The hottest new trend of research and development

New trends in research and development of foreign-funded enterprises in China

in 2017, a number of large multinational pharmaceutical enterprises cut R & D investment in China, laid off technicians and even closed R & D centers. At the same time, major pharmaceutical companies have signed cooperation agreements with Chinese local drug R & D enterprises. Pfizer has reached a cooperation with local enterprise Paige biomedicine to develop glucokinase activator (GKA) drugs. Lilly cooperates with Cinda biology, Wuxi apptec and other Chinese local small and medium-sized pharmaceutical enterprises and drug R & D enterprises to develop innovative drugs

the heads of Pfizer and Lilly said that the adjustment of R & D strategy in China aims to improve the coordination and efficiency of global R & D business, while the R & D efficiency of large enterprises is far less than that of small enterprises. At present, the research and development cycle of new drugs takes 15 years. It will take several years for the new drugs developed by foreign-funded enterprises in China to pass the review of the Chinese government, and the time cost is extremely high. The preferential policies of the Chinese government, such as simplifying the approval process and shortening the time for local pharmaceutical enterprises, have greatly encouraged foreign pharmaceutical enterprises to cooperate with local enterprises in R & D

in 2017, multinational enterprises in the field of electrical automation also adjusted their R & D strategies in China, but the adjustment direction of each enterprise is different. General Electric (GE) announced in mid-2017 that its Shanghai Technology Center (CTC) will no longer undertake basic scientific research, and the basic scientific research tasks will be transferred to the enterprise's research centers in the United States and India. Earlier, Dr. Chen Xiangli, the chief technology officer of the company in China, resigned

on the contrary, Siemens has been increasing its investment in R & D in China for many years. In 2016 and 2017, Siemens set up many innovation centers and laboratories in Qingdao, Suzhou, Wuxi, Chengdu and other places in China, and set up the Suzhou Branch of Siemens China Research Institute in Suzhou. Since September 2017, Siemens China has led the research and development of Siemens' global autonomous robots. Siemens' global factory automation business unit is preparing to develop and market products. Siemens Greater China's revenue in China in fiscal 2018 reached 8.1 billion euros, an increase of 12% over 2017. Siemens China leads the world in performance growth, and its R & D investment continues to increase

case 1: Siemens industrial robot research and development

in recent years, Siemens has focused on the main business direction of electrification, automation and digitalization. Under the guidance of Vision 2020, Siemens China Research Institute took the initiative to propose the idea of developing industrial robots in China, which was supported by Siemens' global board of directors. The prototype was successfully developed within one year, and has now entered the business department (automatic chemical plant) for follow-up research and development and marketization. Autonomous robot is one of the core technologies of Siemens, and Siemens China leads the research and development of the company's global autonomous robot

the growth of China's industrial robot market is very significant, but local enterprises are weak in robot R & D. Siemens has a strong accumulation in industrial automation. When communicating with suppliers, customers and other upstream and downstream partners, it found the demand of local enterprises for industrial robots, so it began to consider developing robot controllers, especially those that can be seamlessly connected with Siemens automation solutions

Herman, CEO of Siemens Greater China, zhuxiaoxun, President of Siemens China Research Institute, and PE, general manager of R & D Department of Siemens China Research Institute? Ter Mertens, Zhuoyue, then director of automation and control at Siemens China Research Institute, and Chen Qixiao, director of technology and innovation management at Siemens China Research Institute, realized the rapid growth of China's industrial robot market in their business activities. After clarifying the goal, Mr. Herman proposed the idea of entering industrial robots to Siemens headquarters in Germany. The R & D team of industrial robots carried out R & D under the leadership of the outstanding doctor of the inventor of the year of 2014 of Siemens, and successfully developed the prototype based on Siemens' previous rich R & D experience in automatic control, it platform, network communication and electromechanical integration. The board of directors of Siemens headquarters also made great contributions to the promotion of the project. In the internal workflow of Siemens, the R & D achievements of the R & D department are generally transformed and produced by the business department. However, industrial robots are an area that Siemens has not been involved in before, and the business department is not sure of its prospects, so it does not stand up for support at the first time. After Siemens China reported the idea to Siemens headquarters in Germany, Siemens headquarters believed that the R & D project was in line with China's national strategy and the Vision 2020 strategy proposed by Siemens. Based on the foresight of the strategic importance of the Chinese market, it approved the R & D proposal of industrial machinery, thus ensuring the flow of resources and funds into the project

reasons for the change of foreign enterprises' R & D strategies in China

(I) R & D competition and talent competition are intensifying

with the enhancement of innovation and R & D strength of Chinese local enterprises and the improvement of salary bargaining power, large multinational enterprises gradually feel the increasing competitive pressure from local technology enterprises. Chinese local pharmaceutical company Hualing has formed direct competition with Pfizer in the field of diabetes drug research and development. In the electrical field, the strength gap between state-owned enterprises such as Guodian and foreign-funded enterprises such as Siemens and ABB has rapidly narrowed. When recruiting computer programming talents due to plastic machinery, many Chinese local Internet enterprises offer significantly higher prices than foreign enterprises. Compared with local enterprises, the talent and technological advantages of large multinational companies continue to shrink

(II) the R & D effect of branches in China is less than expected

the efficiency of some foreign-funded enterprises' R & D institutions in China is not high, the results have not been recognized by the Chinese market, and the performance has been questioned by the global headquarters of enterprises, which is another important reason for foreign enterprises to abolish R & D institutions in China. Taking the field of pharmaceutical research and development as an example, at present, contract research organizations (CRO) and contract registration organizations (CRAO) are becoming more and more popular. Such enterprises have professional knowledge of R & D and drug registration, and local enterprises can enjoy the preferential policies of simplifying the approval process. Therefore, multinational pharmaceutical enterprises are increasingly inclined to hand over drug research and development and application approval to local partners in China. This shows that the R & D strength of Chinese local enterprises is constantly improving. But at the same time, it also reflects that the efficiency of multinational companies' R & D institutions in China needs to be improved

(III) the human cost of central cities such as Beijing and Shanghai has risen, and the human cost advantages of other cities or other countries have become prominent

at present, there are a large number of foreign-funded enterprise R & D institutions in central cities such as Beijing and Shanghai. However, these cities have higher living costs, higher personnel salaries, heavier salary burden of enterprises, and higher employee welfare expenses. In addition to Beijing and Shanghai, Suzhou and other cities have smaller and smaller advantages in human costs. Many foreign-funded enterprises have transferred their R & D centers or innovation centers to Chengdu, Xi'an and other places in order to reduce human costs. However, some foreign-funded enterprises have completely cancelled their R & D activities in China and transferred to India and other places. For example, GE's basic scientific research work in the world, except for the United States, is concentrated in Bangalore, India. Adobe completely canceled the R & D in China and transferred all of it to India. In the long run, multinational enterprises' abandonment of research and development in China is detrimental to Chinese enterprises' introduction, learning and absorption of advanced technology

(IV) changes in the world political and economic pattern and the impact of a new round of technological and industrial revolution

after the global financial crisis, the international situation has changed, and the world economic pattern has changed greatly. The annual growth rate of the global economy fell from more than 4% before the crisis to less than 3% after the crisis. Since the trump administration came to power, the voice of anti globalization trade protectionism has become rampant, and the world economy, which had been struggling to recover, has once again faced major challenges. At the same time, the rapid rise of the fourth industrial revolution has brought about a deep transformation of the technological paradigm and business model of human society. Emerging technologies represented by artificial intelligence, robots, IOT, big data, cloud computing, blockchain, and emerging business models represented by one-man enterprises in the platform economy and the retail economy are emerging, which puts forward new requirements for the digital transformation and upgrading of traditional industries that can weld panels with obvious curvature. Accompanied by the economic cycle and the scientific and technological revolution is the change of the international political environment. From the 301 investigation tax increase list to the Cfius power expansion ZTE incident and the Jinhua incident, the trade friction between China and the United States in the high-tech field is heating up, adding new variables to the development of the global economy. In the face of the great changes in the world economy, both the host government and multinational companies are adjusting their strategies with strategic (rather than tactical) thinking, so as to seize the opportunities and reduce the risks brought by this round of technological and economic transformation. For example, in the context of globalization, business adjustment, reorganization, listing, mergers and acquisitions and other activities of enterprises around the world will become increasingly frequent. There are deep reasons for the adjustment of the global R & D strategy and pattern of multinational corporations, which are affected by the economic cycle, the scientific and technological revolution, and the political and economic environment. For example, Siemens' adjustment is an active choice to deal with the digital future, and some foreign-funded enterprises' withdrawal of R & D from China is also affected by changes in the international political and economic pattern

case 2: Siemens Medical Group is listed

Siemens' global headquarters is located in Germany. Siemens Group has less reference to the single region policy of Greater China in the global business changes, especially in the structural adjustments such as acquisitions, splits, and listings. In his vision 2020 plan, Joe KAESER, CEO of Siemens AG, hoped that Siemens would focus more on industrial businesses such as electrification, automation and digitalization, and gradually spin off other businesses. In fiscal year 2018, Siemens' total revenue was 83billion euros and its net profit was 6.1 billion euros. In fiscal 2017, Siemens heal th? Ineers' revenue reached 13.789 billion euros (accounting for 16.6%), and its net profit was 2.490 billion euros (accounting for 40.3%). Analysts valued Siemens Healthcare at around 40billion euros

Siemens Healthcare is listed on the Frankfurt Stock Exchange, and its main markets include China, Japan, etc. in addition to Germany. The listing of Siemens Healthcare will bring high book income to Siemens China from the financial aspect. According to the current "administrative measures for the recognition of high-tech enterprises", enterprises only need to recognize the qualification of high-tech enterprises once every three years, and can enjoy tax incentives for high-tech enterprises after passing the recognition. This means that as long as the overall situation of the enterprise in the three-year period meets the requirements that the income of high-tech products accounts for no less than 60% of the total revenue. From the perspective of policy design, the policy not only takes into account the objective law of financial fluctuations that may occur in the operation of enterprises, but also reduces the workload of the government in identifying high-tech enterprises every year. However, in the actual operation, the growth of China's plastic machinery industry has ushered in the golden period of Komen growth and rapid growth. At present, the tax collection is based on the financial situation of the year to judge whether to enjoy tax incentives, but when judging the financial situation of the year, the one-time income brought by mergers and acquisitions is not considered (for example, this part of income is not excluded from the total revenue of the year). Such an operation mode not only increases the workload of the government, but also affects the applicability of high-tech policies to multinational enterprises

in the future, efforts must still be made to attract world leading enterprises to invest in China and R & D innovation

in the long run,