A long list of renowned multinational companies, including Microsoft, IBM, Motorola, Siemens, Nortel, GE, GM, Volkswagen and Honda have established research and development centers in China, the Ministry of Commerce said.

"China encourages multinationals to establish R&D centers in China," said Chinese President Hu Jintao at the national science and technology conference held early this year.

According to statistics from the Ministry of Commerce, about 750 foreign-funded R&D centers have been set up in China, which are mainly located in such large cities as Shanghai, Beijing and Shenzhen.

Most foreign-funded R&D centers here are in fields of electronic and telecommunications equipment manufacture, transport equipment manufacture, medicine production and chemical industry, the Ministry of Commerce said.

Although most foreign-funded R&D centers are still focused on application technology, some including that of Microsoft, Nokia, Bell-Alcatel and Panasonic also conduct basic R&D work and have turned into global R&D centers of those transnational business mammoths.

Dr. Li Wanlin, senior vice president of the Siemens (China) Telecommunication Ltd., said that the establishment of Siemens China R&D centers is a vitally important strategy for the German company's future development.

Multinationals have increased their investment in R&D centers in China by a large margin as the market here becomes more important in their global business strategy.

Some global business giants, such as GE, Philips, Motorola and Siemens, invest tens of millions of U.S. dollars in R&D centers in China, the Ministry of Commerce said.

Lu Zheng, a recognized economist who heads the Chinese Academy of Social Sciences Institute of Industrial Economics, said, "By attracting more and more localized foreign R&D centers, China moves up the hierarchy of the global economy."

The establishment of these foreign-owned R&D facilities, with their employees flowing freely in the Chinese job market, stimulates technological upgrades in Chinese companies as well as helps improve the innovative capability of indigenous engineers.

Figures show in some foreign-invested R&D centers, more than 90 percent of the employees are Chinese staff including returned overseas students.

Some centers including GE, Bell-Alcatel and Motorola have enhanced cooperation with local institutes and universities. The sharing of intellectual property rights and other research achievements helps China increase its innovation capacity, said the Ministry of Commerce.

Source: Xinhua