The Internationalization of Corporate R&D

THE INTERNATIONALIZATION OF CORPORATE R&Dabout half of the total) in comparison with the U.S. (80 percent) and Japan (63 percent).Interestingly, this is not the case with the E.U. (55 percent) (Schaaper 2004). 5Several experts expect China to catch up quickly in terms of science and technology(S&T) resources. Richard Freeman (2005), for example, estimates that China willhave more Ph.Ds in S&T than the U.S. by 2010. The rapidly growing number ofChinese engineers is drawing attention, and raising concerns, in Europe and the U.S.(BusinessWeek 2005b). While the number of Chinese university graduates is large(2.4 million in 2004) and rising rapidly (growing an average of 50 percent per yearfor the past three years), according to a recent study, their skills levels are stillcomparatively low, and few Chinese university graduates are suited to work in largemultinational companies (Farrell & Grant 2005). However, foreign managers ofmultinational companies’ China operations interviewed for this study reported seeingrapid improvements in management and project leadership skills in their Chineseemployees.China’s knowledge outputs have also increased rapidly in recent years, though not asfast as its inputs. Perhaps the most noteworthy change is the dramatic increase inChinese scientific publications. In terms of share of total international scientificpublications, China has advanced from around thirteenth place in the mid–1990s tosixth place in 2003 (Schwaag Serger & Widman 2005). Some experts go so far as todescribe this development as “spectacular” (Leydesdorff & Ping 2005, p. 625; seealso Zhou & Leydesdorff 2006).In patenting, China still lags far behind the U.S., Europe and Japan. While Chinesepatent applications have increased significantly in recent years, in 2004 they stillonly accounted for 1.4 percent of total international patent applications (websiteWorld Intellectual Property Organization, WIPO). In 2001, Chinese companies andorganizations held only 0.3 percent of granted patents at the European Patent Office(EPO) and 0.1 percent at the U.S. Patent and Trademark Office (USPTO). Patentingactivities in China are dominated to a much larger extent by foreign companies thanin most other countries. Thus, between 1999 and 2001 nearly half of all domesticinvention patents were foreign-owned (OECD Patent Database). 6At first glance, China performs well on another measurement of knowledge output:high-technology exports. High-technology products account for a high share – morethan one fourth – of total exports in 2004 (MST 2005). However, a large share ofChina’s high-tech exports are products, where the high-tech components are5 Researchers are defined as professionals engaged in the conception and creation of new knowledge,products, processes, methods and systems and are directly involved in the management of projects. Thenumber of researchers is expressed in full-time equivalent (FTE) on R&D.6 China offers three categories of patents: design, utility and invention. Invention patents are the categorymost suitable for international comparison.233