picoChip, a UK company, established an office in China during 2004. This is not an uncommon event in our global marketplace, except for the uniqueness of picoChip’s business. The company serves wireless communications networks with processing equipment that translates information sent wirelessly into signals and then back into their original state at the receiving end. While wireless technologies are common, they are also subject to different standards across the world.  

Several global organizations, along with governments and the private sector, are working to establish common international standards in wireless connectivity. This has proven most difficult in China and other parts of Asia. Of course, physics is universal. But the transmission standards, signal, spectrum, and packet design are not the same in all wireless technologies. China, in fact, has long promoted its own standards, and those are incompatible with the most commonly used 802.XX standards in the United States and other countries.  

Why would the Chinese take the risk of establishing other standards? Wouldn’t it be to their advantage to share the same wireless technologies as the rest of the world? After all, technology products can’t be developed, manufactured, and refined without broadly accepted technical standards (Brown). Part of the reason is that they believe their own country will be the marketplace of choice in the future for wireless technologies. That is, they want to protect their “turf.” 

The discussion of technology transfer here, then, is not about the technology, but rather about government policy, trade provisions, and negotiations. Proprietary standards limit the potential interest by international companies to both buy from and sell to a country in the high-tech arena. With respect to China and the Far East, progress has been made in gaining acceptance of international standards in recent years. But there are still issues to be resolved.  

PicoChip found China to be a compelling marketplace, even though there remain some barriers to adoption of standards. Twenty-six percent of U.S. exports to China are high tech, totaling $125 billion per year (Brown). Moreover, 269 million Chinese are wireless users, and that marketplace grows by over 5 million a month (picoChip). 

With the help of the British government, picoChip was introduced to the Chinese to form an alliance within the country to conduct research on wireless technology. PicoChip also offers a product that can successfully translate incompatible wireless standards between one another, making connectivity between different wireless technologies possible. It is this capability, along with the stunning marketplace opportunity, that encouraged picoChip to take the risks associated with entering the Chinese marketplace.  

Remember, physics is the same the world over. The issues faced by picoChip in evaluating foreign opportunity included the knowledge that the Chinese may not be easy to do business with in establishing global wireless standards. For some organizations, this negative point would be reason enough to avoid China. In picoChip’s case, however, their powerful processor with its ability to “flex” to any standard and allow communication between previously incompatible technologies was the final added reason to go to China. 

As we look at internationalization, though, it is likely there were several other reasons to move into China. The support of the British government, recent progress in working with the Chinese on wireless standards, and the size of the marketplace opportunity had as much to do with their decision to partner with the Chinese as the technology itself.