Alumni Perspective

Recently, Li Junqiang, an outstanding alumnus of our school, a 2018 doctoral graduate majoring in Business Administration, and an Assistant Researcher at the Free Trade Zone Research Institute / Shanghai Development Research Institute of Shanghai University of Finance and Economics, published an article titled What Signal Does the State’s Policy of Encouraging Foreign-funded R&D Centers Send? in Shangguan News. In the article, he expounded on views such as promoting the development of foreign-funded R&D centers should be deeply integrated with China’s innovation chain, industrial chain, capital chain, and talent chain.

Li Junqiang

Assistant Researcher

Free Trade Zone Research Institute / Shanghai Development Research Institute

Shanghai University of Finance and Economics

Preface and Guide

Recently, the General Office of the State Council forwarded the Notice of the Ministry of Commerce and the Ministry of Science and Technology on Several Measures for Further Encouraging Foreign-funded Enterprises to Establish R&D Centers. The document proposes 16 policy measures from four aspects: supporting scientific and technological innovation, improving R&D convenience, encouraging the introduction of overseas talent, and enhancing intellectual property protection, further promoting the development of foreign-funded R&D centers. As a superior platform for global innovation resource allocation, foreign-funded R&D centers have become an important component of China’s national open innovation system, playing a significant role in the country’s economic and social development.

Further encouragement for foreign-funded enterprises to establish R&D centers is not only a key measure for China to leverage industrial clusters to converge global scientific and technological innovation resources and build technological competitive advantages, but also an important manifestation of China’s commitment to encouraging the development and prosperity of foreign-funded economies and adhering to the opening-up strategy. With increased global economic uncertainties, a large number of foreign-funded enterprises are synchronously transferring production and R&D activities to be closer to the market. China should actively utilize the advantage of its super-large market to encourage foreign-funded enterprises to carry out R&D based on market demands, enhance their R&D stickiness in China, and achieve “innovation together with China”. Promoting the development of foreign-funded R&D centers requires deep integration with China’s innovation chain, industrial chain, capital chain, and talent chain based on the existing innovation system.

01 PART The Innovation Chain

First, we should promote the deep embedding of foreign-funded R&D centers into China’s innovation chain to play a role in the basic research and applied research systems.

First, incorporate foreign-funded R&D centers into China’s basic research system. In recent years, foreign-funded R&D centers have shown a new trend of expanding from applied technology research that previously served local markets to basic research undertaking global R&D core technologies. Foreign-funded enterprises are accelerating investment in basic research, relying on strong technical reserves to occupy high-end links in the global value chain. Carrying out basic research through foreign-funded R&D centers can more quickly guide Chinese enterprises to match basic scientific discoveries with global market signals, improving the allocation efficiency of scientific and technological resources and market resources. China should take advantage of this opportunity to incorporate foreign-funded R&D centers into “basic research special zones,” and deploy a number of long-cycle original and disruptive basic research projects for global frontier fields and industrial common technologies.

Second, give full play to the role of the market mechanism to enhance the effectiveness of foreign-funded R&D centers in China’s applied research system. Foreign-funded R&D centers are mainly concentrated in industries with “three densities” of talent, capital, and technology, which is highly compatible with the development direction of China’s strategic emerging industries. Through market-oriented operation models such as contract research, foreign-funded enterprises are encouraged to participate in relevant industrial applied research projects, provide technical consultation services for technology development and process improvement for small and medium-sized enterprises, and promote collaborative cooperation between foreign-funded R&D centers and existing applied research entities. It is necessary to guide foreign-funded R&D centers to further upgrade on the current basis to build applied research headquarters of foreign-funded enterprises, global technology transfer centers, etc., to enhance the effectiveness of foreign-funded R&D centers in China’s applied research system.

02 PART The Industrial Chain

Second, promote the organic integration of foreign-funded R&D centers with China’s industrial chain to boost the value leap of China’s industrial chain.

The changing international situation has posed certain threats to China’s industrial chain. To avoid the risk of chain disruption, China has strengthened the domestic circulation of the industrial chain. However, the shift of the industrial chain to the domestic market does not mean “closing the door to build a cart”, but transforming the original production-oriented industrial form into a new innovation-oriented open industrial form. Foreign-funded R&D centers have made positive contributions to China’s introduction of international cutting-edge technologies and high-end talents, improvement of industrial technology levels and scientific and technological innovation capabilities, and effectively promoted the rapid development of China’s industrial chain. China should focus on absorbing global innovation resources, gradually transform the current scale advantages and supporting advantages of the industrial chain into innovation advantages, and help China’s industrial chain move towards the middle and high-end links of the global value chain.

In addition, based on foreign-funded R&D centers, accelerate the construction of open innovation platforms for foreign-funded enterprises, and attract a number of entrepreneurial teams and small, medium and micro enterprises in the core fields of the industrial chain to settle in. On the one hand, settled enterprises and teams can carry out R&D in the subdivided technical fields of foreign-funded enterprises and provide technical support for foreign-funded enterprises; on the other hand, small, medium and micro enterprises can also learn from the R&D management models of foreign-funded enterprises, share R&D equipment, and connect to the global market. The government should introduce relevant policies to provide guarantees for elements such as land, equipment, and infrastructure, and help strengthen and supplement China’s industrial chain through the open innovation platforms of foreign-funded enterprises.

03 PART The Capital Chain

Third, explore flexible capital support models and strengthen the service of the capital chain to foreign-funded R&D centers.

The capital chain refers to the aggregation of various capitals supporting the entire chain from technology R&D to industrialization. Taking foreign-funded R&D centers as pilot platforms, we should explore more diversified and flexible capital support models to meet the innovative capital needs of enterprises throughout their life cycles.

01 Build a more lenient fiscal and tax support policy system. Strengthen guidance and services for foreign-funded R&D centers in applying for the identification of high-tech enterprises, and increase tax deductions for basic research, applied research, and collaborative R&D with local enterprises; increase financial subsidies for the purchase of scientific instruments and test devices; provide certain policy-based incentives for enterprises or projects incubated by foreign-funded R&D centers according to indicators such as listing status and financing scale.

02 Promote the whole-process technology entrepreneurship investment and financing model. Encourage entrepreneurial teams to carry out technical cooperation with foreign-funded enterprises relying on foreign-funded R&D centers, and attract investment and financing by leveraging platform advantages. It is necessary to build a whole-process evaluation system covering technical strength, team management, market prospects, etc., from technology R&D, technology application to market promotion, so as to improve the “hit rate” of investment and financing institutions for high-quality projects of settled enterprises or entrepreneurial teams, making technology entrepreneurship investment and financing more precise and efficient; guide government funds and commercial investment funds to play a “combination punch” to balance the relationship among strategic significance, public welfare, and rate of return.

03 Promote the application of emerging financial products in foreign-funded R&D platforms. Through the regulatory sandbox model, encourage financial enterprises to pilot sci-tech financial products, services, business models, and marketing methods in foreign-funded R&D platforms, and explore integrated emerging financial products; encourage cross-border flows of scientific and technological capital, explore cross-border sci-tech capital financing systems, and improve the platform’s financial allocation capacity for domestic and foreign innovation resources.

04 PART The Talent Chain

Finally, break down relevant institutional barriers to achieve positive interaction between the talent chain and foreign-funded R&D centers.

General Secretary Xi Jinping has emphasized the need to deeply implement the talent 强国 strategy in the new era, comprehensively cultivate, introduce, and make good use of talent, and accelerate the construction of a world-class talent center and innovation hub. When building a national open innovation system with a global vision, China should actively construct a talent institutional system with global competitiveness, continuously expand opening-up in the field of talent, and carry out more in-depth international scientific and technological talent cooperation.

In terms of talent cultivation and introduction: Foreign-funded R&D centers should leverage policy opportunities to vigorously attract high-end talent from their home countries and other nations, and build R&D teams centered on high-end talent. High-level platforms serve as magnetic fields for cultivating high-tech talent. It is necessary to encourage foreign-funded R&D centers to rely on platforms such as post-doctoral research stations, joint laboratories, and training bases to actively cultivate composite talent with both “research + management” capabilities, opening up new channels for scientific and technological talent to start businesses.

In terms of talent utilization and development: Relying on national funds and government projects, and based on drawing on international experience, explore differentiated project acceptance and talent performance evaluation mechanisms for basic research, applied research, design and development, and other links. Encourage high-end talent to carry out professional title evaluation and project application through foreign-funded R&D centers. Relevant departments should further break down institutional barriers to talent in cross-border mobility, daily life, etc., regularly release regional talent environment indices, and place the talent environment in a prominent position in the business environment.