Foreign R&D in China small, non-innovative

BEIJING - China has registered a total of 690-plus research and development (R&D) institutions invested by transnational companies, of which more than 200 were set up in the past two years. They have maintained a momentum of strong growth, says a research report delivered by the Development Research Center of the State Council.

The report shows that about half of the R&D institutions were set up by investment companies of transnationals in China, and the total amount of R&D funds has accumulated to US$4 billion.

It also points out six characteristics of R&D institutions invested by transnational companies. The six are:

1) R&D institutions are mainly concentrated upon several industries, such like electronics and telecom equipment manufacturing, communication and transport equipment manufacturing, pharmaceuticals, chemical raw materials and chemical manufacturing.

2) R&D institutions are mainly located in several large cities including Beijing, Shanghai, Guangzhou, Shenzhen, Tianjin and Suzhou, where the scientific research force is fairly concentrated. R&D institutions in Beijing are specialized mainly in computer, software and telecom sectors, those in Shanghai mainly in chemicals, automobile and pharmaceutical sectors; and those in Guangzhou, Shenzhen, Tianjin and Suzhou mainly in IT sector.

3) The majority of R&D institutions are dependent legal person ones. R&D institutions invested by transnationals may be divided into independent and dependent legal persons. About three-fourths of existing R&D institutions are of the dependent legal person status, which is beneficial to management and control and convenient to commercialize R&D results.

4) Most of R&D research activities cater for the application in Chinese market and the level is not high. A survey in Suzhou shows that only 1% of R&D is innovative.

5) Investment in R&D is very small. Though the number of transnational-funded R&D institutions in China equals to that of the United States in 1994, the accumulative R&D investment was only $4 billion, as compared with the $14.6 billion of R&D investment of foreign-funded R&D institutions in the United States in 1993 alone.

From General Electric's China Technology Center in Shanghai's webpage:

The GE China Technology Center (CTC), located at the Zhangjiang Hi-Tech Park, Shanghai, is a multi-disciplinary research center conducting leading edge research, engineering development and sourcing for GE's diverse businesses across the world. The focus of the center is to create market-leading innovations and products for GE businesses.
The CTC is an integral part of GE Global Research and one of four such multi-disciplinary research facilities within GE. At CTC, scientists, researchers and engineers work in virtual teams with their counterparts worldwide, in areas like power electronics, real-time/power controls, advanced manufacturing technologies, process sensing & control, medical imaging technologies, materials science, chemical sciences, and materials characterization/analysis. The GE China Research and Development Center has been operational since 2000 and was relocated to Zhangjiang in May 2003.
In addition, technology and sourcing teams from Aircraft Engines (GEAE), Plastics (GEP), Power Systems (GEPS), Transportation Systems (GETS), Consumer Products (GECP), Industrial Systems (GEIS), GE Specialty Materials (GESM) and Consumer Finance (GECF) are co-located in the center. The focus of the technology teams is to provide design engineering, process development and application engineering support to local customers and GE businesses worldwide. The sourcing teams, together with the cross-business commodity leaders, are working to achieve the goal of US $ 5 billion China sourcing by 2005.With 27 research labs in total, the research and technology efforts of the Center is focused on the following areas:
With 27 research labs in total, the research and technology efforts of the Center will be focused on the following areas:

Engineering thermo-plastics and films
Power electronics and controls
Advanced manufacturing
Imaging technologies
Crystals and ceramics
Chemical technologies such as conducting polymers and organic coating

I don't think anyone should doubt China's capability to do r-and-d -- there are many, many capable Chinese scientists in the U.S., and there is plenty of research from Chinese scientists working in China published in our scientific journals.

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