More favorable policies and IP protection measures have contributed to an increase in the number of applications for patents and inventions in China, according to a report released by international accounting and consultancy group KPMG in the second half of 2013.

In early 2004, BASF, a leading chemical company in Germany, established the BASF Asia Technical Center in Shanghai. Nine years later, they have a total of 10 R&D centers in Shanghai, and recently opened a USD 75 million innovation center.

BASF continues to increase investment in China because the BASF product lines need to be adjusted to Chinese tastes and requirements, and we need a more efficient location to better service customer requests, said Waldmier Patti, the Vice-Chairman of the BASF Board of Directors.

To date, there are 1600 R&D centers in China. The number of foreign-funded R&D centers has increased from under 200 to over 1,300 since 2000. China has already surpassed the US to become the world’s “most attractive” destination for R&D investment, as assessed by Russell Reynolds Associates.

In the past, due to a lack of qualified technical personnel, multinationals might have had doubts about setting up R&D centers in China. But there are now more than seven million new university graduates per year in China, and the number is rising. Approximately 900,000 graduates are engineering majors, compared to only 80,000 in the US.