Can China Become a Nano Innovator?

An investigation into the Chinese nanotechnology communities in Shanghai and Suzhou Industrial Park
Matthew Gebbie
Materials Science

Shirley Han
Ecology, Evolution and Marine Biology

Galen Stocking
Political Science

This material is based upon work supported by the National Science Foundation under Grant No. SES 0531184. Any opinions, findings, and conclusions or recommendations expressed in this material are those of the author and do not necessarily reflect the views of the National Science Foundation. It was conducted under the auspices of the UCSBs Center for Nanotechnology in Society (www.cns.ucsb.edu)

Agenda
Methods Overview of Government Policies Cultural and Social Challenges

Methodology
Previous Trips
2003, 2007, 2010 Visited Beijing, Shanghai, SIP Met with innovators at early stage of Chinese nano innovation

2012 Trip

April 16-29, 2012 Visited Shanghai and SIP Met with a variety of innovators: Entrepreneurs University professors SIP administrators Scientists Investigated corporate and social culture, state of innovation, funding levels, government role

Suzhou Industrial Park

Suzhou Industrial Park:
100 sq miles 1,000 high-tech companies 2010 output = $22 billion

Nanopolis: 150+ Nanotech startups

18 universities with 70k students 28k nanotech scientists 10 research institutions 148 Fortune 500 companies

China in Transition
From the worlds factory to the worlds innovator Huge middle class = huge market potential Brand image problems

Chinese approach
China seeks to cultivate long term growth and indigenous innovation Has implemented a multiple, and often contradictory strategy

Characteristics: Strong role for government Often attempts to stimulate market mechanisms Seeks to overcome cultural norms and business practices that hinder growth

Governmental Programs
MLP, 12th Five Year Plan Regional strategies and competition Grants and directed manufacturing Regional economic zones Government sponsored VC companies
Goal is to become an innovation-oriented society by 2020 by leapfrogging development through indigenous innovation ( zizhu chuangxin)
blogs.wsj.com

Weak Human Resources, Reliance on Returnees

Comparatively fewer field-leading experts Returnees do not want to return Best and brightest students go abroad
People would rather stay in the United States if given the choice, but with current economic conditions and decreased funding opportunities, increased numbers of Chinese nationals are deciding to go back to China -Small business owner/entrepreneur April 2012

http://www.businessweek.com

Strong Infrastructure
Strong central planning and investment Extensive construction Significant expenditures to obtain R&D-related capital
Everything is going too fast[references the size of constructed and planned Sinano buildings]this is unnecessary

--Professor, CAS, SINANO April 2012

Business Culture
Guanxi culture
Focus on non-business related activities Potentially detrimental business social norms Often linked to corruption, bribery, and a lack of ethics
One must spend a lot of time on guanxiguanxi can facilitate the progress of a company but it is a necessary evil to do business in China because it is extremely hardphysically to take people out and be forced to drink, to give face

Small business owner/ entrepreneur - April 2012

VCVC Culture
State-funded VC
Young, idealistic investors genuine interest in China Long term investments sustainable growth
Government-backed VC funds are an important tool for promoting high-tech development
-- Chinese VC investor April 2012

Weak IP and legal protections

Guanxi connections to ensure investments Weak contracts Unsophisticated business law

Research and Academic Culture

Project 985 and 211
World class level universities
The pressure is on the young faculty to produce research and papers. There is much pressure to publish and patent. I work 15 hours a dayuntil 11 at night7 days a week since I started.

--Chinese Professors - April 2012

Reward system for publications

Low-quality publications Plagiarism

http://funsom.suda.edu.cn/

Educational Culture
History
Dates back to 600AD Imperial civil service examinations
Experimental colleges show that the central government recognizes [the lack of creativity in Chinese students as a] problem, but maybe is not willing to actually enact educational reform. --Chinese Professor - April 2012

Lack of creativity and originality in students

Rote memorization Lack of questioning authority

http://funsom.suda.edu.cn/

Can China Become a Nano Innovator?

Can China Become a Nano Innovator?

Not a high quality innovator yet but could be Preliminary evidence shows that the government is trying, but inconclusive on their success Will need to overcome substantial barriers: Culture Business practices and corruption Legal practices Contradictory policies

Thank you! ! Dank! Questions?

Innovation Factors
Investment in long-term research Educated workforce Quality research Environment of innovation:
Low corruption Innovative cultural norms

Medium to Long-Term Plan (MLP) & 12th Five Year Plan (2011-2015)
Innovation as centerpiece of economic strategy Innovation-oriented society from made in China to designed in China 7 strategic emerging enterprises (SEIs) include biotech, new materials (nanotech) shift to consumption-led growth: less dependent on state infrastructure investment; increase consumption (now 35% GDP) via health care, pension, housing spending green development: reduce carbon emissions as per unit GDP by 17% industrial upgrading through re-innovation of foreign technology catch up to US in terms of % GDP invested in research

Regional Strategies
Central govt granted regions considerable economic authority Cities and provinces established quasi-governmental agencies to bolster local nano business
They also try to lure businesses away from other cities with subsidies

Still, central govt keeps a tight reign on activity

Penalties Appointments

Grants and Directed work

Considerable grant subsidies 10M RMB to billions Govt list of desired products and research
Commissions dont develop companies
--Small business owner/ Entrepreneur April 2012

Companies that get government funding arent hungry

--Small business owner/ Entrepreneur April 2012

Economic Zones
Regional economic zones like Suzhou Industrial Park combine government, universities, entrepreneurs, and MNCs Incubators within the region offer additional subsidies grants, rent and employee subsidies
Use competitive award process Also conduct workshops, coordinate collaboration

Still, often supports short term growth over long term