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October 27, 2016

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China leads in R&D spending increase

CHINA leads the world in global research and development spending increase, and more companies globally are pumping money into digital development, consultant Strategy& said yesterday.

“Measured by purchasing power parity, China spent over US$300 billion in R&D last year,” said Huw Andrews, innovation group leader of PricewaterhouseCoopers China. “Excluding the United States, no other country spent more than China did.”

A study done by Strategy&, PwC’s strategy consulting business arm, revealed that 130 Chinese companies were among the world’s top-1,000 public innovation firms that spent the most in R&D this year, up from 123 in 2015.

The Chinese firms spent a combined US$46.8 billion in R&D, up 18.6 percent from US$39.4 billion last year. The growth rate was higher than the 8 percent increase in North America.

“When R&D spending by European and Japanese companies decline, Chinese companies lead in investing in R&D,” said Adam Xu, leader of digital practice with Strategy&. “In light of the innovation-driven development strategy at the national level, Chinese companies are shifting their advantage from competitive cost to innovation in the global market.”

Alibaba and ZTE were the biggest spenders among public companies in China, ranking 61st and 70th, on the global list. But Huawei, which is privately owned and is not tracked by the study, should be the de facto top spender.

“If we take Huawei into consideration, it could be among the world’s top 10,” Andrews said.

Volkswagen AG, Samsung Electronics Co and Inc topped the global list by spending in R&D, but Apple, Google and 3M were considered by global innovation professionals as the most innovative companies in the world, the study said.

By 2020, companies are set to shift most of their R&D spending to digital offerings, particularly in software and services, the study predicted.


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