Foreign investment flunks R&D in China

 Instead, it appears that foreign-funded companies look to China for production facilities and sales rather than developing China's R&D ability.

 Chinese officials from the Ministry of Science and Technology told the People's Daily, a Chinese daily, that the survey confirmed that foreign companies had not brought advanced technologies to China.

 The survey, "Use of Foreign Investment and Improvement of China's Innovation Capacity", was conducted by researchers at the Chinese Academy of Social Science.

 It found the most foreign-funded enterprises in China were end-users of technology from their multi-national owners, but did not create new technology themselves.

 While around 60 percent of the surveyed companies had independent R&D branches, most had less than 50 employees specializing in technology research.

 Almost 75 percent had less than $604,000 budgeted for their annual R&D expenditure.

 The survey also compared Chinese foreign-funded companies to those attached to multinationals, and found that the foreign-funded companies lagged behind in research subjects, financial input and personnel makeup.

 Measured by the number of patent applications and approval together with the output value of new products, the foreign-funded companies did not perform well in comparison.

 According to the People's Daily, Chinese officials said that foreign-funded modern production facilities did not automatically mean advanced technology.

 Local staff were trained to operate the high-tech equipment, not to create them.

 Many of the surveyed companies also had few ties to the state. Around 60 percent had no experience working with local Chinese governments, 77 percent had not formally worked with government research institutes and 79 percent saw no need to work with local Chinese enterprises.

 The People's Daily commented that while some local governments in China had focused on attracting foreign investment, the end result had been a slow weakening of China's domestic technology R&D.

 The daily said that insiders wanted the state instead to strengthen foreign companies' cooperation with local domestic enterprises.

 China's government is pushing for locally-developed technology such as its own third-generation (3G) cellular data standard as well as its own movie optical disc format, the enhanced video disc (EVD).

 The push is in part to avoid foreign patents and to move China's technology industry further up the value chain from manufacturing.

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