Prioritization of Technology Transfer Methods to Downstream Petrochemical Industries in Developing...

TIBEC II,Terengganu International Business and Economics Conference 2010 1041

Prioritization of Technology Transfer Methods to DownstreamPetrochemical Industries in Developing Countries

Abolfazl Moradian,Hessam Zand Hessami,Pouya Majd Pezeshki

Islamic Azad [email protected]

Abstract

Nowadays by considering globalization it becomes more important to achieve newtechnologies in developing countries. Development and technology transfer play a majorrole in developing of industries in these countries. Especially downstream petrochemicalmade governments to pay more attention and concern about new technologies to betransferred because of its products which made much more added value in compare withmidstream and upstream petrochemical products. The petrochemical industry is usuallydivided into three major components: Upstream, midstream and downstream. Midstreamoperations are generally included in the downstream category. The downstreampetrochemical industry includes basic chemicals, fertilizers and nitrogen compounds,plastics and synthetic rubber in primary forms, man-made fibres, rubber products, plasticsproducts and other chemical products like pesticides and pesticides. In this paper weevaluate criteria of technology transfer methods in order to determine a list ofprioritization for these methods in downstream petrochemical industry in developingcountries. The approach is based on the Group TOPSIS technique (Technique for OrderPreference by Similarity to Ideal Solution). Evaluating the methods of technologytransfer shows that the most suitable method is industrial espionage. Industrial espionageis a technique to gain technical information and transferring the technology withoutpermission from the owner of information or technology. Although there are ethicaldoubts about this method due to illegal actions which are known as a crime butsometimes it may become a logical decision to achieve required information andtechnology.

Keywords: Technology transfer, developing country, downstream petrochemical industry, Group TOPSIS,MADM

1. Introduction

Today, despite the globalization issue, importance of access to new technology fordeveloping countries is not secret to anyone. Companies are constantly trying to acquire

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new technologies, and, in this way, get overtaken their competitors in the market (Arasti& Delavari, 2004). Hence the technology development and consequently the technologytransfer are always considered as very important issues. Especially in downstreampetrochemical industries, since governments have drawn their attention from relying onoil and gas sales to conversion and production of the petrochemical products withextremely high added value, transfer of new technology has particular position.Technology transfer is a complex and difficult process, which will be not only worthlessbut may lead to waste time and money.Much has been said about the concerns of the industrialized countries, from whom thetechnology will be transferred, on technology transfer, including low level of competitionand market imperfection in the DCs, policies that constrain entry of imported productsand impose high tariffs on imported goods, low level of capital market development, non-economical pricing policies, weak institutional and legal framework, non-recognition ofintellectual property rights, etc. (Barnett, 1993) (Brown, Levine, Romm, Rosenfeld, &Koomey, 1998)Similarly, DCs will consider several factors when some technology is transferred. Pastexperiences with unsuccessful technology transfers indicate that any failure inconsidering these factors may lead to failure of the entire technology transfer processitself. These factors include the following (Parikh & Kathuria, 1997) (Achanta,Bhattacharjee, & Chandrasekar, 1994) (Sathaye & Ravindranath, 1998)

• The type of needs of a developing country and level ofagreement of the technology transfer process with other developmental objectives of thecountry.

• The requirements of appropriate or better technologies tomeet those needs.

• The available expertise, i.e. the capacity building needed toensure effective transfer.

• The factors affecting adoption, assimilation and adaptationof imported technology.In this paper we evaluate criteria of technology transfer methods in order to determine alist of prioritization for these methods in downstream petrochemical industry indeveloping countries. The approach is based on the Group TOPSIS technique (Techniquefor Order Preference by Similarity to Ideal Solution).

2. Developing countries

Developing country is a term generally used to describe a nation with a low level ofmaterial well being. There is no single internationally-recognized definition of developedcountry, and the levels of development may vary widely within so-called developingcountries, with some developing countries having high average standards of living. (Sullivan & Sheffrin, 2003) (United Nations Statistics Division) Some international organizations like the World Bank use strictly numericalclassifications. The World Bank considers all low- and middle- income countries as"developing". In its most recent classification, economies are divided using 2008 Gross



National Income per capita. In 2008, countries with GNI per capita below US$11,905were considered developing (World Bank). Other institutions use less specific definitions The International Monetary Fund (IMF) uses a flexible classification system thatconsiders "(1) per capita income level, (2) export diversification—so oil exporters thathave high per capita GDP would not make the advanced classification because around70% of its exports are oil, and (3) degree of integration into the global financial system."(International Monetary Fund)Countries with more advanced economies than other developing nations, but which havenot yet fully demonstrated the signs of a developed country, are grouped under the termnewly industrialized countries (Bozyk, 2006).

3. Downstream petrochemical industries

Petrochemical industry is usually divided into three major components: Upstream,midstream and downstream. Midstream operations are generally included in thedownstream category.By definition, downstream petrochemical units include the units transferring finalpetrochemical products to the consumer products. These units can be built both beside thepetrochemical complexes and away from them. Factories producing pesticides ofvegetable pests, synthetic fibers, plastic parts, and so forth are considered as thedownstream units (Rhabaran Modiriat Amin Co, 2009). Figure1 shows the area ofdownstream industries in the petrochemical industry.

Figure 1. The area of downstream industries in the petrochemical industry

A part of developing countries, including the Persian Gulf states with huge oil reserves,have begun pursuing efforts to develop the downstream petrochemical industries.



Increase in population, need for new labor market, fluctuations in oil prices and intensiveeconomic competitions, each of which can lead the state's economy to suffer from severeand irreversible fluctuations, demand that the governments in developing countries drawattention from relying on oil and gas sales to conversion and production of petrochemicalproducts, especially downstream industries -- a subject matter that should be consideredas an inevitable matter in the macroeconomic planning.A classification of the different industrial trends is needed to examine in the field oftechnology transfer in the downstream petrochemical industries. For this purpose,"International Standard Industrial Classification of All Economic Activities (ISIC) isused, which is provided by the UK government as a standard method to classify theeconomic activities. Code ISIC puts in a group, those enterprises producing a type ofgoods or services or utilizing similar processes (e.g. similar raw materials, similarproduction process or similar technology or skills. The latest revised version of the codeISIC is version 4, which is a basis of classification of industrial trends in the downstreampetrochemical industries in the present paper, and which is specified in Table 1 (theUnited Nations Industrial Development Organization (UNIDO), 2008).

Table 1. Classification of Industrial trends in the field of downstream petrochemicalindustries

Division Group Class DescriptionDivision 20 Manufacture of chemicals and chemical

products201 Manufacture of basic chemicals, fertilizers

and nitrogen compounds, plastics andsynthetic rubber in primary forms

2011 Manufacture of basic chemicals2012 Manufacture of fertilizers and nitrogen

compounds2013 Manufacture of plastics and synthetic rubber

in primary forms202 Manufacture of other chemical products

2021 Manufacture of pesticides and otheragrochemical products

2022 Manufacture of paints, varnishes and similarcoatings, printing ink and mastics

2023 Manufacture of soap and detergents, cleaningand polishing preparations, perfumes andtoilet preparations

2029 Manufacture of other chemical products n.e.c.203 2030 Manufacture of man-made fibres

Division 22 Manufacture of rubber and plasticsproducts

221 Manufacture of rubber products2211 Manufacture of rubber tyres and tubes;

retreading and rebuilding of rubber tyres



2219 Manufacture of other rubber products222 2220 Manufacture of plastics products

4. Technology in developing countries

Technology transfer can be defined as the “transfer of systematic knowledge for themanufacture of a product, for the application of a process, or for the rendering of aservice” (UNCTAD, 1979). The international transfer of technology from developed todeveloping countries continues to be an important stimulus to industrialization andeconomic growth for the latter. Firms located in developing countries stand to gain fromsuccessful technology transfer in at least three ways:(1) improved product and service quality and reduced prices, resulting in greaterdomestic and international competitiveness;(2) diversification into new products or markets, resulting in expanded business activity;and(3) “learning by doing”, resulting from cooperation with technologically advancedforeign firms (Calantone, Lee, & Gross, 1990).Technology policy requires a balanced assessment of product complexity (for valuemaximization) and process complexity (for cost minimization) (Sharif, 1997). These are afunction of a product's performance and design characteristics, and the technicalspecifications for manufacturing facilities. In both instances resources, competencies andfinancial constraints will restrict the selection of technologies in developing countries(Hipkin, 2004).A number of situational models describe the development of technological capabilitiesinto strategically important core competencies (Hipkin, 2004). Equipment and processesrequire continuous updating, and it is essential for competencies to retain a technologicaledge (Kim, 1998) (Lennon, 1997). When technology is transferred to developingcountries, owner and acquirer companies should determine what technology isappropriate in the acquiring country (Plenert, 1994).Technology activity between one country and another may be construed as a flow oftechnological capabilities emphasizing the desire of the technology acquirer to establish“knowledge-creating activities” (Leonard-Barton, 1995). This emergence oftechnological proficiency is a continuum extending from the purchase of equipment by anacquirer (essentially constituting a financial transaction with no technology transfer), tototal technology transfer giving the acquirer equal technological partnership with theowner. Along this continuum Leonard-Barton identifies four levels in a technologycapability ladder: (1) assembly or turnkey operations, (2) adaptation and localization ofcomponents, (3) product redesign, and (4) independent design of products. The first twolevels are more likely to be encountered in developing countries. However, if they are notto remain followers in their endeavors to compete in internationally, developing countrieswill increasingly have to direct their technology policies at the third and fourth levels.This will require an element of realism as achieving first-mover advantage on the basis ofredesigned or independently adapted technology will not be easy for developing countries(Hipkin, 2004).



In order to gain significant entry to world markets, the technology strategies ofenterprises in developing countries will have to reflect the trends, and meet the prioritiesfound in the developed world: more rigorous quality standards and demanding customers,shorter product life-cycles, greater product diversity, more fragmented markets, andenvironmental consciousness (Sharif, 1997) New technology, whether imported ordeveloped at home, is a key requirement for expanding the export base of a developingcountry (Hipkin, 2004).Purchasing a new machine or taking over a turnkey project does not provide an acquirerwith “a new technology” as a surrogate for technology transfer, as this makes unrealisticassumptions of “self-sufficiency, flexibility, and endless reliability on equipment design”(Leonard-Barton, 1995). At the most basic level technological capability flow becomes“a process of converting or transferring scientific or technological knowledge directlyinto the satisfaction of a customer need; the product then becomes merely the carrier ofthe technology and the form it takes is only defined after the technology and the needhave been clearly matched” (Twiss, 1986) (Hipkin, 2004).

5. Key stakeholders of technology transfer

One can identify several categories of people affecting and being affected by technologytransfer. We describe a few important stakeholders below (Ramanathan, 2002)

Government

The government of the DC to whom the technology is to be transferred is one of the mostinfluential stakeholders in technology transfer. It formulates the policies and conditionsdefining the successful implementation of technology transfer.

Entrepreneurs

These people will be responsible for successfully selling the technologies to local people.Hence, their opinions on the profitability and the likely extent of diffusion in the localmarket will be important.

Ultimate users

A successful technology transfer would result in significant benefits to the ultimate users.For example, people using compact fluorescent lamps (CFL) will benefit from costsavings in the long run. Their views should also be considered in prioritizing thetechnologies.

Experts

Those carrying out research and development on different technologies and technologytransfers may have special knowledge. If they cannot be included in any of thestakeholders, they may be considered as experts. They will have an overall idea of the



positive and negative features of a given technology transfer. Hence, their opinions maybe sought if necessary.

6. Technology transfer Methods

There are different interpretations about the transfer method in the literature, which canbe briefly proposed in Table 2 along with their references; then they are supposed to bethe same and are considered as "technology transfer methods".

Table 2. Different interpretations about the transfer methods in the literaturePhrase ReferencesTechnology TransferChannel

(Khalil, 2000) (Radosevic, 1999) (Ragaits, 1999)(Jungki, 1999)

Technology Transfer Mode (Lee, 2002) (Radosevic, 1999) (Kondo, 2001)(Stainslaw, 1996) (Cassiman & Veugelers,January 2000)(Chiesa & Manzini, 1998)

Technology TransferPathway

(Boarini, 1999)

Technology TransferMechanism

(Khalil, 2000) (Radosevic, 1999) (Robert & Berry,1985)

Generally, different methods are mentioned in the literature for transferring technology,some of them are identical in content and nature and only differ in their titles. Here weintroduce the most important techniques with combination of some similar techniques:

Obtaining Technology through acquisition of a company (Acquisition): In thismethod, the recipient company buys the technology holder company and owns it instead of transferring technology directly. Obviously, through in this way, the technology willbe acquired (Chiesa & Manzini, 1998).

Training Acquisition (Human Exchange & Hiring): in this method, the recipientcompany, employed experts under certain conditions or uses from other companiesprofessionals services as an agent. (Radosevic, 1999) (Kondo, 2001) (Chiesa &Manzini, 1998).

Merge: in this method, a company merges with another company that is the holder oftechnology and a new company formed from combination of two previous companies inwhich technological capabilities are shared. Obviously, in the process of sharingtechnological capabilities, technology and technical knowledge transferring is happenbetween the two organizations (Chiesa & Manzini, 1998).

Licensing: In this method recipient organization receives all or part of technologicalrights which is owned by another organization (technology provider) via paying somemoney or some services. This method to access technology usually is used in food and



drug industries and service activities. In this method, technology recipient organization,in addition of mastering technology, supply product/service in market using owner'scredit and name (Khalil, 2000) (Radosevic, 1999).

Joint Venture: In this way, two or more firms share their technological power,knowledge and resources to develop a special technology so that a third company, whichusually has a limited life is created and each part is participating in profit and losses.(Khalil, 2000) (Robert & Berry, 1985) (Chiesa & Manzini, 1998) Usually using jointventure in large projects with high cost and investment risk becomes important. (Robert& Berry, 1985)

Training and education: This method is divided to two training and education part:Education: Employees of recipient company are sent to educate in different grades insideor outside the country under the supervision of technology provider and getting validscientific documents.Training: Technology recipient Company hold required short and long term practicalcourses in the provider company or under its auspices. This method has been introducedunder other titles such as research and training courses and study abroad. (Radosevic,1999)

Reverse Engineering: In this method, the recipient achieves technology throughsimulation, breaking codes and discover the technology secrets and remaking products(Khalil, 2000). This method has been introduced under other titles such as Imitation andDuplicate copy. This method can be used when access to technology is difficult orimpossible, and transport costs are high and legal costs are low. (Lee, 2002)

Outsourcing: In this method, some activities are transferred outside the company.During this products transition and delivery by contractors which often accompanied byproduct or manufacturing process control by employer, transfer of technology ortechnical knowledge is occurred (Kondo, 2001) .

Alliance: in this way two firms share their technological capabilities in order to achievenew technology (Chiesa & Manzini, 1998) and in spite of many similarities with jointventure method there are some differences which could be mentioned as there is noinvestment between firms and usually its short term cooperation in alliance (Robert &Berry, 1985).

Turn Key Project: In this method receiver, purchase technology in the form of acomplete project from technology holder so that technology provider manages and runthe design, installation and initial operation process. In certain cases, training and supportafter launching is also part of the agreement (Khalil, 2000).

Equity Investment: Investment in other companies result in access to technology andhas several forms. It is possible that recipient company invests in the source company toaccess their technical knowledge or the source company invests in recipient so thetechnology transferred (Lee, 2002). This investment could be as equal or minority shares.



In the minority share method, one company buy part of the supplier company’s share butit has no role in its management (Chiesa & Manzini, 1998).

R&D Collaboration: Cooperation in research and development is possible in differentways:Joint R&D: Two companies decide to search jointly in R&D areas about a particulartechnology, without having to buy each other's share. (Chiesa & Manzini, 1998)R&D Contract: A company undertakes costs of research projects in academic or researchcenters to develop a specific technology. (Chiesa & Manzini, 1998)Contract out R&D: In this method the organization defines part of his R&D activities asa project and assign to other organizations as a contractor agreement. (Khalil, 2000)

Industrial Espionage: is a technique to gain technical information and transferring thetechnology without permission from the owner of information or technology. Althoughthere are ethical doubts about this method due to illegal actions which are known as acrime but sometimes it may become a logical decision to achieve required informationand technology. (Lee, 2002).

Selecting appropriate technology transfer method has a great impact on the success of thetransfer process. It should be noted that sometimes a complete technology transferrequires the use of a combination of several different methods (Arasti & Delavari, 2004).Table 3 shows technology transfer methods and related symbols.

Table 3. Technology transfer methodsTechnology transfer Method Symbol

AcquisitionHuman Exchange & HiringMergeLicensingJoint VentureTraining and educationReverse EngineeringOutsourcingAllianceTurn Key ProjectEquity InvestmentR&D CollaborationIndustrial Espionage



7. Selection Criteria

Different criteria to select appropriate method for technology transfer were obtainedthrough reviewing literature of management technology and technology transfer. A partof the proposed criteria are useful only when the type of technology intended by theenterprise is clear; another part is general criteria. However both criteria will be useful toselect the appropriate technology transfer method. The criteria discussed here belong tothe second type of criteria (Chiesa & Manzini, 1998) (Khalil, 2000) (Arasti & Delavari,2004) (Ramanathan, 2002).

• Ability to define content of cooperation: More ability todefine content of cooperation, more desirable cooperation between the technology ownerand receiver

• Investment level: Different methods of technology transferwill require different investment level. The transferred technology and the related transfermethod should be affordable for its receiver.

• Ownership level of the company: the amount of ownershipof the technology-providing company

• Speed of access to technology: Necessity of quick access totechnology is one important factor, which has influence on the transfer method.

• Risk level• Level of technology acquisition• Level of accompanying with technology changes.

Table 4 shows the selection criteria suitable for technology transfer method along withthe relevant symbols used in this paper and the related source.

Table 4. The selection criteria suitable for technology transfer methodCriteria Symbol References

Ability to define content ofcooperation

(Chiesa & Manzini, 1998)(Arasti & Delavari, 2004)

Investment level (Chiesa & Manzini, 1998)(Arasti & Delavari, 2004)

(Ramanathan, 2002)Ownership level of thecompany

(Arasti & Delavari, 2004)(Khalil, 2000)

Speed of access totechnology

(Khalil, 2000) (Arasti &Delavari, 2004)

Risk level (Chiesa & Manzini, 1998)(Arasti & Delavari, 2004)

(Ramanathan, 2002)Level of technologyacquisition

(Khalil, 2000) (Arasti &Delavari, 2004)

Level of accompanyingwith technology changes

(Ramanathan, 2002)



8. Research methodology

Research question is as follows: "What is the best way to transfer technology todownstream petrochemical industries in developing countries?"In this paper, we firstly calculate the weight of method selection criteria. Weightingmethods are divided into two categories: objective methods and subjective methods. Weare using subjective method group, whose result will be a weight vector. Then,considering the resulting weight matrix, we prioritize the technology transfer methods.MADM models are divided into two different categories: I) compensatory models,including the methods in which it is permitted to perform trade-off between the criteria;II) non-compensatory models, including those methods in which it is not allowed to dotrade-off between the criteria; and for example, weakness of an index will not becompensated by advantage of other criteria. Considering that it is possible to do trade-offbetween the selected criteria and criteria for selecting and prioritizing the technologytransfer methods, the intended model should be selected from the compensatory models.Furthermore, considering that the desirability of the intended criteria increases ordecreases in a uniform manner, and that the rate of substitution trade-off between them isan Euclidean one, and that the Group TOPSIS (Technique for Order-Preference bySimilarity to Ideal Solution) is easily understood and acceptable for decision makers, thelatter model has been selected (Asgharpour, 1998).Senior managers, supervisors, and those experts of the production process in downstreampetrochemical industries having a bachelor's degree or higher in Industrial Engineeringand Management (with more than 5 years of experience in this industry), as well theexperts in the area of technology transfer who participated in at least one technologytransfer project, were selected in Iran as well as developing countries such as China,Persian Gulf countries also turkey which have multinational firms in Iran, as the studypopulation. Considering the features above and the data provided, the number of samplesconsidered for this research is 10 people. Sampling method used in this stage of researchis simple random sampling, in which each element of the intended population has equalchance of selection. The tool used to collect data is questionnaire which has beendesigned based on the decision matrix and using Likert 5-option spectrum.

9. Applying group TOPSIS method to select technology transfer method (Shih,Shyur, & Stanley Lee, 2007)

To include the multiple preferences of more than one DM, we will consider theseparation measures by taking the geometric mean or arithmetic mean of the individualsfor TOPSIS. The detailed procedure, with a few options within each step, is illustrated inthe following.Step 1. Construct decision matrix , for each DM. The structure of the

matrix can be expressed as follows:



(1)

where denotes the alternative (technology transfer methods)

represents the attribute or criterion with quantitative and qualitative data.

indicates the performance rating of alternative with respect to attribute by

decision maker and is the element of . It is noted that there should

be decision matrices for the members of the group.

Step 2. Construct the normalized decision matrix for each DM.

For DM , the normalized value of the decision matrix can be any linear-scale

transformation to keep , as follows:

(2)

Where and .



Step 3. Determine the ideal and negative ideal solutions (PIS) and (NIS),

respectively, for each DM . For DM , his or her PIS and NIS are

(3)

Where is associated with the benefit criteria and is associated with the cost criteria;

and .

Step 4. Assign a weight vector to the attribute set for the group.

Each DM will elicit weights for attributes as , where , and ;

and for each DM . Each element of the weight vector will be the

operation of the corresponding elements of the attributes’ weights per DM.

Step 5. Calculate the separation measure from the ideal and the negative ideal solutions,and , respectively, for the group.

There are two sub-steps to be considered in Step 5. The first one concerns the distancemeasure for individuals; the second one aggregating the measures for the group.

Step 5a. Calculate the measures from PIS and NIS individually, as follows:

(4)

And

(5)

Step 5b. Calculate the measures of PIS and NIS for the group.In addition, the group separation measure of each alternative will be combined through anoperation for all DMs, . Thus, the two group measures of the PIS and NIS

are the following two equations:



(6)

(7)

The operation can offer many choices, geometric mean, arithmetic mean, or theirmodification. If we take the geometric mean of all individual measures, the groupmeasures, Eqs. (4) and (5), from PIS and NIS will be

(8)

And

(9)

where .

Results of step 5b, as follows:

Table 5. The separation measure of alternatives for the groupNo. Separation measure of the group

1 0.108 0.0542 0.035 0.0943 0.057 0.0744 0.069 0.0675 0.081 0.0626 0.039 0.0937 0.075 0.0618 0.040 0.0869 0.082 0.05810 0.093 0.03911 0.062 0.07212 0.058 0.07413 0.038 0.112Note: The separation measure of the group is countedthrough the geometric mean of all DMs with Euclideandistance and vector normalization.

Step 6. Calculate the relative closeness to the ideal solution for the group.



Calculate the relative closeness to the ideal solution and rank the alternatives indescending order. The relative closeness of the th alternative with respect to PIS can

be expressed as

(10)

Where . The larger the index value, the better the performance of the

alternative.

Step 7. Rank the preference order.A set of alternatives can now be preference ranked according to the descending order ofthe value of .

Results of step 6 and 7, as follows:

Table 6. The relative closeness and rank by group TOPSISNo. Technology transfer methods Rank Note1 0.333 Acquisition 122 0.727 Human Exchange & Hiring 23 0.563 Merge 54 0.492 Licensing 85 0.432 Joint Venture 106 0.704 Training and education 37 0.448 Reverse Engineering 98 0.683 Outsourcing 49 0.413 Alliance 1110 0.298 Turn Key Project 13 #11 0.537 Equity Investment 712 0.562 R&D Collaboration 613 0.745 Industrial Espionage 1 *Note: “*” and “#” mark the first and the last candidate, respectively.



10. Analysis and conclusion

According to the calculations above and using the technique TOPSIS, methods oftransferring technology to developing countries were prioritized, whose results can beseen in Figure 2. The results of the study show that at present, the most appropriatemethod for transferring technology to developing countries, especially in the downstreampetrochemical industries, is industrial espionage, in which access to technical andtechnological information, as noted above, is provided through a variety of ways withoutthe knowledge and consent of the technology holder. Despite the moral doubt in thismethod, its use may be a logical decision to achieve technology.One of the major problems that downstream petrochemical industries in developingcountries are faced with is that in many cases, the developed countries do not provide, todeveloping countries, the tested technology which have appropriate process, and areeconomically affordable and environmentally acceptable. In other cases, these countrieshave restrictions on sales. These countries have been set aside, for sale to developingcountries, the untested technologies that have been abandoned due to low productionefficiency, high cost of product and high production cost, or environmentalconsiderations in some countries (Itan Co). In these cases, using industrial espionagemethod to achieve appropriate technologies is inevitable. In addition to the traditionalform of industrial espionage, other forms (such as "competitive intelligence") that arecompletely legal have been also suggested.

Industrial espionage is an undeniable fact. During recent years, China has performedwide operations to collect and obtain industrial and economic information from theindustrialized countries. A leading intelligence agent said, Germany is under attack from



an increasing number of state-backed Chinese spying operations that are costing theGerman economy tens of billions of Euros a year. Also, an espionage protection expert in the office for counter-intelligence for the state ofBaden-Württemberg, estimated that German companies were losing around 30,000 jobsto industrial espionage every year.He said, "China wants to be the world's leading economic power by 2020, For that theyneed a speedy and intensive transfer of high-level technological information which isavailable in developed industrial lands, if you can get your hands on it "The areas most under attack include car manufacturing, renewable energies, chemistry,communication, optics, x-ray technology, machinery, materials research and armaments.Information being gathered was not just related to research and development but alsomanagement techniques and marketing strategies (Connolly, 2009).This issue well specifies the situation of industrial espionage in the competitive world ofthe current technology. Study in the field of industrial espionage methods and theirperformance in various industries, as well as courses of action to counter industrialespionage can be good grounds for subsequent research by those scientists interested inthis area.

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