INSIGHT: China must work to deliver R&D potential

13 October 2008 17:57  [Source: ICIS news]

By Nigel Davis

LONDON (ICIS news)--The powerhouse that is China is being built on many things with economic reform and the “open door” policy leading to spectacular growth.

Yet a critical challenge is to effectively link the pockets of growth to create a more seamless whole. It is to make the spectacular more sustainable.

Underpinning that growth and, indeed, sustainability, as the economy advances is the research base and the country’s innovation potential which, although growing rapidly, has by far yet to be effectively realised.

China’s research base and its innovation capability are growing fast: at an unprecedented scale according to the Organisation for Economic Cooperation and Development (OECD).

Research and development (R&D) spending has grown at a rate of 19% a year since 1995, reaching $30bn in 2005.

The sheer number of researchers has ranked China second in the world since 2000, after the US and ahead of Japan.

China’s share in the world’s scientific publications rose from 2% to 6.5% over the decade ending in 2004, and the number of patent applications by its researchers is doubling every two years.

But the rate of investment has yet to be matched by a proportionate increase in innovation performance the OECD said in a report released last month.

The ability to make effective use of R&D has developed much more slowly country-wide, especially in the business sector.

The report raises the question of just how innovative China’s firms can become alongside the potentially great contribution its researchers can make to scientific advancement.

And whether the country will put more resources into some of the basic industries such as chemicals, or continue to pursue somewhat different, high-tech goals.

China suffers from a degree of “high technology myopia”, the OECD suggests, and could pay more attention to traditional industries and the services sector. Its research efforts also are also highly regionalised.

“To the outside observer it [the national innovation system] appears as an ‘archipelago’, a very large number of ‘innovative islands’, with synergies insufficiently developed between them limiting pullovers beyond them,” it says.

“Spreading the culture and means of innovation beyond the fences of S&T [science and technology] parks and incubators by promoting more market-based innovative clusters and networks should now be an important objective.”

The regions play an important part in the deployment of science and technology across China but the current pattern of development does not provide an “optimal” innovation system, the OECD believes.

Part of the reason is the sheer physical separation of innovation centres but part also comes down to the lack of development in certain parts of the country.

Foreign firms have invested heavily in R&D in China and in chemicals are reaping the benefits the early starters – most notably companies such as BASF and Bayer – look set to gain the most and primarily in the materials sciences.

But the potential for China’s R&D engines are significant, both locally and within individual scientific disciplines.

As China broadens its scientific base, and the application of science, then its firms stand the chance of playing a more significant role on the world’s markets.

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By: Nigel Davis
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