The Internationalization of Corporate R&D

THE INTERNATIONALIZATION OF CORPORATE R&Dcompany websites and news clippings of foreign companies’ activities in China. We founda complicating factor in the discrepancy between R&D sites declared by a company or theChinese press to be strategic, and the absence of these sites in the same company’s listing,on its homepage, or in its annual report, of its global R&D centers. After correcting for thisdiscrepancy, we found approximately 30 large multinational companies that currently haveup to 60 facilities performing innovative R&D activities in China.In summary, there exists a relatively new and clear upward trend for companies toestablish R&D activities in China. In addition to establishing operations aimed atdeveloping or adapting products solely for the Chinese market, a growing number offoreign companies are setting up innovative or global R&D operations in China.10.4.3 R&D Centers Concentrated in a Few CitiesThe vast majority of foreign R&D centers can be found in Beijing and Shanghai.Beijing appears to be a preferred R&D location for IT, telecommunications and electronicscompanies, while Shanghai attracts automotive, chemical companies, food,pharmaceutical and engineering companies (von Zedtwitz 2004). Maximilian vonZedtwitz finds clear indications of foreign R&D centers “clustering” with proximity tocentral government, academic institutions, design or fashion hubs, as well as with otherR&D labs. While proximity to government seems to determine location intelecommunications, for example, in other sectors availability of graduates (e.g. engineeringschools) and access to scientific, fashion or key consumer communities seem tobe more important (von Zedtwitz 2004).Foreign R&D activities focusing on product development or adaptation can be foundoutside Beijing and Shanghai, and are quite frequently located close to the companies’production facilities. However, when it comes to innovative R&D operations, with very fewexceptions, they tend to be located in Beijing or Shanghai and not necessarily in closevicinity to companies’ manufacturing plants. These two cities are the most populardestinations for foreign R&D activities because they offer a combination of highly qualifiedhuman resources, well-developed infrastructure, a concentration of industrial and scienceparks, as well as top-class universities and research institutes (Gassmann & Han 2004).10.4.4 R&D Centers Also Concentrated in Certain SectorsThe extent to which foreign companies locate innovative R&D functions in Chinadiffers significantly according to industry. So far, telecommunications and IT or personalcomputer companies are at the forefront, whereas life-sciences companies havebeen less likely to locate such functions in China (Asakawa 2005 and Gassmann & Han2004). A number of pharmaceutical companies have established, or make use of, clinicaltrial capabilities in China, but few have located innovative R&D there. Interestingly,some pharmaceuticals have recently announced plans to do so, (e.g. Novartis).245