"China attracts more and more foreign investments in the capital- and know-how-intensive sectors," said the chairman of the German Chamber of Commerce in China, Dr Richard Hausmann.

Around 750 research and development (R&D) centres have already been set up in China by foreign enterprises and the number is increasing.

This trend is mainly the result of the improved institutional research landscape and the availability of qualified personnel. Sino-German co-operation in the field of R&D is not only the outcome of better framework conditions but also contributes significantly to this.

"A rising number of German companies establish R&D capacities in China," Hausmann pointed out. More and more of these facilities are not only following the objective of adapting products to the local market, but are also starting to develop new products for the world market. In the chemical industry, large German enterprises have established R&D centres in the Yangtze Delta in order to incorporate China into the companies' global R&D network.

Regarding the electric and electronic industry, a leading German company has already set up 16 R&D centres in China with over 2,500 highly qualified engineers comprising close to 8 per cent of the company's total workforce in China.

In the IT industry a top German corporation set up a further R&D centre in Chengdu early this year - and these are only three of many examples of R&D activities of German companies in China. Nevertheless further foreign engagement also depends on the continuous enforcement of IPR by the Chinese government.

Scientific partnership

The scientific co-operation between Chinese and German companies has a long tradition dating back to the governmental co-operation agreement from 1978. Nowadays, Germany is China's largest co-operation partner for science and technology. Current fields of priority are biotechnology, ocean research, environmentally sound development and new materials.

An outstanding milestone of co-operation is the foundation of the Sino-German Centre for Research Promotion in 2000, a joint venture between the "Deutsche Forschungsgemeinschaft" and the National Science Foundation of China. Other milestones are the formation of the Sino-German Joint Software Institute in Beijing and the Joint Mobile Communication Institute in Berlin, both in 2003.

All important German research institutes are present in China. The Fraunhofer-Gesellschaft has several major projects in China: The partnership with the Chinese Academy of Sciences (CAS) dating back to 1979 enables Chinese scientists to visit Germany for research stays. In addition, the Fraunhofer-Gesellschaft is co-operating with the government of Beijing to develop a logistic competence centre in Zhongguancun, Beijing's Silicon Valley.

The Helmholtz Association with its 15 research centres is Germany's largest research institution: 24,000 employees produce top-rate scientific results in six research fields of energy, earth and environment, health, key technologies, structure of matter and transport and space.

The partnership of Max-Planck-Institute and CAS in establishing international networks is also remarkable: Due to the large number of scientist exchanges in the past, one third of all directors and managers in the CAS are scientists with research experience in Germany.

According to Dr Hausmann, who is also the president and CEO of Siemens Ltd China, the Sino-German Centre of Research Promotion, Max-Planck-Institute, Fraunhofer-Gesellschaft and the Helmholtz Association significantly encourage the development of institutional international research networks.

Changing face of R&D

The Sino-German co-operation in science and technology has to be considered in context with the progress of the Chinese innovation system strongly supported by China's governments: The long-term plan, issued by the State Council in early February this year, increases annual investment in research and development to 900 billion yuan (US$112.5 billion) by 2020, which would raise the share at gross domestic product (GDP) from actually 1.3 per cent to 2.5 per cent.

An important development is the favourable trend of China's research to become more application-based, said Dr Hausmann. In the context of the overwhelming transition of China's economic system, R&D is now not only the domain of public research institutes. Nowadays, 62 per cent of all R&D expenditures are realized by companies. The trend towards application-based research is also reflected by numerous spin-offs, which are founded by universities and research institutes to commercialize their research results.

The chairman of the German Chamber also emphasizes co-operation with Chinese universities.

In 2005, there were around 2.4 million university graduates, many of them from the top 20 universities such as Tsinghua University, Peking University and the Shanghai Jiaotong University, which meet international standards.

Fifty-five per cent of the graduates were natural scientists and engineers with a bachelor's or a master's degree. The access to qualified personnel is facilitated by more than 100 co-operations between German and Chinese universities: Outstanding examples are the well-known "Chinese-German Hochschulkolleg" at the Tongji University, the joint master studies of the RWTH Aachen and Tsinghua on production processes and the automobile industry.

Nevertheless there are some bottlenecks concerning personnel, especially regarding low English language levels, which has to be improved nationwide, as well as enthusiasm and the capacity for invention and experiments by the staff.

Hausmann concludes: "Decades long experiences in R&D between Chinese and German institutions have resulted in significant innovations and are a solid foundation for further intensive co-operation."

(China Daily 09/13/2006 page18)