Why American companies refuse to make China their main innovation hub

Fewer than 4 per cent of American businesses said China was their most important research and development (R&D) centre owing to the lack of intellectual property rights (IPR) protection, limited market access and unfair business environment, according to a survey by the American Chamber of Commerce (AmCham) in Shanghai.

The findings come despite intensifying efforts by the Chinese authorities to encourage R&D and foster an innovation-friendly environment. They echo Washington’s criticism of China’s IPR and technology transfer policies amid festering trade tensions.

Based on a survey of 52 members and in-depth interviews with company officials, the Shanghai-based business lobby group found that only two respondents viewed their R&D facilities in China as the most important part of their global research and development operations.

“Respondents indicated that China remains of relatively low importance compared to other regions,” the AmCham said in the report released on Thursday. “The majority said China was only one of many important global R&D centres or of minimal importance.”

Three quarters of American companies operating in China established their own local R&D facilities as they aimed to “meet the demands of the local market,” the survey showed.

Beijing encourages the establishment by companies of R&D facilities to support its aim of becoming a global powerhouse in technological innovation by 2050.