China: Technology Leader or Technology Gap?
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1 China: Technology Leader or Technology Gap? Prof. Han Zheng, Ph.D Chair of Innovation and Entrepreneurship Tongji University, Shanghai Asia Research Centre University of St. Gallen, Switzerland Shanghai, 2014 Zheng Han I 1
2 Many technology leaders started like this 2
3 How do innovators emerge in China? Path of innovation in / from China Target market / Internationalization Developed markets Local / China Emerging markets A B 1 3 Proprietary innovation 2 C Trivial modification D Complex re-engineering Low Medium High Innovativeness e.g. heavy machinery e.g. railway industry e.g. mobile phone industry China undergoes a transformation from imitator to innovator Own research 3
4 World leader in science and technology by 2050? Innovation 2020 Chinese Academy of Sciences (CAS) in 2011 Special emphasis on 4 key areas: Space science, IT, Energy, Health Creation 2050: Science, technology and China' s future Chinese Academy of Sciences (CAS) in 2009 Emphasis on 18 subjects to pave the way for a technological and industrial revolution Innovation goals for 2020 S&T % of GDP > 2.5% Contribution of S&T to economic development > 60% Dependence on foreign technology < 30% No. of top scientists at CAS > 5,000 What each transformation society goes through is closely related to a scientific breakthrough. Innovation must be the ultimate solution for any economic crisis. Lu Yongxiang, President of CAS Goal: Increase China s innovativeness and transforming it into an innovative nation by 2020 Goal: Transform China into a world leader in science and technology by 2050 Next Big Future (2011), Science and Development Network (2009) 4
5 Strategic emerging industries (12 th FYP) Strategic emerging industries Energy-saving / environmental protection Next-generation information technology Biotechnology High-end equipment manufacturing New energy New materials New-energy autos Highly efficient and energysaving equipment Environmental equipment Cyclical use of resources Nextgeneration telecom networks Fusion of the three networks* New-type monitor, highend software and servers Biotechnologybased drugs Biotechnolog. manufacturing Marine biotechnology Aviation and space-related equipment Transportation equipment Intelligent equipment Nuclear energy Solar energy Wind energy Bioenergy Specialty materials Highperformance materials Composite materials Basic materials Low-emission cars Hybrid cars Electrical cars Pillar industries Forerunner industries To improve the country s core industrial competitiveness, the share of new emerging industries should increase 15% by 2020 from 3% in 2010 To support these industries, the Chinese government seeks to introduce preferential treatment by e.g. granting subsidies, taxation, bank lending and direct financing *Telecom, broadcasting and the internet J.P. Morgan Japanese Companies Will Benefit from China's 5
6 Development of R&D Expenditure in China China s spending on R&D reached 193 bn UDS in 2013 In R&D spending value, China has surpassed Japan in 2011 and ranks 2 nd after the U.S. R&D expenditures accounted for 2.08% of GDP in 2013, compared to 0.57% in 1995 (CAGR of 21.6%) China is already world class in terms of R&D spending in value National Bureau of Statistics, World Economic Forum 6
7 Global Innovation Barometer 2013 China is considered innovation champion among business leaders, but has fallen back compared with 2012 result. GE Global Innovation Barometer (2013) 7
8 PCT applications in international comparison PCT = Patent Cooperation Treaty ( international patent ) China s share in worldwide PCT applications rose from 1.4% in 2004 to 10.5% in 2013 (+15.1% yoy). In 2013, China surpassed Germany and became the third largest user of the PCT system, with Japan as the second-largest user. Especially since the world economic crisis, China has stepped up one more time in PCT application WIPO (2014) 8
9 Ch. telecommunication giants are leading the way TOP 15 PCT Applications, 2013 WIPO (2014) 9
10 Emergence of Chinese innovators Chinese innovators can be found across various industries
11 the other side of the story 11
12 Global Innovation Index 2013 China improves at a significant faster pace than its BRIC peers Global Innovation Index The BRIC economies show sign of divergence o China (No. 29) o Russia (No. 49) o Brasil (No. 61) o India (No. 76) China ranks best among middle-income economies but definitively not world leading The Global Innovation Index (2014) GDP per capita in ppp $ 12
13 IP output has improved over the years by volume Classification [Qty.] 1,000,000 Invention [Qty.] 800, , , , , , , , Invention Utility model Design Utility Model [Qty.] 1,000, , , , ,000 0 Design [Qty.] 800, , , ,000 0 Domestic Foreign Domestic Foreign Domestic Foreign 13
14 Limited international relevance of local innovation Conversion ratio of resident patent applications to PCT applications, 2013 WIPO (2014) 14
15 Top Global Innovators Report 2013 Thomson Reuters assesses innovative companies by o number of "quadrilateral" patents o patents new to the world (real invention) o % of patent applications that are granted (success rate) o Whether the patent is filed in major world markets (commercial value of patent) o how often patents are cited by other companies (influence of patent) 2013 Top 100 Global Innovators by Region USA Japan France Switzerland Germany S. Korea Sweden Canada Netherlands China Taiwan 4% 3% 3% 2% 1% 1% 1% 12% 28% 45% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% Top down policies cannot guarantee emergence of world class innovator Thomson Reuters 1515
16 Over 26 mn enrolled students National Bureau of Statistics 16
17 Chinese brain drain to the world Immigrant vs. emigrant inventors, China loses more inventors than any other country The Global Innovation Index (2014) 17
18 China s innovation framework still lagging behind GE Global Innovation Barometer (2013) 18
19 China will become a true technology leader, if it can set the framework right 19
20 Challenges ahead for closing the quality gap Framework conditions for a world class innovation eco-system: The human factor Public R&D Culture Intellectual property regulation Support for new firms Advanced IT ecosystem The Global Innovation Index 2014, OECD 20
21 Thank you! Prof. Han Zheng, Ph.D Chair of Innovation and Entrepreneurship Tongji University Shanghai, China Asia Research Centre University of St. Gallen, Switzerland Shanghai, 2014 Zheng Han I 21
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