Investors worldwide are actively seeking new business prospects in China as the second-largest economy in the world embraces innovation-driven development. The 14th Annual Meeting of the New Champions, also known as the Summer Davos, saw prominent companies from both domestic and international markets come to a consensus that China’s commitment to innovation empowers them in an increasingly digitalized world.
Flender, a German mechanical and electrical drive producer, has significantly increased its investments in the Chinese market in recent years, driven by the country’s growing appetite for advanced technology and innovative products. Gou Jianhui, chairman and CEO of Flender Ltd., China, highlights the exponential expansion of customers for high-end industrial materials and components, which reflects the continuous evolution of China’s industrial technologies and the shifting consumer demand towards high-end products.
In Tianjin, a northern port city, Pegasus, a century-old Japanese manufacturer of industrial sewing machines, has established a new research and development (R&D) center this year. This move aims to enhance the market competitiveness of their products. Okada Yoshihide, general manager of Pegasus (Tianjin) Sewing Machine Co., Ltd, a wholly-owned subsidiary, emphasizes that the R&D center will enable the company to meet the rising demand for high-performance, multi-functional sewing machines in China’s thriving high-end clothing sewing market. The company plans to intensify its R&D and sales efforts to further expand its business in China.
Official data indicates that overseas firms play a significant role in and benefit from China’s innovation-driven growth. R&D investment by major foreign-funded industrial enterprises in China has surged by 91.5 percent from 2012 to 2021. The number of valid invention patents filed by these enterprises has also increased from 68,000 to 241,000. These figures reflect China’s ongoing efforts to promote innovation across all sectors. In 2022, China’s spending on R&D reached 3.087 trillion yuan (approximately 427.5 billion U.S. dollars), marking a 10.4 percent increase over the previous year. The country has consistently achieved double-digit growth in R&D spending since 2016, as reported by the National Bureau of Statistics.
To further encourage innovation, Chinese policymakers have recently emphasized the need to ensure the pivotal role of enterprises in scientific and technological innovation through institutional arrangements. They also underscored the importance of seizing opportunities presented by the new scientific and technological revolution, such as artificial intelligence. Alex Zhavoronkov, founder and CEO of Insilico Medicine, a pharmaceutical company headquartered in New York and Hong Kong, believes that China’s rapid innovation capacity growth will position it at the center of the future pharmaceutical revolution. Insilico Medicine, attracted by China’s vast market and growing innovation capacity, established a drug research and development center in Shanghai in 2019. This center has now become the company’s largest and most talent-intensive facility globally, with a strong Chinese team driving global business development.
China’s impressive rise as a global hub for innovators is exemplified by its climb to the 11th spot in the Global Innovation Index 2022, released by the World Intellectual Property Organization. This ranking represents a remarkable ascent of 23 places since 2012. Yu Feng, president of Honeywell China, acknowledges China’s effective implementation of an innovation-driven development strategy, which has fueled the growth of the digital economy and nurtured new sectors and high-tech products. As a result, companies dedicated to technological innovation are presented with significant opportunities.
Overall, global investors are increasingly drawn to China’s expansive market and thriving innovation landscape. The country’s commitment to fostering innovation across industries, coupled with its impressive growth in R&D spending, positions China as a prime destination for businesses aiming to capitalize on the digital revolution and emerging sectors.