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Pudong to Become High-tech Hub
Shanghai's Pudong New Area is expected to become an important hub in the Asia-Pacific region for the research and development (R&D) centres of multinational companies, analysts said.
Of those multinational companies that have set up R&D centres in Pudong, the latest is the Germany-based Wacker Chemie, one of the major silicone and polymer producers in the world, which announced on September 15 the opening of its Shanghai Technical Centre.
Located in Zhangjiang High-tech Park, the technical centre, which cost US$1.3, is expected to focus on improving existing technologies in China and East Asia by transferring technological know-how from Germany.
"We take the move as an initial and essential step prior to our further expansion into China's rapidly growing silicone and polymer market," said Wilhelm Sittenthaler, member of Wacker's managing board.
Bayer (China) Ltd has also begun the construction of a technical service centre for applied polymer technology in Pudong.
With a planned investment of about 10 million euros (US$8.5 million), the centre is expected to bring the expertise of Bayer, another worldwide polymer giant, to Shanghai and China.
"A competitive edge in production and quality combined with comprehensive application technology services is our winning formula," said Reinhard Clausius, head of marketing for Bayer's Polyurethanes Business Group.
Earning the company a total sales volume of US$535 million in 1999, China is Bayer's second largest individual market in Asia.
More than 70 foreign companies or joint ventures have established their regional R&D centres in Pudong, statistics from the Economic and Commerce Bureau of Pudong New Area Government indicate.
The R&D centres mainly belong to the high-tech sector, including information technology, biomedicine and new materials research.
"Previously, multinational companies in China focused on setting up production-oriented plants. Now it's time for them to shift to establishing regional technical service centres," said Chen Wei, an analyst with the bureau.
Chen attributes this change to the increasingly fierce market competition for the multinational companies, which are vying for an advantageous position in the Chinese market, which has a great deal of potential, and the fact that the companies are beginning to see the importance of R&D as a driving force of the new economy.
As a key aspect of their global strategies, the local R&D centres are expected to allow the companies respond quickly to market changes.
"Without the support of our technical centre, we would never have made the achievements that we have," said Zhao Jiaxiang, an executive with the United Automotive Electronic System Co Ltd, a 50/50 joint venture with the Germany-based Bosch.
With a total sales volume of one billion yuan (US$120.7 million), Zhao's company has reportedly grabbed a nearly 75 per cent share of the domestic market of automobile engine management systems.
Statistics indicate that the total amount of investment in R&D in the 156 Pudong-based high-tech enterprises hit 2.38 billion yuan (US$287 million) in 1998, accounting for nearly 6.4 per cent of the enterprises' combined revenue for that year.
As a minimum standard set by the municipal government, local enterprises are expected to spend three per cent of their annual revenue on research and development.
However, analysts warn much remains to be done if Pudong is not to lose ground to other cities in China, including Beijing and Shenzhen, which are also making efforts to boost R&D.
"Government agencies should pave an easier way by mapping out some key preferential policies to stir up enterprises' enthusiasm for R&D," Chen said.
While an R&D-oriented venture capital market has still not taken shape, endeavours should be made to foster R&D institutes, which are able to initiate the development of some core technologies in which they own the intellectual property, Chen said. (Source: chinadaily.com.cn)
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