More Overseas Companies Choosing China for Research and Development Activities

More Overseas Companies Choosing China for Research and Development ActivitiesChina is fast becoming the most popular destination for research and development activities by overseas companies due to the presence of a high growth market and several key manufacturing sites. A survey that was conducted by Strategy& a global consultancy major for PricewaterhouseCoopers LLP said that the total Research and development in China have increased to $39 billion to date a 3,285 percent growth compared to $1.2 billion ten years ago.

The 2015 Global Innovation 1,000 Study the 11th consecutive report that was published by the firm stated that the total research and development spending of the top 1,000 global companies have increased by 5.1 percent to date. There are 123 Chinese companies are now on the global top 1,000 list which is nine more than last year. in 2005 there were only eight Chinese companies in the top 1,000 and the total research and development that these Chinese companies spend surged 31 percent year on year of 5.8 percent in total. Then in 2007 this year the total research and development spent by overseas companies in China increased by 79 percent due to the result of investments coming form the Unite States. The strong growth in the imported research and development also helped China overtake Japan and Germany in becoming the second largest destination for in country research and development.

71 percent of the survey respondents stated that the proximity to a high growth market is a major reason for moving research and development functions to China. Proximity to key manufacturing sites and to key suppliers and lower development costs are also reasons for moving to China. The quality of research hand development that are reached in China also increased in the past years and the complexity of the patent applications made by multinational companies have risen considerably and many are starting the concept or are in the preliminary stage of the research and development work in China.

The biggest research and development spender in China is PetroChina Co. with a total investment of $2.1 billion. Then Alibaba Group Holdings that went public in September 2014 entered the Global Innovation 1,000 list for the first time with a total spending of &1.7 billion ranking then 84th worldwide. Chinese companies are learning quickly and are flexible, especially privately owned companies. The power of Chinese increase further especially in industries such as digital, e-commerce and high tech in which Chinese consumers are at the cutting edge.

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