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2022-06-08 | All chapters

European industry report: China’s innovation ecosystem – right for many, but not for all

Beijing, 8th June 2022 – The European Union Chamber of Commerce in China (European Chamber), in partnership with the Mercator Institute for China Studies (MERICS), today published China’s Innovation Ecosystem: Right for many, but not for all. Based on a member survey and in-depth interviews, the report highlights that while there are many positive aspects to undertaking R&D in China, there are still areas where European companies need to exercise caution.

The report finds that European companies see enormous value in the variety of collaboration partners available in China, ranging from established national champions to companies that are part of China’s vibrant start-up ecosystem, and inventive scientists and researchers. Other notable positives include the size of China’s market and the fast pace of commercialisation of R&D results, both of which were recognised by 68% of survey respondents.

As a result, some European companies are increasingly integrating China R&D with their global efforts, and while the majority are using China R&D to refine existing products, more and more are creating new goods and services in China, including as part of their global portfolios.

However, the report also reveals the risks of engaging in R&D in China. These include weak intellectual property rights (IPR) protection systems, an unlevel playing field for foreign companies and negative sentiment in their home markets towards R&D in China, reported by 32%, 27% and 23% of respondents respectively. Unequal access to government support in comparison with local companies was also reported by 82% of respondents, with reasons for this including opaque or unclear information/processes for accessing grants and subsidies, administrative challenges not faced by local companies, support schemes that are not publicly announced and explicit rules preventing foreign companies from accessing support.

In addition, the report highlights that the benefits of engaging in R&D in China are not universal. Those operating in industries in which investment is not encouraged in China—such as information and communication technology (ICT), telecommunications and all things digital—face more challenges to R&D. Similarly, the risks associated with R&D in China are disproportionately larger for small and medium-sized enterprises, which have fewer resources to counter significant challenges such as IP theft. In that sense, European companies have embraced diverse strategies based on their own technological positions relative to the local ecosystem, with some going ‘all-in’ and others adopting a ‘hedged bets’ approach.

“There are many reasons for foreign companies to invest in R&D in China, but companies need to be clear where the risks are and where their competitive advantage lies before deciding how much to commit,” said Joerg Wuttke, president of the European Union Chamber of Commerce in China. “In that respect it is much like China’s market overall, it is vibrant and can be hugely rewarding but ultimately it may not be the right decision for every company.”

“From a European policymaker perspective, there is a need for a dispassionate appraisal balancing the technology leakage risks of further integration into China’s innovation ecosystem with the potential value they can extract from China to boost their global competitiveness,” said Mikko Huotari, executive director of MERICS. “Such an exercise could generate valuable corporate guidance from the European Commission, while also contributing to a framework for how to manage technological ties with a systemic rival that is home to business partners and competitors.”

This report was completed with support from the German Federal Ministry of Education and Research, and was developed with input from colloquium partners under the project - University of Duisburg-Essen and Ruhr University Bochum

Download the full report here.









“欧洲政策制定者需要作出理性评估,在进一步融入中国创新生态系统时所面临的技术泄漏风险和充分汲取中国市场的潜在价值以提升全球竞争力二者之间取得平衡。” 墨卡托中国研究中心执行董事Mikko Huotari表示,“欧盟委员会可以为企业提供有价值的指导,并且建立起一个应对制度性对手的框架,以处理好与合作伙伴和竞争者云集的市场的技术关系。”



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Xinhe Fan