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

 Current S&T Activities at FIEs Trends of S&T Activities at FIEs  Discussion... – What are the trends by which FIEs have carried out R&D and S&T activities in China?. Performance Mea

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

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Cong Cao University of Oregon

 Current S&T Activities at FIEs

 Trends of S&T Activities at FIEs

 Discussion

– 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

Performance Measurement

 Output

– New product sales in total sales

– Profits from new products in total profits

– Patent applications and especially inventive patent applications

– Inventive patents owned

FIEs: Current S&T Activities

 They have less S&T institutes and activities

With S&T institutes (%)

With S&T activities (%)

Technical personnel

(%)

SOEs 30.78 52.18 11.86NSOEs 27.62 44.66 10.16All LMEs 24.89 42.69 10.08

FIEs: Current S&T Activities

 … and fewer S&T personnel

S&T personnel

(%)

R&D personnel

(%)

Personnel in

S&T institutes (%)

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 expenditure/Sales revenue (%)

R&D expenditure/Sales revenue (%)

FIEs: Current S&T Activities

 … but more on new product development

New product development expenditure/Sales revenue (%)

New product development expenditure/S&T expenditure (%)

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: Current S&T Activities

 They do well in inventive patenting

Patent applications (items)

Inventive patent applications (%)

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)

SOEs 112 863.4

NSOEs 38 399.9

All LMEs 45 467.7

FIEs: Current S&T Activities

in their S&T activities.

spending on S&T/R&D activities, FIEs do

well with higher sales revenue and profits

from new products

application are low

FIEs: Trends

FIEs: Trends

FIEs: Trends

FIEs: Trends

FIEs: Trends

 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