In­no­va­tion push

China Daily (USA) - - FRONT PAGE - ByWUYIYAO in Shang­hai wuyiyao@chi­

Re­search and de­vel­op­ment spend­ing by Chi­nese com­pa­nies leads the world as they shift ad­van­tages from com­pet­i­tive costs to in­no­va­tion.

Re­search and de­vel­op­ment spend­ing growth by Chi­nese com­pa­nies leads the global mar­ket as they shift their ad­van­tage from com­pet­i­tive costs to in­no­va­tion to build up tech­nol­ogy ca­pa­bil­i­ties to win in the global mar­ket, ac­cord­ing to re­search.

The 2016 Global In­no­va­tion 1000 Study from Strat­egy&, which iden­ti­fied the 1,000 pub­lic com­pa­nies around the world that spent the most on R&Ddur­ing the last fis­cal year as of June 30, said that 130 Chi­nese com­pa­niesa­mongthe top 1,000 spenders on R&D had spent a com­bined $46.8 bil­lion on R&D, up 18.6 per­cent from $39.4 bil­lion in last year.

As a re­sult, the R&D spend­ing con­trib­uted by Chi­nese com­pa­nies is also on the rise, up from 5.8 per­cent in 2015 to 6.9 per­cent in 2016.

Huawei, a Chi­nese leader in telecom­mu­ni­ca­tion, al­though be­ing ex­cluded from the top spenders list due to its non­pub­lic sta­tus, is high­lighted as the high­est spender onR&Din China with 59.6 bil­lion ($9.48 bil­lion) on R&D in 2015, the ninth largest R&D spender be­hind No­var­tis but ahead of John­son & John­son among the top 1,000 global in­no­va­tion en­ter­prises.

“In light of the in­no­va­tion­driven de­vel­op­ment strat­egy at a na­tional level, Chi­nese com­pa­nies have been in­creas­ing their in­vest­ment in R&D year by year,” said Adam Xu, part­ner and leader of dig­i­tal prac­tice with Strat­egy&.

Many of world’s ma­jor in­no­va­tors are trans­form­ing mostly driven by chang­ing and ris­ing cus­tomer ex­pec­ta­tions, and the fast pace of im­prove­ment in what soft­ware can do, in­clud­ing the in­creas­ing use of em­bed­ded soft­ware and sen­sors in prod­ucts.

“Com­pa­nies will re­cruit fewer me­chan­i­cal en­gi­neers and more data and soft­ware en­gi­neers to build their ca­pa­bil­i­ties, shift­ing from phys­i­cal prod­ucts to dig­i­tal of­fer­ings in­clud­ing soft­ware and ser­vices,” said Huw An­drews, part­ner and in­no­va­tion group leader of PwC China.

Chi­nese com­pa­nies have been al­lo­cat­ing a great deal of R&D re­sources on op­ti­miz­ing pro­duc­tion pro­cesses and the sup­ply chain, which help to re­duce costs and in­crease pro­duc­tiv­ity, which are not di­rectly vis­i­ble to con­sumers but ben­e­fit com­pa­nies, said An­drews.

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