Barriers for Foreign R&D in China
Wenke, Ph.D
Institute of Policy and Management
Chinese Academy of Sciences
Outline
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Introduction
Research methodology and data collection
Three types of barriers for foreign R&D in China
Several interesting patterns
Conclusion
1.Introduction
• Cooperating with Dr. Sun yifei, one part of the
project “Foreign R&D Investment in
China”(founded by NSF, BCS-0214042 )
• Focusing on the barriers for foreign R&D in china
2.Research methodology and data collection
• The results are primarily based on 29 interviews
with managers of foreign R&D in China. The
empirical sample consisted of 27 multinational
corporations.
Establishment Year
Location
Industry
Parent Country or
Regions
Location in global
top500
Alcatel
2002
Shanghai
Electronics
France
Bayer
2000
Shanghai
Chemist
Germany
DaimlerChrysler
1999
Shanghai
Automobile
Germany
Epson
1995
Shanghai
Electronics
Japan
385
129
7
435
Honeywell
2003
Shanghai
Special Materials
America
Infeneon
2003
Shanghai
Telecommunication
Germany
Jiaoda-Ormron
1989
Shanghai
Software
Japan
a joint venture
Sharp
2003
Shanghai
Electronics
Japan
Unilever
1996
Shanghai
Cosmetic
British
249
70
AVL
2003
Shanghai
Engine
Austria
AMD
2003
Beijing
Electronics
America
Bell
1997
Beijing
Communication
America
France TeleCom
2004
Beijing
Telecommunication
France
Fujisu
1998
Beijing
Electronics
Japan
IBM
1995
Beijing
Software
America
Microsoft
1996
Beijing
Software
America
Motorola
1998
Beijing
Electronics
America
NEC
2003
Beijing
Electronics
Japan
Nortel
1994
Beijing
Communication
Canada
Nova Nordisk
2001
Beijing
Pharmacy
Denmark
Sun
2001
Beijing
Software
America
Toshiba
2001
Beijing
Electronics
Japan
BenQ
2002
Nanjing
Electronics
Taiwan
Lucent
2003
Nanjing
Wireless
America
Phoenix
Siemens Program and System
Engineering
2003
Nanjing
Electronics
Germany
2004
Nanjing
Telecommunication
Austria
CoreTek
2000
Chengdu
Telecommunication
America
Parent Company
59
90
19
130
171
85
478
65
3. Three types of barriers
• Barriers from policy environment
–
–
–
–
Strong and bureaucratic government
Import limitation
Imperfect IPR protect system
Difficulty for traveling to taiwan
• Barriers from local market
– Increasing operation cost
– Imperfect infrastructure
• Barriers with Human Resource Management
– Lack of innovative and experienced labors
– High employee mobility
– Difficulty in managing the diversified staff
4.Several interesting patterns
• Mainland-born managers and non Mainlandborn managers
mainland-born managers are more positive
about the environment in China.
Mainland-born
Non mainland-born
managers (15)
managers (13)
Barriers from policy environment
8(44.4%)
13(46.4%)
Strong and bureaucratic government
4
7
Import limitation
2
5
Imperfect IPR protect system
1
1
Difficulty for traveling to Taiwan
1
1
Barriers from local market
4(16.7%)
3(10.7%)
High operation cost
3
1
Imperfect infrastructure
1
2
Barriers from human resource management
7(38.9%)
12(42.9%)
High labor mobility
1
2
Lack of innovative talents
4
7
Difficulty in managing diversified staff
2
3
Total
19
29
4.Several interesting patterns
• Variations among different cities
R&D managers in difficult cities felt different
problems, though common problems do exist
Beijing (14)
Shanghai (10)
Nanjing (4)
Barriers from policy environment
7(30.4%)
12(60%)
2(50%)
Strong and bureaucratic government
4
5
2
Import limitation
3
4
0
Imperfect IPR protect system
1
1
0
Difficulty for traveling to Taiwan
0
2
0
Barriers from local market
2(8.7%)
4(20%)
1(25%)
High operation cost
1
3
0
Imperfect infrastructure
1
1
1
Barriers from human resource management
14(60.9%)
4(20%)
1(25%)
High labor mobility
0
3
0
Lack of innovative talents
9
1
1
Difficulty in managing diversified staff
5
0
0
Total
24
20
4
4.several interesting patterns
• Differences among Companies with Different
Presence in China
The size of foreign investment is negative
correlation to the barriers they encounter.
We conducted case studies of company A and
company B.
A
B
Strong and bureaucratic government
Yes
No
Import limitation
Not mentioned
No
Imperfect IPR protect system
Yes
No
High operation cost
Not mentioned
No
Imperfect infrastructure
Yes
No
High labor mobility
Acceptable
Acceptable
Lack of innovative talents
Yes
Yes
Difficulty in managing diversified staff
No
No
Policy environment
Local market
Human resource management
Total
5.Conclusions and discussion
• Policy environment is still the major barrier, and
other problems include high labor mobility, lack of
talents and so on.
• the feelings of R&D managers depend on the
location of the establishment.
• more established foreign companies seem to have
experienced more problems than smaller and less
prominent foreign companies.