this is
the example of a not so successful joint
venture

EFFORTS BY

ASHISH TAYAL
PULKIT GOSAIN
SANDEEP KUMAR
SAMEER KUMAR
VAIBHAV VERMA