S&T/R&D ACTIVITIES BY FOREIGN INVESTED ENTERPRISES IN CHINA

S&T/R&D ACTIVITIES BY FOREIGN INVESTED ENTERPRISES IN CHINA 在在在在在在在在在 / 在在在在 Cong Cao University of Oregon Outline  Introduction  Basic Information of Large- and MediumSized FIEs  Performance Measurement of S&T Activities  Current S&T Activities at FIEs  Trends of S&T Activities at FIEs  Discussion Introduction  In 2003, China invested RMB154 billion, or 1.31% of its GDP, on R&D – – – Of the expenditure, 62.4% was spent by enterprises with three-quarters (RMB72.1 billion) at LMEs Of the R&D spending by LMEs, 23.1% was from FIEs ( 三三三三 ), including those from Hong Kong, Macau, Taiwan (8.1%), and those from foreign countries (15.0%) In other words, R&D spending by LM FIEs contributed to 11.3% of the total enterprise R&D spending in China Introduction Questions: – – – What does this expenditure tell us about the general picture of the R&D activities and more generally S&T activities of FIEs in China? What are the trends by which FIEs have carried out R&D and S&T activities in China? How have FIEs in China been doing compared to their domestic counterparts in R&D and S&T activities? FIEs: Basic Information  They have seen their share in China’s LMEs increased FIEs: Basic Information  … and employment among LMEs increased FIEs: Basic Information  Per FIE employment had been constant until 2003 FIEs: Basic Information  Their revenue has been climbing FIEs: Basic Information  … so has been their profits Performance Measurement  Input – Organizational  Enterprises with S&T institutes  Enterprises with S&T activities – Personnel  Tech personnel, S&T personnel, R&D personnel, S&Es – Financial  Funds from enterprises  S&T expenditure  R&D expenditure  New product development expenditure FIEs: Current S&T Activities  … and fewer S&T personnel S&T R&D Personnel in personnel personnel S&T (%) (%) institutes (%) FIEs 2.68 1.06 1.02 SOEs 5.15 1.58 1.61 NSOEs 4.96 1.75 2.14 All LMEs 4.55 1.54 1.71 FIEs: Current S&T Activities  FIEs – – – – may be not that interested in S&T activities mainly manufacturing facilities dependent upon their parents for technology less likely to be engaged in innovation within the confine of a formal research setting as innovation has become a day-to-day and conscious activity at the shop level (do this suggest that FIEs and Chinese enterprises have different innovation culture?) FIEs: Current S&T Activities FIEs spend less on S&T activities  S&T R&D expenditure/Sales expenditure/Sales revenue (%) revenue (%) FIEs 1.11 0.56 SOEs 1.69 0.81 NSOEs 1.72 0.84 All LMEs 1.52 0.75 FIEs: Current S&T Activities  … but more on new product development New product New product development development expenditure/Sales expenditure/S&T revenue (%) expenditure (%) FIEs 0.57 51.29 SOEs 0.68 40.37 NSOEs 0.72 41.91 All LMEs 0.66 43.53 FIEs: Current S&T Activities  They also have significantly higher per capita spending FIEs: Current S&T Activities FIEs get more from new products  New product sales/Total sales (%) New product profits/Total profits (%) FIEs 18.60 18.60 SOEs 11.34 11.70 NSOEs 13.88 10.46 All LMEs 14.61 13.03 FIEs: Current S&T Activities  They well in inventive patenting Patent applications (items) Inventive patent applications (%) FIEs 9,144 40.29 SOEs 5,360 20.80 NSOEs 16,878 27.23 All LMEs 31,382 29.94 FIEs: Current S&T Activities … and are more cost effective  S&T personnel per patent applications (persons/item) S&T expenditure per patent application (RMB10,000/item) FIEs 19 360.9 SOEs 112 863.4 NSOEs 38 399.9 All LMEs 45 467.7 FIEs: Current S&T Activities  FIEs are more efficient and cost effective in their S&T activities – – – In spite of fewer S&T personnel and less spending on S&T/R&D activities, FIEs well with higher sales revenue and profits from new products S&T personnel and expenditure per patent application are low These may be associated with significantly higher level of S&T expenditure per S&T personnel, higher percentage of S&T expenditure devoted to new product development, among others FIEs: Trends FIEs: Trends FIEs: Trends FIEs: Trends FIEs: Trends Discussion     The analysis is not about R&D/S&T activities by foreign corporations per se It is about LM FIEs in China as a whole But these are likely to set up R&D centers/S&T institutes and engage in S&T activities as they have resources Many of these centers/institutes are not separate units Their registration with governments is mainly intended to take advantage of the preferable policies Therefore, the analysis is a proxy to the current situation of FIEs’ R&D/S&T activities in China