China’s top private enterprises are ramping up their research and development (R&D) expenditures, reflecting a shift toward innovation to become more competitive on the global stage. According to a report by the All-China Federation of Industry and Commerce (ACFIC), total 2023 R&D expenditures for the top 1,000 private firms reached CNY1.39 trillion, up 4.78% year-on-year. They accounted for 41.88% of the nation’s overall R&D spending. The manufacturing sector emerged as a major contributor, with total R&D expenditures surpassing CNY1 trillion last year. The highest R&D investments were in the computer and electronics sector, which invested CNY318.47 billion with an impressive average R&D intensity of 8.34%. It was closely followed by the internet and related services sector at CNY245.07 billion and the automotive industry at CNY142.56 billion.
China's top leadership emphasized earlier this year the need to deeply integrate technological innovation with industrial innovation to develop new quality productive forces, highlighting the importance of reinforcing the role of enterprises as key innovators. Gao Yunlong, Chairman of ACFIC, said: “Private enterprises are expected to lead technological innovation, drive revolutionary breakthroughs and increase R&D investments. They can also strengthen the deep integration of industry, academia and research institutions, and play a greater role in strengthening and supplementing key industrial chains, as well as in the transformation of technological achievements and self-reliance.”
China’s R&D efforts are increasingly narrowing the gap with other leading economies. Some 217 of the global top 1,000 R&D-invested firms are from China, with total R&D investments amounting to CNY1.27 trillion. The year-on-year growth rate of R&D expenditures for these top 1,000 private enterprises last year was 12.78%, a growth of 6.54% for the global top 1,000 and 7.68% for the European Union. The average R&D intensity for the top 1,000 private enterprises was 3.58%, 0.31 percentage points higher than that of the top 1,000 firms in the EU.
Xu Qin, Party Secretary of Heilongjiang province, said that the province will implement more supportive policies for the development of the private economy to invigorate its growth. “Efforts will also be made to create a top-tier business environment, ensuring comprehensive support for enterprises, enhancing gains for entrepreneurs, and contributing to the overall revitalization of Northeast China,” Xu said. China is expected to scale up R&D expenditures by more than 7% annually during the 14th Five Year Plan (2021-25) period. Consultancy McKinsey & Co said in a report that such a growth target will make China the world’s largest R&D spender.
Wang Peng, Senior Researcher at the Beijing Academy of Social Sciences, said that amid a global economic slowdown, encouraging the private economy to increase R&D efforts is important. “The Chinese economy will continue gathering momentum if the private sector, including smaller businesses, remains sound, given that many SMEs are being increasingly recognized for their role as leaders in new concepts and new business models,” Wang said, as reported by the China Daily.
Swiss management consulting firm dss+, formerly known as DuPont Sustainable Solutions, will expand its business in China in the coming years, said Davide Vassallo, CEO of dss+, which became independent from U.S.-based DuPont Group in 2019. China’s GDP growth of 5% is outstanding for any European country, Vassallo said, adding that to further tap into such a market, productivity and innovation should be given full play. “Productivity is to release the value, and innovation is to create the value. They are two very powerful tools in this economy to continue to grow,” Vassallo said. According to an IBISWorld report, with the continuous growth of the Chinese economy and increasing demand from enterprises to improve management efficiency and reduce costs, the market size of the management consulting sector is growing rapidly, providing a broad development space for management consulting firms. The management consulting market in China is expected to grow at a compound annual growth rate (CAGR) of 5.2% from 2019 to 2024, reaching an estimated USD39.2 billion by 2024, the the China Daily adds in a separate article.
