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Since 1994, 28 leading MNCs have opened 32 wholly owned R&D laboratories and technology development centers, and another 16 are considering following suit. They have also sought cooperation with local universities or research institutes to undertake joint initiatives or projects.
Some of China's most technology-intensive companies have taken the issue seriously by devoting a significant portion of their sales revenue to new technology and product development. For example, on average, China's top 100 electronics and information companies spent 3.2% of their sales on R&D in 2001 (the indicator is not satisfied but promising), while the investment was highly correlated with the profits of these firms. The enterprises have rushed to establish R&D institutes, and even have set up R&D centers abroad.
The government also encourages and promotes corporate R&D. In 1999, a National Conference on Technological Innovation was held, during which the government demanded that high-tech enterprises spend at least 5% of their annual sales on R&D. The most recent policy measures include allowing R&D expenditure to be counted as cost, implementing a technology standard- and patent-focused strategy in enterprise's innovation endeavors, and supporting software products "Made in China" in government procurements.
While R&D centers are typically set up by MNCs in triad nations, particularly in the US, there is an emerging trend that some MNCs have begun to establish R&D centers in developing countries such as China
The Chinese government is formulating a middle and long-term national science and technology development program to improve national competitiveness, according to the Ministry of Science and Technology.
Emphasis on natural science, encouraging local enterprises to set up research and development (R&D) centers in other countries and regions to improve their competitiveness in international markets, overseas R&D centres are some ways of improving the R&D situation.
Attracting more R&D centers is important for Shanghai's bid to become a real international city. Earlier reports said the municipal government expected 500 more Shanghai enterprises would expand their business and invest US$1 billion abroad by 2005, almost double the amount invested in 2002. While foreign multinationals have built over 80 R&D centers in the city, it will be a long time before domestic firms match their performance abroad.
Shanghai Science and Technology Commission expects that in addition to the current 80-plus centers, 40-50 more first-class research institutions from home and abroad will be set up in the city by 2004. Meanwhile, the government will also consolidate and upgrade existing research bodies into world-class R&D centers. The key areas for attention include micro-electronics, computer technology, biotechnology, new materials and integrated circuit design.