Technology transfer, the transferee point of view
May 4, 2012 by LISA Infant Milk
Benefits & requested conditions for success
Technology transfer is frequently considered by companies as an alternative to exportation, when custom duties stand high on a foreign market.
This process consists in “transferring” some technology (in a broad sense: know-how, processes, etc. for manufacturing a good or delivering a service) to a partner settled in a foreign country. The partner produces under license, and he can be named the licensee, the transferee, the receiver or the technology buyer. Through technology transfer, customs barriers disappear and both partners join their forces and additional skills to conquer the local market.
In emerging countries, technology transfer is strongly encouraged by governments. Overtaking technological innovation is a way for them to accelerate and develop local market industrialization and competitiveness.
The benefits of a technology transfer are often described from the licensor's point of view. In this article we would like to focus on a more original topic, by screening the advantages for the “transferee”.
The transferee enhances its production standards…
Technology transfer enables the transferee to benefit from and overtake a technology developed by the seller. This transfer offers much more than a common trading partnership. Indeed, beyond technical aspects, it includes training of the local team (by the technology owner), and above all, it steadily raises production & management standards to adapt them more stringent requirements.
Besides technical aspects and possible incremental improvements (may they occur by its own or be given by the technology owner, depending on contractual clauses), there are many other benefits for the receiver, as it enables it to boost its development and to improve its internal processes. However, some conditions are required to seize and integrate a technology into an organisation.
… demonstrating a high level of maturity
What are the prerequisites to receive a technology transfer? All companies are not able to integrate a new technology in a sustainable way. The company's ability to sort out the best benefits from the new technology is not only highly dependent on its technical skills, but also on its organisational adaptability and its marketing & sales competencies.
A successful transfer demonstrates the high maturity of the licensee, as it proves its ability to integrate and adapt a new technology, and also its capacity to adress the local market. Thanks to the technology partnership, the company products will be more reliable and efficient, and this will help to gain market shares and enhanced competitiveness in the country.
A strategic partnership oversizing usual commercial relationships
In this context, the “partner” term has a strong meaning:
- The local company is not a subcontractor of the foreign company. The partner receives a technology, integrates it, develops it, and thus becomes an active player in the association.
- It should not either be considered as a customer by the technology seller, but rather as a partner: indeed, the real final customer is the local market. The local market must be addressed by a unique and innovative combined value proposition, surging from the singular association of both companies' activities.
A condition for success: an acute co-management partnership
A successful technology transfer also requires an excellent internal management of the partnership, with a close relationship with the partnering company.
Partnership managers are the backbone of the process. Their missions encompass the following : ensuring fluent communication between both companies, developing common values, optimizing the development on the local market, updating the seller processes and monitoring the production quality standards according to the termes of the partnership.
The co-management is the keypoint of the whole process, ensuring its durability and long-term success.