brining competitive edge. By liberalizing its policies China is planning to build its technology and innovation capacities through foreign direct investments. The technology transfer is done by multi national companies through various methods:
1.Forward and backward linkages of MNC's with the local customers and firms.
2.Induction by the local firms after observing the patterns and process of MNC's.
3.Recruiting the employees with experience in MNC's.
4.Carrying out the research and development activities of MNCs in the host countries.
Direct transfer of technology is done through introducing new process techniques, capital goods, new products and new management skills. Direct transfer is the result of spillovers such as forward and backward linkages, competition effects and trained worker migration. The amount and level of knowledge transfers may be linked to the local industry characteristics. There should be a balanced level of absorptive capacity and technology involved in the work. So host country capability in absorbing that technological spillover is also a determining factor in technical advancement (Glass 2001).
China tops the developing nations with huge magnitude of foreign direct investment inflows with one third of total world FDI investments and even received more FDI inflows than US in early 2000s (UNCTAD 2005). Technology transfer to China from MNC's is mostly through indirect effects. Several researches were conducted on these subjects revealed interesting conclusions. A research conducted in Venezuela during 1976-89 pointed out that "spillovers" are minute from foreign enterprises or even negative from the joint ventures. A study conducted in Indonesia, found that domestic firms benefited through the high productivity leading to spillovers and not due to the foreign ownership.
Factors determining the benefits of host country:影响东道国利益的因素：
On the other side of the coin, there is a chance of confining the indigenous technological growth capabilities. Local technological research and development is curbed and "crowding-out" effects may also occur. Generally MNC's will not transfer technology, as they wish to maintain monopoly over the market (Zhao and Zhang 2007). The technology transfer by the multinational companies is not appropriate to the host firms thereby affecting their chances to compete in the global market. There is a need to imbibe that technology by establishing those industries that are compatible to that transferred technology.
The American type technology transfer tries to monopolize the market and there exists a gap between receiving and providing countries in a particular industry that is expected to transfer technology. It is a type of reverse-order technology transfer. This will not result in any benefit to the host country and just provide an out-station (Kojima and Kiyoshi 1977).
Multinational companies also take enough measures to control the amount and kind of technology transfer through following measures:
1.Restricting the advanced technology to the subsidiary firms in the host nations.
2.Transferring the technology that will not tactically give advantage to the host nations.
3.Using the intellectual property laws to maintain the technological advantage.
4.Importing of key industrial inputs from the parent company to its subsidiaries thereby minimizing linkage effects.
There are some factors affecting the technolo
