Foreign-funded enterprises in China are not active in technology research, and contribute little to introducing advanced technology to China, in contrast to the country's original expectations of foreign investment.

Foreign-funded enterprises in China are not active in technology research, and contribute little to introducing advanced technology to China, in contrast to the country's original expectations of foreign investment.

A survey entitled "Use of Foreign Investment and Improvement of China's Innovation Capacity" by researchers from the world economic and politics research institute under the Chinese Academy of Social Sciences disproved some commonly held views about foreign companies in China.

According to the survey, foreign-funded enterprises in China are mostly recipients or users of technology developed by their multinational parent companies, and not creators of new technology.

Among the surveyed companies, about 60 percent have established independent research and development (R&D) branches, but with a comparatively smaller group of employees. Most have less than 50 employees specializing in technological research. Nearly 75 percent restrain their annual R&D expenditure to less than 5 million yuan (US$604,595).

The R&D departments of Chinese foreign-funded companies still lag far behind those attached to multinationals in terms of research subjects, financial input and personnel composition, the survey showed.

They also perform unsatisfactorily in R&D output, as indicated by the number of patent applications and approvals as well as the output value of new products, according to the survey.

Meanwhile, some 60 percent of the surveyed companies had no cooperative experience with local government, 77 percent had not formally cooperated with government research institutes, and 79 percent showed no desire to ally with local domestic enterprise.

"The survey shows that foreign companies haven't brought advanced technology to China," said officials with the Ministry of Science and Technology.

Officials said that modern production facilities didn't equate with advanced technology. Chinese staff could not claim mastery of certain technologies if they were only capable of operating machines or equipment supported by that technology.

However, foreign-funded companies now mainly introduce their products and production facilities to China, but not their R&D capacities, making home enterprises more reliant on them.

To pursue rapid economic development, some local governments have focused more on attracting foreign investment, but gradually weakened the input in domestic enterprises for technology researches, making it more difficult for them to enhance innovation capacities.

Insiders consider that the government should strengthen foreign companies' cooperation with local domestic enterprises in the future, to benefit the spread of foreign advanced technology in China.
 
(Xinhua News Agency November 19, 2003)