Barriers for Foreign R&D in China Wenke, Ph.D Institute of Policy and Management Chinese Academy of Sciences

Outline Introduction Research methodology and data collection Three types of barriers for foreign R&D in China Several interesting patterns Conclusion

1.Introduction Cooperating with Dr. Sun yifei, one part of the project “Foreign R&D Investment in China”(founded by NSF, BCS ) Focusing on the barriers for foreign R&D in china

2.Research methodology and data collection The results are primarily based on 29 interviews with managers of foreign R&D in China. The empirical sample consisted of 27 multinational corporations.

3. Three types of barriers Barriers from policy environment –Strong and bureaucratic government –Import limitation –Imperfect IPR protect system –Difficulty for traveling to taiwan Barriers from local market –Increasing operation cost –Imperfect infrastructure Barriers with Human Resource Management –Lack of innovative and experienced labors –High employee mobility –Difficulty in managing the diversified staff

4.Several interesting patterns Mainland-born managers and non Mainland- born managers mainland-born managers are more positive about the environment in China.

Barriers from policy environment8(44.4%)13(46.4%) Strong and bureaucratic government47 Import limitation25 Imperfect IPR protect system11 Difficulty for traveling to Taiwan11 Barriers from local market4(16.7%)3(10.7%) High operation cost31 Imperfect infrastructure12 Barriers from human resource management7(38.9%)12(42.9%) High labor mobility12 Lack of innovative talents47 Difficulty in managing diversified staff23 Mainland-born managers (15) Non mainland-born managers (13) Total1929

4.Several interesting patterns Variations among different cities R&D managers in difficult cities felt different problems, though common problems do exist

Barriers from policy environment7(30.4%)12(60%)2(50%) Strong and bureaucratic government452 Import limitation340 Imperfect IPR protect system110 Difficulty for traveling to Taiwan020 Barriers from local market2(8.7%)4(20%)1(25%) High operation cost130 Imperfect infrastructure111 Barriers from human resource management14(60.9%)4(20%)1(25%) High labor mobility030 Lack of innovative talents911 Difficulty in managing diversified staff500 Beijing (14)Shanghai (10)Nanjing (4) Total24204

4.several interesting patterns Differences among Companies with Different Presence in China The size of foreign investment is negative correlation to the barriers they encounter. We conducted case studies of company A and company B.

Policy environment Strong and bureaucratic governmentYesNo Import limitationNot mentionedNo Imperfect IPR protect systemYesNo Local market High operation costNot mentionedNo Imperfect infrastructureYesNo Human resource management High labor mobilityAcceptable Lack of innovative talentsYes Difficulty in managing diversified staffNo AB Total

5.Conclusions and discussion Policy environment is still the major barrier, and other problems include high labor mobility, lack of talents and so on. the feelings of R&D managers depend on the location of the establishment. more established foreign companies seem to have experienced more problems than smaller and less prominent foreign companies.