Innovation in China: A Vibrant Ecosystem for EU Cooperation
This article was originally published in Italian in Panorama on 2nd February 2023.
Please note that this is a courtesy translation of the Italian language article originally published in the Panorama Magazine Issue at: https://www.panorama.it/news/dal-mondo/cina-europa-mercato
European companies have long since recognised that China’s R&D ecosystem is increasingly vibrant and has many advantages over the rest of the world. Among the advantages most commonly cited are the number and variety of collaboration partners, which range from established national champions to companies that are part of China’s vibrant start-up ecosystem as well as inventive scientists and researchers.
Survey respondents to a publication released by the European Chamber of Commerce in China in 2022 entitled "China’s Innovation Ecosystem: Right for many, but not for all" widely praised the size of the market (68%) and the fast pace of commercial application of R&D results (68%). Reporting increasingly high integration between their China-based innovation work and their global efforts, the mature nature of China-based R&D activities, utilizing local innovation capacity to refine existing products, as well as to create new goods and services alongside new business models and operational improvements, the attitudes of European companies has altered tremendously since the days of merely viewing innovation in China as almost exclusively for localization of products developed in their home markets.
Let’s take a closer look at how innovative companies in China operate on the ground and how European companies are faring in this highly competitive market.
Growing Leader in Innovation
China has led the world in number of patent filings since 2011 (in 2022 alone, the total number of patents filed in China was 4.21 million), according to the World Intellectual Property Organization (WIPO), with the country accounting for even larger portions of world total filings in utility models (96.9 percent), trademarks (51.7 percent) and industrial designs (52.3 percent). In addition, China also saw rapid growth in patents and trademarks granted to foreigners in 2022. The number of valid foreign invention patents in China reached 861,000 by the end of 2022, up 4.5 percent from the previous year, while the number of valid trademarks registered by foreign parties in China reached 2.03 million, up 5.9 percent year on year.
In relation to the protection of such intellectual property, respondents to the European Chamber of Commerce in China’s publication "China’s Innovation Ecosystem: Right for many, but not for all" also noted that China’s IPR protection system is increasingly mature for patent filing and enforcement, despite lagging behind in trade secrets. Companies should take note of which kind of IP their R&D results fall into and recognise for which types they will be able to rely on judicial enforcement, and for which types they cannot. SMEs in particular should be especially judicious in protecting their IP, as IP leakage could be more detrimental to their business in comparison to MNCs who may be able to shoulder the infringements.
For prospective investors exploring the Chinese market for their R&D, we should note that high-tech enterprises registered within China that are engaged in continuous research and development as well as commercialization of their technological achievements in relevant fields may benefit from a reduced enterprise income tax rate of 15%.
Fostering Innovation in the Chinese Marketplace
As Beijing pursues a national innovation strategy, companies, institutions as well as associations have all increasingly been promoting the innovative connections between China and Italy in recent years. One such example arises via the “Abruzzesi in Cina” association, which was established in 2020 with the aim of strengthening and promoting relations and exchanges between the Region of Abruzzo and the People's Republic of China, promoting trade as well as mutual investment opportunities in multiple sectors, as well as presenting the “Corradino D'Ascanio Award for Innovation”.
The prize is named after the Abruzzese aerospace engineer Corradino D'Ascanio, the famous inventor of the helicopter and the Vespa, and is awarded as a recognition-with the support of the Abruzzo Region, the Regional Council of Abruzzo in the World (CRAM) and the Consulate General of Italy in Shanghai - in favor of two companies, one from Abruzzo with interests in China and one from China with interests in Italy, that have distinguished themselves for the development of an innovative project in the industrial sphere, in the areas of smart manufacturing, digital transformation, and energy transition, and that have been particularly active in building business, cultural and innovation relations between the two countries.
The “Abruzzesi in Cina” Association & the Corradino D'Ascanio Award
The President of the association "Abruzzesi in Cina," Eng. Fabrizio Ferri, together with the other members of the Executive Committee, such as Vice Presidents Eng. Pierluigi Gorgoretti and Eng. Claudio Neroni, Treasurer Att. Carlo D'Andrea and Secretary General Att. Riccardo Verzella are committed to promoting economic, cultural and innovation exchanges between China and Europe's greenest region, with the Governor of Abruzzo region, Marco Marsilio, also actively involved in this initiative in his capacity as CRAM President to attract Chinese investment to the region and recognize the work of Abruzzo companies in China.
On the occasion of the Corradino D'Ascanio Award for 2022, the Consul General of Italy in Shanghai, H.E. Tiziana D'Angelo, honored the Abruzzo-based company Valagro S.p.A., for its high level of innovation, the important research and development activity conducted on an annual basis and especially for the leadership achieved in the field of bio-stimulants, as well as the Chinese company Guangdong Dongpeng Ceramics Co, Ltd, one of the largest companies in China's building ceramics industry, in recognition of its commitment to research and development of innovative low-carbon and environmentally friendly solutions, including through synergies in Italy and Abruzzo, whose village of Castelli boasts a centuries-old tradition in ceramics and is recognized as one of the most important centers of ceramics in Italy.
To select and evaluate these innovative projects, a special committee consisting of academics, institutional representatives and representatives of the Association was appointed. The projects of the participating companies were analyzed and evaluated based on a number of factors taking into account the quality and innovativeness of the project idea, applicability and potential in the target market, design, eco-sustainability, economic feasibility in terms of cost and duration of the innovative project, and the diversity of the innovative project development team.
As we have already passed into 2023, as well as recently celebrated the Chinese New Year (the year of the rabbit), we can expect to see a big push from the Chinese authorities to recover the ground lost over the past 3 years due its much maligned Zero Covid policy.
In such a rapid reopening procedure, it has been widely predicted that China will provide a much-needed boost to global economic growth, which will particularly benefit the most innovative companies.
Edited by: Att. Carlo D’Andrea, Vice president of the European Chamber of Commerce in China