Visit to China: Innovation

Many times we tell ourselves that the key to US competitiveness is innovation. Visiting China makes one realize that we aren’t the only society focused on innovation.

For example, at a session held at Tsinghua Science Park we learned that China has 42.8 million people involved in science and technology with R&D expenditures approaching $200 billion RMB; 2.5% of GNP is invested in science and technology. As they explained their science and technology approach we learned that their goal is to create an innovative nation and increase proprietary innovations, leapfrogging developments in key fields. To do that they are investing in both basic and applied research and facilitating business-university partnerships.

In China there massive programs for high technology research and basic research. In addition to research and development they are creating the capacity for science and technology commercialization, including the promotion of small and medium sized businesses. In addition, multinational corporations had over 750 R&D units in China in 2005, 90% of which are in either Beijing or Shanghai.

The goal is to reduce dependence on foreign science and technology by 30% and to make China first in the world in science and technology innovation. To achieve that goal they are developing a national innovation system involving the development of science parks, for example. The Ministry of Science and Technology has invested in the creation of science and technology innovation programs (STIPs) or high-tech industry development zones and technology-business incubators. Forty-three percent of national R&D investment goes into the 54 STIPs. The current estimate is that 10% of industrial growth is due to STIPs.

Another tool for stimulating innovation and economic development are Technology Business Incubators (TBIs). Their mission is to nurture “technopreneurs” and technology-based startups. There are over 500 TBIs that employ over 700,000 employees. An incubation service system is provided to support the success of the incubators (e.g., infrastructure, planning, consulting services, etc.). There are 58 university related incubators, 9 international business incubators to accommodate foreign start-ups and over 100 incubators for returned overseas scholars. The investments target specific industrial clusters, such as IT, biotechnology, medicine, material science, energy and others.

Their strategies appear to be working. We were told that it took China 50 years to receive 1 million patents, 4 years to reach 2 million and only two more to reach 3 million patents.

One additional factor having an impact on China’s development is the return of the “sea turtles,” the phrase used to describe returning Chinese scientists and entrepreneurs. With their experience in countries like the US, the “sea turtles” are able to quickly start up research labs and businesses, making a rapid impact. In addition, the number of returning Chinese students has increased. In 204, 247,000 overseas Chinese students returned, influencing the science and technology workforce.