China ahead of Europe and N America in R&D spend: Report

Affirming China's image as an emerging innovation powerhouse, a study on R&D spend by top Global 500 companies for 2014 has found that China surpassed Europe and North America in growth of total R&D spend.
"In terms of geography, China saw the maximum growth of 20 per cent in R&D spend from 2012 to 2014; even higher when compared with Europe (consistent over last 3 years) and North America (steady at 4-5 per cent growth) and Japan (which is on a recovery after a strong decline the previous year)," says the study by management consulting firm Zinnov.
Moreover, the total R&D investment by Global 500 companies grew by 4.31 per cent from 2013 (USD 604 billion) and reached a USD 614 billion in FY14.

The study highlighted that over 65 per cent of the overall R&D spend was contributed by the top 100 R&D spenders, with majority of this growth coming from North American and Asia Pacific (APAC)-based firms.
Technology and market disruptions are having large scale impact on Global 500 companies with a much faster churn being witnessed than ever before, said Preeti Anand, Associate Director, Zinnov.
"New age companies like Tesla, Garmin, Facebook are threatening the incumbents with large R&D spends. China is visibly and firmly establishing itself as a R&D powerhouse with 4X the growth in R&D spend as compared to even US West coast companies.

"This is good news for Asia overall as the region will continue to attract more R&D investments across key industry segments such as web 2.0/e-commerce, automotive and telecom from both home-grown and multinational companies," Anand said.

Among the total R&D spend on various industry verticals, automotive topped the list with USD 109 billion, followed by semi-conductor (USD 51 billion), software/internet (USD 71 billion), consumer electronics (USD 46 billion) and telecom (USD 41 billion).
Moreover, the number of billion dollar club members (companies that spent more than USD 1 billion in R&D expenditure) in the Global 500 firms have increased though the share of R&D spending has not seen any significant change.

It also highlighted that the billion dollar club is gaining more companies from the APAC region.
"Consumer/Web 2.0 and e-commerce companies such as Baidu, Tencent, Ctrip.Com etc. Led the growth in R&D in China, while the contribution by telecommunication (Huawei, ZTE) and automotive segment (Great Wall Motors, Byd Co Ltd-H, Dongfeng Motor) is also on a rise," the study noted.
It also brought to light that companies based out of Beijing, Shanghai and Shenzhen contribute more than 95 per cent of the total R&D spending in China. The Global 500 R&D spend in China stood at USD 26 billion in 2014.