China Foreign Companies Database

Document Sample
China Foreign Companies Database Powered By Docstoc
					  A Preliminary Evaluation of
Indigenous Innovation Policy of China


       Xielin LIU, PHD
       Professor in Graduate University of
       Chinese Academy of Sciences
       liuxielin@gucas.ac.cn


                                             1
Outline

   Achievement of innovation and challenge
   New strategy for 2020: indigenous innovation
   Evaluation of indigenous innovation policy
   Implication of standard setting
   Conclusion




                                                   2
        Share of High-tech exporting of the world

25.00



20.00
                                                                 China


15.00
                                                                     USA

10.00                                                            Japan

                                                                 Germany
                                                                      Korea
 5.00
                                                                      UK

                                                         India
 0.00




 Source: NSF: Science and Engineering indicator, 2006.
                                                                           3
         Accelerated catch-up in R&D intensity
                   GERD as a percentage of GDP,1990-2006,%




Source: ECD MSTI database 2006/2.
                                                             4
    R&D Intensity in 2004 and Annual Average
    Growth Rate of R&D Intensity*,1999-2004




Source: Euro stat, “R&D expenditure in Europe”, Statistics in Focus, European Communities,June,2006.
                                                                                                       5
* R&D intensity is R&D expenditure as a percentage of GDP
       Surge in applications for Chinese patents
                      1995-2006




Source: Chinese S&T Yellow Book 2004, and MOST website most.org.cn
                                                                     6
    The number of invention patents granted to
         Chinese actors has risen rapidly




Source: Chinese S&T Yellow Book 2004, and MOST website most.org.cn
                                                                     7
          Summing up: a simplistic input-output
                account,1995-2004/05




Source: China S&T Statistical Yearbook 2005, China Yellow Book on S&T 2004, China Foreign Investment
Report 2005, and MOST website most.org.cn                                                              8
                       Challenge
   Cost driven strategy, limit profit margin, trapped by
    IPR, standards and high royalty for licensing
    technology.
   Poor innovation capability in industrial level. No
    internationally competitive company.
   High reliance of foreign technology supply in key
    industry, such as chips, software, machine tool,
    engine etc.
   Technological dominance of multinationals in
    domestic industry
   No leading edge scientists and research in China

                                                            9
    Strategic goal of indigenous innovation policy
                        for 2020
   Solid improvement of capability of S&T to promote
    economic and social development.
   To master the leading edge industrial technology
    and decrease the reliance to foreign technology
   To promote the enterprise from cost-driven to
    innovation driven.
   Achievement of S&T results with global impact.
    Make China of innovative countries in the world



                                                        10
                         1999—2004 R&D/GDP

Year              1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2020

R&D/GDP(%) 0.76           0.90    0.95    1.07   1.13   1.23   1.34   1.42   1.49   1.52   2.5




 Source: China S&T Database of MOST sts.org.cn
                                                                                           11
           16 Target technologies for 2020
   General CPU
   New broad wireless mobile telecommunication
   High end digital machine tools
   Nuclear station
   New drugs
   Large Airplane
   Moon flight
   Trans-genetics products
   Anti-HIV and other dieses
   …
   Those project intend to start in a time before 2020 one
    by one. But financial crises kicked off those mega
    projects earlier.
                                                              12
        Procurement to promote indigenous
                   innovation
   Priority for indigenous innovative products in public
    procurement
   More than 30% of technology and equipments buying
    should go to domestic equipment if using public
    money
   Giving indigenous products some price advantage in
    procurement
   Identification needed before implementation of the
    policy.


                                                       13
         Improvement of Special tax policy
   150% underwriting for R&D expenditure before tax
    but with conditions 10% of R&D increase, a
    company in profit, cannot use the tax benefit to
    other year.
   Now all the conditions are cancelled.
   No profit required
   No 10% increase is necessary
   Can write off the benefits in next three years.
   One income tax policy for domestic and foreign
    companies in China
   High-tech company can enjoy free income tax for
    the first two years and half for next three years after
    its profit year.

                                                              14
              Tax for high tech industry
   Free income, operating, real estate and land tax in a
    given period for incubators and university science
    parks to encourage start-up firms.
   For VC company, there will be tax reducing for
    investment revenue and income, but not specific this
    time, intending to promote VC in China.
   Policy bank can invest in high-tech companies by
    using equity share.
   Second board for SME, started from 2009.




                                                        15
More support to IPR and standard setting

   Strongly Support TD-SCDMA: push China
    Mobile to launch out TD-SCDMA. The effect
    is not yet sure.
   Take standard and IPR as important indicator
    of achievement of government R&D project.
   Direct support to enterprises for next
    generation technology and standards.



                                               16
Evaluation of indigenous policy




                                  17
          Accelerating of R&D investments: yes
                            National R&D expenditure

                                                                        One billion of US dollar

                   2001       2002       2003       2004       2005       2006       2007       2008
National R&D
                     12.6      15.56       18.6      23.74      30.36       38.5      50.82      66.23
expenditure




Source: Data Bank of MOST. most.gov.cn, NBS, MOST and MOB (2009). Bulletin of national S&T expenditure
                                                                                                         18
   More money for applied research and product
                 development
                                  National S&T programs

                                                                               One million of US dollar
                                   2001      2002       2003       2004      2005       2006        2007    2008

973 Basic Research                  71.2       82.8       96.6     108.3      121.8      173.6      225.5   275.4

Key Technologies R&D
                                   127.2      161.6     162.5      195.0      201.3      384.6      745.4   734.8
   program

High-tech program (863)            301.9      305.9    1147.8     1122.3 1409.6

National Key Experimental
                                    15.7       15.7       15.7       15.7      16.6       27.7       21.9    23.3
    Lab Program

Innovation fund for SME             94.6       65.2       80.2       99.9     122.5      108.1      172.1   211.6


  Source: MOST, China Science and Technology Development Report, 2006.China S&T Literature Press.
                                                                                                              19
   More money for experimental development,
         Less money for basic research

             Basic                   Applied                  Experimental
                                                                                          of GDP
            Research(%)              Research(%)              Development(%)
1995                   5.18                    26.39                         68.43               0.57
2000                   5.22                    16.96                         77.82               0.90
2005                   5.36                    17.70                         76.95               1.34
2006                   5.19                    16.28                         78.53               1.42
2007                   4.70                    13.29                         82.01               1.49
2008                  4.40*




Source: 2008 Statistical Yearbook of China's science and technology. *NBS, MOST and MOB (2009)
                                                                                                   20
       Industry has taken a role in innovation system
           as counterparts in developed country
                        Some countries’ R&D expenditure structure in 2006

Item                 China USA Japan Turkey Austria Czech Korea                                  Russian

Financed by
                        69. 1 64. 9         77. 1        46. 1           46. 7   56. 9   75. 5     28. 8
Industry(%)
Financed by
                        24. 7 29. 3         16. 2        48. 6           37. 4   39. 0   23. 1     61. 1
Government(%)
Financed by
Other                    6. 2      5. 8       6. 8         5. 3          15. 9    4. 2    1. 5     10. 1
Sources(%)



   Source:2008 Statistical Yearbook of China's science and technology.
                                                                                                    21
All enterprises began to speed up their R&D
investment, but the R&D investment gap between
SOE and non-state enterprises is widening fast, why?

     4500
     4000                                                         State-owned Enterprises
     3500
     3000                                                         Non State-owned
     2500                                                         Enterprises
     2000
                                                                  Enterprises with Funds
     1500                                                         from Hongkong Macau
                                                                  and Taiwan
     1000
                                                                  Foreign Funded
       500                                                        Enterprises
         0
              2002      2003     2004      2005     2006   2007


Source: China S&T Statistical Yearbook 2003-2008.
                                                                                            22
             Business R&D in China 1995-2005




Source: China S&T Statistical Yearbook 2003-2008.
                                                    23
Chinese scientific publications are growing
exponentially.
  Chinese-authored publications included in Science
  Citation Index and Engineering Index, 1997-2005




Source: MOST online database, and China S&T Statistical Yearbook 2005.
                                                                         24
China’s emerging presence in nanoscience:
papers.




Source: A comparative bibliometric study of several nanoscience „giants‟ [J]. Research Policy,2007
                                                                                                     25
Patents granted in USA of China, Japan Korea
and Taiwan
      Year                 China                  Japan                Korea               Taiwan
      1996                            78                24355                  1603                 2477
      1997                          103                 24498                  2027                 2678
      1998                          133                 32543                  3427                 3911
      1999                          172                 32928                  3741                 4664
      2000                          274                 33387                  3560                 5976
      2001                          472                 35417                  3849                 6685
      2002                          626                 36860                  4100                 6883
      2003                          724                 37744                  4246                 6846
      2004                          951                 37568                  4769                 7435
      2005                          963                 32243                  4696                 6172
      2006                         1621                 39954                  6634                 8241
      2007                         1827                 36452                  7465                 7759
      2008                         2653                 37250                  8924                 8126

Source: Online database of United States patent and trademark office.www.patft.uspto.gov
                                                                                                      26
USPTO Patenting by year for Various
Nations,1963-2004Year for Various Nations, 1963-2004
  USPTO Patenting by

  100000

    10000                                                                                  Korea
                                                                                           Taiwan
     1000                                                                                  Japan
                                                                                           USA
       100                                                                                 China
                                                                                           India
        10
                                                                                           Mexico
          1
         63
         66
         69
         72
         75
         78
         81
         84
         87
         90
         93
         96
         99
         02
       19
       19
       19
       19
       19
       19
       19
       19
       19
       19
       19
       19
       19
       20
                                                   China              India

Source: Online database of United States patent and trademark office.www.patft.uspto.gov
                                                                                                    27
Conclusion and discussion:
   The government spends more on applied science,
    experimental development and mega projects as ways
    of promoting innovation, in the same time, the share of
    expenditure for basic science has been decreased.
    But this will not lead more radical innovation and
    standard setting in long run.
   Foreign related enterprises remain in key innovation
    performance indicators, even much faster to spend R&D
    in China from 2003 on. It means that after indigenous
    innovation policy, foreign company are not intended to
    leave, vice versa, they are determined to be more
    localized.
   So, we can forecast that in near future, foreign company
    will continuously be the main actor in industrial standard
    setting.
                                                             28
Conclusion and discussion 2
The gap of needs and the power in standard setting
   SOEs have been accumulating their innovation capability,
    but lots of indicator show that State-owned enterprises
    have lost their dominant position of innovation. Though
    the current innovation policy favors SOEs, but the
    regulation of SOEs and their monopoly position
    restrained them to be innovation driven. They have the
    power to implement standards, but do not have the
    incentive to get it.
   Private enterprises are the fast runner to build innovation
    capability, though they enjoy less direct support from
    government. They need standards to win out in the
    market competition, but they are relatively weak to do so.
   So, Chinese companies are the weak stakeholders
    in standard setting.

                                                             29
Conclusion and discussion 3:market size

   Market size is the key for standard setting?
   Lots of scholars argue that the size of
    Chinese market can nurture lots of standards
    if China is willing to in software,
    telecommunication, etc.
   But the touch situation of TD-SCDMA shows
    that just market size is not enough to lead to
    standard setting and control.



                                                 30

				
DOCUMENT INFO
Description: China Foreign Companies Database document sample