Massive Investments Could Boost Innovation in China by Attracting Global Talent
REUTERS/ Jason LeeBusiness21:20 13.10.2017Get short URL
Heavy investments in research and development (R&D) by Chinese companies, led by China’s “Big Three” tech firms Alibaba, Baidu and Tencent, could help boost innovation in the nation by attracting top researchers from around the globe, experts told Sputnik.
MOSCOW (Sputnik), Tommy Yang — China’s largest online retailer Alibaba Group announced plans to launch an innovative global research program, known as the “Alibaba Damo Academy,” which is expected to invest more than $15 billion in research and development over the next three years, the company said in a statement on Wednesday. Corporate filings showed Baidu spent $2.9 billion on R&D over the past two and a half years, while Tencent spent $3.2 billion on R&D in the past two years.
According to figures released by China’s National Bureau of Statistics on Tuesday, the nation spend 1.57 trillion yuan ($238.1 billion) in 2016 on technology R&D, up 10.6 percent from the previous year, while posting the fastest annual growth rate since 2014. China’s investment into R&D accounted for 2.11 percent of the annual GDP of last year. In comparison, the United States spent an estimated $512.46 billion in 2016, accounting for 2.81 percent of its annual GDP of the year, figures from the 2017 Global R&D Funding Forecast released by the Industrial Research Institute and Research-Technology Management showed.
Taking Advantage of Local Talent
With Chinese research institutions and companies pouring billions of dollars each year into newly-established R&D labs around the world, these research facilities are expected to attract more and more top local researchers, experts told Sputnik.
“Chinese research institutions and universities are getting more and more money to invest in scientific research. Chinese companies, like Alibaba or Huawei, now have the money to set up R&D centers in foreign countries like the United States. They’re now hiring foreign scientists. For example, Huawei has a microwave R&D center outside Milan, Italy, with Italian scientists. Foreign R&D centers are important for innovation in Chinese companies,” George S. Yip, a professor of Marketing and Strategy at Imperial College Business School in London, who wrote a book named “China’s Next Strategic Advantage: From Imitation to Innovation,” told Sputnik.
Alibaba said that its Damo Academy will focus on opening seven research labs in China (Beijing and Hangzhou), the United States (San Mateo and Bellevue), Russia (Moscow), Israel (Tel Aviv) and Singapore.
The London-based scholar believes Chinese research centers established in foreign countries will not meet resistance locally.
“I haven’t seen any resistance. The Chinese has been very cautious when they make foreign acquisitions. They leave it being run by the locals, like Geely Volvo,” Yip said.
Return of Top Chinese Talent
Many top students from elite Chinese universities flock to the United States for further education each year and many choose to stay there after completing their studies. However, with increase in investment and funding in recent years, Chinese research institutions finally have a chance to attract more ethnic Chinese researchers and scientists to return to their homeland, experts told Sputnik.
“This [return of ethnic Chinese researchers] is inevitable. We had a research recently on the number of US scientists who won Nobel prizes and found out that many of the prize winners were not born in the United States. As the economy grows bigger, we have enough money to attract best scientists to work in China. Not to mention foreigners, we will be much stronger if we can attract ethnic Chinese scientists to come back,” Sun Yutao, a professor in the Faculty of Management and Economics of Dalian University of Technology, whose research interests focus on innovation systems, networks, and policy in China, told Sputnik.
US research institutions and hi-tech companies in Silicon Valley in California are filled with scientists and innovative entrepreneurs from around the globe. For example, Google’s co-founder Sergey Brin was born in Russia, Yahoo founder Jerry Yang was born in Taiwan and current Google CEO Sundar Pichai was born in India.
In additional to financial incentives, the Dalian-based scholar argued that cultural identity could also be a reason for ethnic Chinese scientists to return.
“In another country, you [Chinese scientists] are not a local citizen. Even after you have obtained the Green Card, your participation in local communities is still rather poor. You could reach a bottleneck very soon without much room for progress. Chinese scientists have more chances to succeed in universities overseas. I rarely see ethnic Chinese taking up senior positions in foreign high-tech companies,” Sun said.
Innovation in Manufacturing Sector
China’s explosive economic growth in the last four decades was based on the nation’s competitiveness in traditional manufacturing industries, thanks to its massive amount of cheap labor, which turned the country into the “factory of the world.”
Professor Yip from the Imperial College Business School in London argued that China’s advantage in innovation also lies in manufacturing sectors.
“In the traditional manufacturing intensive sectors, China has a big advantage over the West, because it has lots of engineers and scientists for much cheaper and they also have the manufacturing base. Just like manufacturing, Chinese do their innovation with a lot of labor. They put a lot of engineers and scientists at work and they bring out a lot of product variants. So people say ‘the Chinese products have ‘twice the features for half the price of western products’,” he said.
The London-based expert added that aerial drones are a good example of this advantage.
“While it [aerial drone] is not invented in China, about 90 percent of aerial drones in the world are made in the country today. This is the kind of product where the innovation is incremental. You make it bigger, you make it smaller and you make it with more capabilities,” he said.
The expert gave an example that Chinese aerial drone maker EHang recently planned to test an automated drone that could carry passengers in Dubai, the United Arab Emirates, which pushed frontiers of regulations, as such tests could be tied up in red tape for years in the West.
EHang released a video in July this year, showing its unmanned passenger drone taking off next to the Burj Al Arab hotel in Dubai. In the text accompanying the video, Ehang said the tests have been taking place since the start of 2017 at the test site of the Dubai Civil Aviation Authority.