carimmohelp: ‘Discovered in China’ a new goal

воскресенье, 1 января 2012 г.

‘Discovered in China’ a new goal

(Foreign Correspondent

GlaxoSmithKline has invested in an RD centre in Shanghai where it is carrying out studies on neurodegenerative conditions. GSK via Reuters

When the British pharmaceutical giant GlaxoSmithKline, launched a clinical research centre in China four years ago, Moncef Slaoui, the company’s research and development chairman, made a comment that could easily have been uttered by one of Beijing’s leaders.

China Multinationals investing in research and development

Novartis This pharmaceutical giant announced two years ago it was investing US$1 billion (Dh3.67bn to create China's largest pharmaceutical research centre, in Shanghai, by expanding an existing facility, as well as putting $250 million into a research and development and production plant in nearby Changshu

BMW Just as its fellow German car maker Mercedes-Benz launched a design centre in China this year, so BMW announced plans in May to set up a facility. The Shanghai centre, part of BMW's in-house design consultancy DesignworksUSA, comes in addition to similar sites in Los Angeles, Munich and Singapore.

Microsoft The computer industry company opened a research centre in Beijing in 1998, seen as key in helping it to establish itself in China after years of struggling. The laboratory has helped to develop global Microsoft products, coming into prominence just as the company's success in China grew amid a new strategy of partly tolerating, rather than trying to fight, software piracy.

A key aim of the centre, Mr Slaoui said, was to «be part of a future in which the phrase ‘discovered in China’ is heard as often as ‘made in China’ is heard today».

Investment by the company also known as GSK in its centre in Shanghai to study neurodegenerative conditions illustrated well China’s burgeoning role as a research and development hub, rather than just a place for churning out cheap generic drugs or pharmaceutical ingredients.

It tied in with the economy’s aim of moving up the value chain in many industries, including the automotive sector and IT, as wage rises push some non-value-added manufacturing overseas.

There are multiple reasons that China has become an innovation hub that last year accounted for 12.3 per cent of global research and development (RD expenditure, which amounted to 1.5 per cent of the nation’s GDP.

Although wages have risen, the cost base remains low, and the vast pool of people educated in science and technology means researchers can be hired for a fraction of the cost in the West. Universities are producing more than 6 million graduates annually, 10 per cent of them engineers. One report suggested that the wage of someone with a PhD in China is just one tenth what it is in the US.

Being close to a consumer market that is becoming increasingly important thanks to near double-digit economic growth is also key, as designers or software developers in China are better able to tailor products to local consumers.

Government incentives for multinationals are also a magnet.

«Cities like Shanghai and Beijing, they encourage these foreign direct investors to [open] headquarters. They encourage these kinds of centres and other service-related headquarters in these tier-one cities,» says Ren Xianfang, an analyst with IHS Global Insight in Beijing.

«On the part of the multinationals, it makes sense for them to move these headquarters close to the markets and close to where the professionals [they want to recruit] are. «

Financial incentives such as tax breaks for foreign-invested companies purchasing research and development equipment, and VAT and customs duty refunds, help to lure companies.

The concentration of expertise these initiatives have promoted is such that one analyst predicted that by the end of the 2010s, western companies could be doing as much as half their RD in China.

Switzerland’s Novartis is among several others in the pharmaceutical sector to have focused on China for research and development, announcing two years ago it was investing US$1 billion (Dh3. 67bn in a centre in Shanghai, as well as $250 million on a research and production facility in the nearby city of Changshu.

Other drug companies have followed suit, while Microsoft and other technology companies have also expanded RD capabilities in China. In particular, Microsoft has used China to develop video games for the Chinese market.