Internationalization of China’s R&D: Characteristics and Questions by

1. Internationalization of China’s R&D: Characteristics and Questionsby Professor Zhou Yuan, Deputy Director-General National Research Center for S&T for Development Ministry of Science and Technology, China Presented at the international workshop on Internationalization of R&D Helsinki,Finland 17-18 Jun, 2004

2. Contents • Background • Characteristics • Questions • Conclusion

3. I. Background • China’s comparative advantage in R&D (1). Cheaper S&T human resource in good quality (2). Grand domestic market

4. I. Background 2. Incentives of developed countries and MNC to promote internationalization of China’s R&D (1). Making full use of Chinese S&T talents (2). Occupying the market

5. II. Characteristics 1. Chinese S&T human resource is developed on a large scale in internationalization Students studying abroad Source: MOST(2002), China Science and Technology Indicators 2002

6. II.Characteristics • Chinese S&T human resource is developed on a large scale in internationalization MNC’s R&D institutes in China by region Source: MOST(2002), China Science and Technology Indicators 2002

7. II. Characteristics 2. China’s big market attracts R&D input from developed countries and MNC Overseas share of R&D funds Source:OECD, MSTI, 2003-2, MOST(2002), China Science and Technology Indicators 2002

8. II. Characteristics 2.China’s big market attracts R&D input from developed countries and MNC Overseas share of R&D funds in manufacturing Source:OECD, STI Scoreboard, 2003, OST(2002), China Science and Technology Indicators 2002

9. II. Characteristics 2. China’s big market attracts R&D input from developed countries and MNC Distribution of MNC’s R&D institutes by technology fields Source: MOST(2002), China Science and Technology Indicators 2002

10. II. Characteristics 2. China’s big market attracts R&D input from developed countries and MNC Foreign patents application Source: MOST(2002), China Science and Technology Indicators 2002

11. II. Characteristics 2. China’s big market attracts R&D input from developed countries and MNC Sales value of high-tech new products Source: MOST(2002), China Science and Technology Indicators 2002

12. III. Questions Question 1: Does China benefit from internationalization of R&D? Yes: 1. Learning advanced R&D experience from other countries 2.Nurturing domestic talents in international cooperation

13. III. Questions Question 2: Does R&D internationalization enhance host country’s S&T competitiveness? No: 1. In theory, developed countries and MNC input R&D resource into China in order to pursue maximized profit for themselves, not to enhance host country’s competitiveness.

14. III. Questions Question 2: Does R&D internationalization enhance host country’s S&T competitiveness? No: 2. In practice (according to a survey of foreign enterprises in Beijing, Shanghai, Suzhou and Dongguan) ----all the equipments of 32.4% foreign enterprises are introduced from abroad ----the majority of equipments of 55% foreign enterprises are introduced from abroad ----the majority of equipments of 13.2% enterprises are made in China

15. III. Questions • Question 2: Does R&D internationalization enhance host country’s S&T competitiveness? • ----55.5% enterprises introduce technologies mainly by consulting • ----only 24.8% enterprises offer technology and know-how

16. III. Questions • Question 2: Does R&D internationalization enhance host country’s S&T competitiveness? • ----91% foreign enterprises have never applied patents in China ----13% foreign enterprises have applied international patents

17. III. Questions Question 2: Does R&D internationalization enhance host country’s S&T competitiveness? ----77% enterprises have never formally cooperated with domestic R&D institutes ----79% enterprises do not plan to cooperate with domestic enterprises

18. III. Questions Question 2: Does R&D internationalization enhance host country’s S&T competitiveness? Overseas share and output structure of China’s R&D funds Performed by Source: MOST(2002), China Science and Technology Indicators 2002

19. III. Questions • Question 2: Does R&D internationalization enhance host country’s S&T competitiveness? • R&D funds of universities and institutes by source Source: MOST(2002), China Science and Technology Indicators 2002

20. IV. Conclusion 1.China’s R&D internationalization is developing both on scale and in depth

21. IV. Conclusion 2. R&D internationalization benefits both China and developed countries & MNC

22. IV. Conclusion 3. Developing countries should enhance S&T competitiveness by innovation on their own.

23. Thank You !