Research and rip-offs
By Matt Cooney,
China is a land of factories and rip-off artists, right? Well, no. But if you need more convincing, this week the OECD reported that China is now the world’s second-largest spender on research and development, passing Japan. This year the Chinese will spend over US$136 billion on R&D—and you can be sure they’re not spending all that money reverse-engineering iPods.
The US remains the R&D champ, spending US$330 billion this year, but that could be under threat too. China spent just US$17 billion in 1995 and US$94 billion in 2004. They’re serious about R&D.
R&D numbers, of course, vary wildly according to the way R&D is defined and how it’s taxed, so comparisons between countries can be misleading. But China is investing big in ideas and that’s great news for New Zealand. Our economies are complementary and we’re good at different things. Still, if you have a business idea for China, better act soon—before they think of it themselves.
Comments
jasonk
Measuring an input such as $ invested and hoping to make some sense of the R&D debate like that is always problematical. Better to also look at outputs such as patents as some form of measurement. On the patents / head of population measure NZ ranked fairly highly - not far off Switzerland where all those pharmaceutical companies are ramping the Swiss numbers. Would be interesting to know what the latest patent data shows.
Also look at how investment is funded and allocated. In NZ quite a few billion of the $ invested in residential property is actually funding businesses. This is because bank managers value a house more than they value a business.
Much of the NZ R & D spending is actually hidden in other budgets because the tax situation and funding situation is not so clear.
I'd also like to know what the Chinese R & D is being invested in.
Matt Cooney
I'd like to know too, but I've read the report itself (behind a pay firewall) and it doesn't go into detail on what the R&D money is being used for — more where it comes from. Which is why I think the numbers are most useful as an illustration of the value of new ideas in China today.
jasonk
The key point is size of growth (31%?) i.e they went from $94b in '04 to a projected $136b this year. So either they have changed the way they measure such investment or there is some significant R& D projects under way.
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