MD Research Development Romania 2014

Romania
Corporate R&D Report

2014
July 2014
Foreword
Reasons given for this low spend include alack of

perceived government incentives to encourage
expenditure, as well as thepoor promotion of those
that doexist, too much bureaucracy in theapplication
process and concerns about thetreatment of R&D
spending by thetax authority.
In 2014-2020, EUR 1,066,927,655 is allocated
through EU funds to Romania in order to support a
strengthening in research, technological development
and innovation. In this view, we are optimistic about
the increase in absorption rate of these funds.
It is my pleasure to introduce this report, which

attempts to assess thefactors that influence
Romanian companies spending on Research
& Development (R&D) and to identify those of
thegreatest importance to national economic success.
Today, R&D is widely recognised as akey driver of
global economic competitiveness. Indeed, in this
survey 81% of Romanian respondents say that in their
experience R&D expenditure results in theimproved
competitiveness of their products and services.
It is therefore somewhat surprising to see that
Romania as awhole spends just 0.49% of its GDP
on R&D, thelowest proportion among the10 CE
countries participating in thesurvey (theothers
being Bulgaria, Croatia, theCzech Republic, Estonia,
Hungary, Latvia, Lithuania, Poland and Slovakia).
That said, it is encouraging to note that over 80% of

respondents anticipate spending more over thenext
three to five years, while none expect to decrease
their R&D budgets. Still, there is avery long way to go
for Romania to achieve theEurope 2020 Strategys
target of 2% of GDP being allocated to R&D activities.
Perhaps thepublication of this report is just one small
step in that journey.
Iam very grateful to those enterprises, active in R&D,
who devoted some of their time to sharing their
views and helping enable this survey to take place,
and Ivery much hope that you will find this report
insightful.
Ahmed Hassan
Managing Partner
Deloitte Romania
Romania Corporate R&D Report 2014
R&D definition
According to theRomanian companies participating

in the2014 Corporate R&D survey, while R&D is
perceived as thedevelopment of new products,
processes and services (68%), it is seen even more
as making significant changes or improvements to
existing ones (79%). Almost half of thefirms involved
consider that R&D includes thejoint realisation of
research projects aimed at improving or developing
new products and services in collaboration with other
group entities/companies (46%).
Thedevelopment of animportant innovation or of

abreakthrough solution for various markets (25%)
and co-operation with external entities by means of
purchasing their R&D services, externally-developed
intellectual property rights or know-how (21%) are less
often seen as part being R&D.
Graph 1: What best describes your R&D activity?

Changes / improvements of existing products / processes /
services leading to better performance/characteristics
of products/processes/services
79%
Development of new products / processes / services
68%
Joint realization of research projects aiming at improvement

or development of new products / processes / services with
other group entities / companies
46%
Cooperation with external entities by means of purchasing

R&D services / IP / know-how
25%
Developing important innovation / a breakthrough solution

for various markets
21%
0%
20%
40%
60%
80%
100%
Human capital management focused

on retaining most valuable people
IP protection policy
Existence of R&D procedures (i.e. instructions
for planning and executing R&D projects)
R&D portfolio management (i.e. prioritizing
and resource allocation for R&D projects)
External cooperation
R&D financing
R&D organizational structure
0,0
Trademark
Company secrets policy
Copyright
Patents / utility design

Industrial design
0,5
1,0
1,5
2,0
2,5
3,0


19% of respondents said their companies didnt

have anR&D policy. As for theothers, thetwo most
Cooperation with external entities by means of purchasing
important aspects for
R&D policy are
R&Dthecompanys
services / IP / know-how
considered to be anIP protection policy (2.50) and
human capital, as in retaining themost valuable
people (2.58).
for various markets
Thespecialist literature considers employee retention

to be akey issue for many companies that have R&D
divisions. Some of thesolutions highlighted by experts
in this field as themost effective retention factors are
long-term career opportunities and aunique organisational culture that encourages high performance.

0%
20%
40%
Graph 2: P
lease rate importance of thefollowing aspects in your firms R&D policy
60%
80%

protection
or development of new products / processes IP
/ services
withpolicy
Cooperation with external
entities management
by means of purchasing
R&D portfolio
(i.e. prioritizing
R&D services
/ IP for
/ know-how
and resource
allocation
R&D projects)
100%
2,58
2,50
1,88
1,88
1,85

R&D financing
for various markets
1,85

0%
0,0
20%
0,5
40%
1,0
60%
1,5
1,69
80%
2,0
100%
2,5
3,0
Note: theimportance of theabove factors is rated on ascale from 0 to 3 where 0 means afactor without any influence
Human
capitalimportant
management
focused
and 3 means
themost
factor.
Trademark
Existence of R&D procedures
(i.e. instructions
Company
secrets policy
R&D portfolio management (i.e. prioritizing
As forand
intellectual
property,
relevant means of
resource allocation
forthemost
R&D projects)
Copyright
protection chosen by therespondents
were tradeExternal cooperation
marks (78%) and acompany secrets policy (56%).
R&D financingscore (11%).
Industrial design registered thelowest
R&D organizational
structure
Industrial
design
0,0
0,5
1,0
1,5
Graph 3: How doyou protect Intellectual Property
0% / know-how
20%in your company?
40%
2,0
60%
2,5
80%
3,0
100%
78%
Trademark
56%
Copyright
48%
33%
Industrial design
11%
0%
20%
40%
60%
80%
100%

IP protection
policy
other group entities
/ companies
planning
and executing
R&D
projects)
Cooperation withfor
external
entities
by means of
purchasing
services / (i.e.
IP / know-how
R&D portfolio R&D
management
prioritizing
R&D expenditure
for various markets
R&D financing
R&D organizational structure 0%
20%
0,0
40%
0,5
1,0
60%
1,5
80%
2,0
2,5
100%
3,0

IP protection
policy
Trademark
R&D portfolio management
(i.e. prioritizing
Thesurvey
shows that most respondent companies
(57%) spend up to 3% of their turnover on R&D.
Copyright
Only 3% of Romanian respondents told us that they

spend nothing at all on R&D.
Thehighest spending (over 5%) is claimed by 22% of

companies,
which mainly operate in theIT media and
R&D financing
telecommunications sector.
Industrial design
0,0
0,5your turnover
1,0 was spent
1,5 on R&D 2,0
Graph 4: What percentage
of
in 2013?
0%
Trademark11%
20%
40%
60%
2,5
80%
3,0
100%
3%
Nothing
11%
32%
Less than 1%
Between 1% and 3%
Copyright
18%
Between 3% and 5%
Between 5% and 10%
Above 10%
25%
Industrial design
0%
20%
40%
60%
Although most of therespondents state that they

donot spend very much on R&D, they also admit that
in their experience doing so increases thecompetitiveness of their products or services (81%).
80%
100%
However, it is interesting to note that 15% of

therespondents are unable to assess theimpact of
their R&D spend in this way.
Graph 5: From your experience, have R&D costs increased thecompetitiveness of your product/services?
100%
80%
15%
4% 60%
40%
Yes
No
20%
0%
Idont know
81%
Approximately
the same as in 2013
Higher than in 2013
No planned
R&D spending
Approximately
the same as in 2013
Higher than in 2013
No planned
R&D spending
100%
Titoktartsi szablyzat
80%
Szabadalom (hasznlati mintaoltalom)
60%
Vdjegy
40%
Szerzi jog
20%
Formatervezsi minta
0%
Nincsenek eszkzeink a vdelemre
0%
10%
20%
30%
40%
50%
60%
70%

Industrial design
0%
20%
40%
60%
80%
Asignificant percentage of companies (71%) intend

to increase theamount they spend on R&D in
theyears to come. Looking ahead by three to five
years, this percentage goes up to 81%. Theavailability of new, larger R&D grants which companies
also expect to see in years to come has asignificant
role to play in these expected positive changes.
100%
25% of companies expect to maintain R&D spending

at thesame level during thenext one to two years.
However, looking further ahead, this proportion
decreases to 15%. Its interesting to note that no
respondents are planning to reduce their R&D
spending in thefuture.
Graph 6: How would you foresee theR&D spending of your company?
100%
81%
80%
71%
60%
40%
25%
15%
20%
4%
0%
Approximately
the same as in 2013
Higher than in 2013
In thecoming 1 2 years
4%
In thecoming 3 5 years
No planned
R&D spending
lom (hasznlati mintaoltalom)

Vdjegy
Szerzi jog
Formatervezsi minta
senek eszkzeink a vdelemre
0%
10%
20%
30%
40%
50%
60%
70%
bility of more types of benefits

Costs of researchers
ity of experienced researchers
mpared to R&D tax incentives
ailability of skilled researchers
s of IP protection procedures,
rotection maintenance period
of intellectual property rights
of the regulatory environment
Access to and cooperation

universities/research institutes
100%
80%
60%
40%
20%
0%
Approximately
the same as in 2013
Higher than in 2013
No planned
R&D spending
One of thekey questions of this survey focused on

Szabadalom (hasznlati mintaoltalom)
theanalysis of those
external factors that could most
effectively encourage Romania-based companies to
Vdjegy
increase their R&D spending. Responses show that
themost important factors are theavailability
Szerzi jog of
various types of benefits (cash grants, tax allowances
Formatervezsi
minta are
etc.) and thecost of researchers.
These factors
closely followed by theavailability of experienced
researchers and agreater emphasis on cash grants, as
opposed to tax incentives.
0%
Although access to R&D sectoral benchmarks,

thestability of theregulatory environment and
thelack of R&D tax incentives compared to cash
grants are considered theleast important external
factors likely to influence anincrease in R&D spending,
they still registered among thepreferences of over
half of therespondents.
10%
20%
30%
40%
50%
60%
70%
Graph 7: To what extent would theexternal factors mentioned below influence theincrease of your R&D
spending in thecoming 1-2 years?
2.32
Availability of more types of benefits
2.29
Availability of experienced researchers
2.11
2.07
More R&D cash grants compared to R&D tax incentives
1.89
Availability of skilled researchers

Possibility of co-financing costs of IP protection procedures,
including costs of protection maintenance period
1.82
Protection of intellectual property rights
1.82
Stability of the regulatory environment
1.81

with universities/research institutes
1.64
Access to the R&D sectoral benchmarks
1.61
More R&D tax incentives compared to R&D cash grants
1.54
0,0
0,5
1,0
1,5
2,0
2,5
Note: the importance of the above factors is rated on a scale from 0 to 3 where 0 means a factor without any influence
and 3 means the most important factor.
Government Grants
Additional deduction
for eligible expenditures relating to R&D
Accelerated depreciation of assets used in R&D
0%
20%
40%
60%
80%
Formatervezsi minta
Usage of R&D grants and tax

incentives
0%
10%
20%
30%
40%
50%
60%
70%

As well as theexpectations and external factors

Availabilityof
of companies
skilled researchers
determining thelevel
R&D spending,
Possibility ofthesurvey
co-financingalso
costsexplored
of IP protection
procedures,
how familiar
companies are
with themost important government benefits (cash
grant schemes
and R&D tax incentives), and whether
or not they
useofthem.
Stability
the regulatory environment
As indicated in chart 8, 62% of thecompanies know

about and benefit from theaccelerated depreciation of assets used in R&D. In addition, over 50% of
respondents claim to be familiar with other incentives,
such as government grants and theadditional deduction for eligible expenditures relating to R&D, which
increased in 2013 from 20% to 50%. However, less
than half of them have actually used these benefits.

0,0
0,5
1,0
1,5
2,0
2,5
Graph 8: Awareness and usage of grants and tax incentives
31%
Government Grants
54%
31%
50%
62%
62%
20%
0%
40%
60%
80%
Awareness
Usage
My company is uncertain about the approach

of the tax authority with respect to R&D costs;
therefore I find the use of these tax incentives risky
R&D tax regulations are not clear
and are presenting too many risks for the company
My company is rather unfamiliar with R&D tax incentives

My company is familiar with R&D tax incentives
but uncertain about which activity could be classified as R&D
and how to prove that its activities are R&D
(classification of activities as R&D activities)
My company is not very familiar with the methods
on how risksrelated to classification
of its activities as R&D could be managed
I believe that my company does not carry out
any R&D activities/projects that would be eligible
for R&D tax incentives
My company is familiar with how to prove that its activities
are R&D but the companys reporting/cost tracking/
time sheet/etc. systems are not capable
of appropriate recording/proof of related costs

0,0
0,5
1,0
1,5
2,0
2,5
Government Grants
Themain obstacle to using R&D tax incentives

appears to be uncertainty about thetax authoritys
approach to thetreatment of R&D costs. Also, 46%
of companies are not familiar with R&D tax incentives.
In addition, it is important to note that almost half of
respondents (46%) consider R&D tax regulations0%to be
unclear and laden with risk for thecompany.
Further perceived difficulties in claiming R&D-related

tax benefits, cited by around one third of companies,
included uncertainty and risk-management issues
relating to theclassification of activities as R&D.
20%
40%
60%
80%
Graph 9: Companies statements about R&D Tax Incentives

54%

46%
46%
My company is familiar with R&D tax incentives

36%

32%

any R&D activities/projects that would be eligible
18%
My company is familiar with how to prove that its activities

are R&D but the companys reporting/cost tracking/
of appropriate recording/proof of related costs
7%
4%
Other
0%
Opportunities relevant for our company would require

involvement of partners (consortium),
but the nature of our R&D project/our business interests
do not allow such co-operation with third parties
Familiar with R&D grant opportunities but has no sufficient
resources to monitor such opportunities
and eventually prepare successful application(s)
Not very familiar with R&D grants
10
Familiar with R&D grant opportunities but do not use them
10%
20%
30%
40%
50%
60%


s uncertain about the approach
ority with respect to R&D costs;
use of these tax incentives risky My company is familiar with R&D tax incentives
&D tax regulations are not clear
too many risks for the company
familiar with R&D tax incentives

familiar with R&D tax incentives any R&D activities/projects that would be eligible
tivity could be classified as R&D
prove that its activities
are of
R&D
29%
thecompanies
surveyed
in Romania
are
My company is familiar with how to prove
that its activities
on of activities as R&D activities)
R&D
butmake
the companys
reporting/cost
tracking/
familiar are
with
and
use of R&D
grant programmes.
very familiar with the methods
However, 46% of respondents stated that, although
how risksrelated to classification of appropriate recording/proof of related costs
ities as R&D could bethey
managed
are familiar with R&D grant opportunities, they
are unable to benefit from them. This is because

Other
my company does not carry out
those
that are relevant require theinvolvement
s/projects that would be eligible
for R&D taxof
incentives
partners in aconsortium; thenature of these
respondents
R&D projects or business interests
h how to prove that its
activities
mpanys reporting/cost
tracking/
not
allow such co-operation with third parties.
eet/etc. systems are not capable
recording/proof of related costs
0%
does
At thesame time, 46% are familiar with

theprogrammes but are unable due to alack of
resources either to monitor grant opportunities or to
manage them once received. Asimilar percentage
of companies (46%) admitted alack of awareness
relating to R&D grants, while almost athird (32%)
said they were familiar with R&D grants but didnt use
10%
20%
30%
40%
50%
60%
them.
Graph 10: Companies statements about R&D grants

Other
Opportunities relevant for our company would require
involvement of partners (consortium),
0%
10%
20%
30%
40%
but the nature of our R&D project/our business interests
do not allow such co-operation with third parties
50%
46%
60%
Familiar with R&D grant opportunities but has no sufficient

resources to monitor such opportunities
46%
46%

for our company would require
ement of partners (consortium),
&D project/our business interests
h co-operation with third
partieswith R&D grant opportunities but do not use them
Familiar
portunities but has no sufficient

s to monitor such opportunities
prepare successful application(s)
32%
Familiar with R&D grants and use them
29%
ot very familiar with R&D grants

0%
10%
20%
30%
40%
50%
portunities but do not use them
with R&D grants and use them
Over three quarters (78%) of companies conduct

their R&D projects in collaboration with third parties.
10%of these (86%)
20% seems to
30%
Themain 0%
driver for most
be
theneed to carry out research projects.
On theother hand, themost important reason

for alack of collaboration with third parties is that
40%
50% have aRomania-based R&D centre
companies
already
within theorganisation (mainly in Bucharest).
Graph 11: Are you cooperating with third parties when you are carrying out R&D projects?
22%
Yes
78%
No
Universities/Academies of Science
Private R&D/scientific institutes
Public R&D/scientific institutes
Other, please specify below
11
0%
10%
20%
Almost half of respondent companies collaborate with

universities or academies of science. Private R&D/scientific institutes are partners for 38% of these companies,
and their public counterparts are partners to 29% of
these respondents.
30%
40%
50%
24% of these companies said they collaborate with

other public or private companies.
Graph 12: What entities are you cooperating with?
Universities/Academies of Science
48%
Private R&D/scientific institutes
38%
Public R&D/scientific institutes
29%
Other, please specify below
24%
0%
10%
20%
Finally, theparticipating companies were asked to

state some of thereasons why Romania has thelowest
R&D expenditure among the10 countries in thesurvey.
Themost common answers referred to thelack of
available grants, insufficient promotion and alack
of information available to Romanian companies.
Thelack of interest in R&D on thepart of government
and politicians, thenon-accountability of government
agencies and unclear legislation are additional issues
worth considering.
Other complaints included:
theexaggerated bureaucracy in meeting eligibility
criteria for co-financing
thedifficulties met in managing R&D funds (e.g. The
National Authority for Scientific Research activity
and procedures)
thefact that too few investors are willing to stimulate R&D activity
adistrust of thestates long-term and medium-term
economic policies
themajor technological gap between Romania and
other more developed countries
thelack of awell-known and regulated national
programme to stimulate R&D activities.
30%
40%
50%
Other reasons given included thesmall size of thelocal

market, thelimited number of local commercial
success stories, thelocal experts who are leaving
thecountry (and not being encouraged to come back)
and thelack of educational standards in universities
(both for teachers and students).
TheEurope 2020 Strategy aims to foster smart growth
by supporting sustained investment in innovation.
In 2012, Romania invested only 0.49% of GDP in
Research & Development, with more than 80%
accounted for by theRomanian public sector. Asteep
change in behaviour is needed in order to achieve
thenational Europe 2020 target of 2% of GDP by
2020. Country Specific Recommendations 2013 envisaged closer links between research, innovation and
industry, in particular by prioritising R&D activities that
have thepotential to attract private investment.
Thestrategy identifies thefollowing thematic priorities
related to public research, development and innovation (RDI) investments for thenext six years:
Bio-economy (agriculture and forestry, fisheries
and aquaculture, food, biotechnologies and
biopharmaceuticals)
ICT, space and security
Energy, environment and climate change
Eco-nano-technologies and advanced materials
Health.
12
Regional
perspective
13
Partners Foreword
TheEuropean Commissions Innovation Union

Scoreboard 2014 shows that among countries
taking part in thesurvey, only Estonia is ranked
in thegroup of so-called innovation followers
(those whose innovation performance is close
to or above theEU average). Croatia, theCzech
Republic, Hungary, Lithuania, Poland and Slovakia are
among themoderate innovators with performance
below theEU average, while Bulgaria, Latvia and
Romania are rated as modest innovators (innovation
performance well below theEU average).
Central European countries are in theprocess of

transforming into knowledgebased economies.
They can no longer compete with low-cost labour
on theglobal market. This has already been
acknowledged by Asian countries, whose share in
global spending on R&D is still rising from 33% in
2009 to nearly 40% in 2014 (and Chinas from 10%
to nearly 18%). In themeanwhile Europe is decreasing
its participation down from 26% of thetotal in
2009 to 22% in 20141.
After political changes, countries in theregion have
begun their transformation from asimilar level
although currently they are at different stages of
development.
Innovation-wise we all are looking in thesame

direction. However, adifferentiated approach to
supporting R&D is apparent across theregion. As
thefindings of last years survey showed, theR&D
activities of companies vary across theregion and
different factors are influencing increase of spending
on R&D. Much is however to be learnt and shared
this is one of main reasons for covering additional
countries in this years survey, gathering data from 10
countries in theregion. This brings us theopportunity
to compare how countries stimulate R&D activities,
how implemented systems are evaluated by
enterprises and how this impacts theeffectiveness of
various systems.
Supplementary to theon-line survey, we have
conducted detailed interviews with representatives of
some of thebest-known R&D developers in theregion.
Key quotes from these interviews provide avaluable
complement to thesurvey conclusions presented in
thereport.
Ivery much hope that you find this report
aninteresting and insightful read.
Magdalena Burnat-Mikosz
Partner
Central European Leader for Deloitte R&D
and Government Incentives Service Line
12014
14
Global R&D Funding Forecast by Battelle and R&D Magazine
Key trends and findings:

Availability of more types of incentives is still themost important factor
affecting thelevel of expenditure on R&D. Results of thesurvey show that
cash grants are only aslightly more frequently expected incentive than
tax reliefs amixed system, combining these two schemes, is perceived
as themost effective way to support companies R&D activities. In
order to maintain thepresent rising trend of companies share in R&D
expenditure, it is essential to adjust thesupport schemes available in
Central Europe to match enterprise expectations2.
Predicted percentage of R&D expenditures is declining overall more
companies are allocating less than 1% and under 3% of their turnover
to R&D, while those allocating over 10% have declined from 24% to
22.1% of thesample. As indicated above, theavailability of incentives
strongly influences R&D spending; this means slightly pessimistic
forecasts regarding short-term R&D spending may result from ongoing
work on support schemes under theEU 2014-2020 agenda and limited
availability of grants.
Increasing numbers of companies are collaborating with research units,
indicating atrend towards strengthening co-operation between business
and science. Theproportion of companies with their own R&D centre is
also growing, and this results in thefact that theavailability of skilled and
experienced researchers is one of themost important factors influencing
R&D expenditure. However, thepossibility of co-operating with
universities / research institutes is still highly appreciated and desirable in
R&D activities.
15
Key trends and findings:

We can see anumber of changes in how companies define R&D and
their R&D activities. While theproportion of firms in 2014 defining
R&D as changes / improvements of existing products / processes / services
leading to better performance / characteristics of products / processes / services
has fallen from 67% to 65.2%, this selection has also moved up from
third to first place. Theleading definition in 2013 (Development of new
products / processes / services) has fallen from 88% to 60%, while thethird
most popular definition is joint realisation of research projects aimed at
improvement or development of new products/processes/services with other
capital group entities/companies. (It rises from fourth to third despite
areduction in support from 49% to 29.4%). Clear and transparent
understanding of R&D is being underlined by firms in theregion as
important factor for all support schemes.
IP / know-how are protected usually in theform of acompany secrets
policy and trademarks. However, companies declare that themost
effective way is to combine different forms of protection and tailor them to
thespecific needs of different sectors.
2In
2011 BERD (Business Expenditures on R&D) index value for Europe Union was 54.9% and only Estonia had this index value above
theaverage (55%). Thelowest index was in Bulgaria (16.9%), Latvia (24.8%), Poland (28.1%) and Lithuania (28.2%) Eurostat
16
Findings
Definition of companies R&D activities

Within last years survey, respondents were asked
to define their understanding of R&D. This year, we
invited them to describe their R&D activities and
there have been some major changes in their answers.
2014s third most popular definition, with 29.4%, is

theJoint realisation of research projects aimed at
improvement or development of new products /
processes / services with other capital group entities
/ companies. In the2013 report, this was number
four with 49%. This year, it was driven up by above
average scores in Romania (over 46%) and Estonia
(over 37%).
In the2014 report, 65.2% of companies across

theregion defined R&D activity as making Changes
/ improvements to existing products / processes /
services, leading to better performance / characteristics of products / processes / services. This was asmall
decline comparing to 2013s 67%, but despite this
thedefinition has moved up from number three to
thenumber one choice. Its new popularity was driven
up by above average selection in Estonia (87.5%) and
Romania (78.6%).
Perhaps themost significant change in thedefinition

of R&D activities appeared within theCo-operation
with external entities by means of purchasing R&D
services/IP/know-how. This has been observed
particularly among Polish respondents last year, 68%
declared that it is how they understand R&D activities;
this year, that figure went down to 19.4%.
In the2013 report, theleading definition of choice

was theDevelopment of new products / processes
/ services, chosen by 88% of respondents. In 2014,
this has slipped to 60%, although it attracted 75% of
respondents in Lithuania.
What best describes your R&D activity?
Changes / improvements of existing products /

processes / services leading to better performance /
characteristics of products/processes/services
65,2%
67,0%
60,0%
88,0%

or development of new products / processes /
services with other capital group entities / companies
29,4%
49,0%
24,5%
Developing important innovation /

a breakthrough solution for various markets
81,0%
13,9%
Cooperation with external entities by means

of purchasing R&D services / IP / know-how
25,0%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
2014
2013
17
Spending on R&D
The2014 report shows that in 201320.6% of
companies allocated less than 1% of their turnover
to R&D this went up from 15% in 2012. There was
also anincrease in companies allocating less than 3%
of their turnover to R&D (rising to 41.8% from 36%
in 2012).
Meanwhile, just 22.1% of companies allocated more
than 10% of their turnover on R&D, down from
24%. However, in Slovakia (as in theprevious year)
and Bulgaria thepercentage is well above average at
54.5% and 40% respectively.
Only 5.5% of companies allocated no expenditure
for R&D activities in 2013, down from 2012s 10%.
Changes / improvements of existing
products
/ and Poland (9.7%), however both
Hungary
(17.8%)
processes / services leading to better performance /
significantly
exceeded
theaverage.
characteristics of products/processes/services
Development of new products / processes
/ services
20.5% of
companies in Croatia, 12.1% in Slovakia and
11.1% in Poland donot know how much expenditure

has been
allocated
or development of new products
/ processes
/ to R&D activities. In Poland, this
services with other capital group entities
might/ companies
be thecase because there are no effective
incentives
in place
Developing important
innovation
/ that encourage them to keep solid
a breakthrough solution for
variousof
markets
records
their R&D expenditure.
Across theregion, 88.5% of companies plan to

maintain thecurrent level of spending or increase
it in theshort term (one to two years). At thesame
time, 89.7% expect to maintain or increase spending
in thenext three to five years. All therespondent
companies in Lithuania and Estonia are confident that
there will be no decrease in spending on R&D over
thenext five years.
Across theregion, 4.8% of respondents expect to
make no expenditure in thenext five years - only in
Bulgaria, Estonia and Lithuania did no respondents
make this claim. It is also worth noting theresults
from Romania, where 67.9% of companies plan
to increase expenditure in thenext two years and
78.6% in thenext three to five years (theaverages for
theregion are 42% and 58% respectively).
Responses indicate positive forecasts in terms of
theeconomic situation of companies, and may result
from thefact that in years to come significant R&D
support will be available from EU funds.

What percentage of
your turnover
on R&D40%
in 2013?
0%
10% was
20%spent30%
50%
7,3%
5,5%
60%
70%
Above 10%
22,1%
Between 5% and 10%

Between 3% and 5%
Between 1% and 3%
20,6%
12,4%
Less than 1%
None
21,2%

18
Access to and cooperation with universities / research

10,6%
Idonot know
80%
90%
Developing important innovation /

a breakthrough solution for various markets
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
To what extent would theexternal factors mentioned below influence theincrease of your R&D spending in thecoming 1-2 years?
2,11
2,22

1,94
1,92
1,87
1,82
1,67
1,78
1,44
1,54
1,42
1,5
1,61

1,36
1,32
1,29
1,28

Possibility of cofinancing costs of IP protection procedures,
1,21
0,32
Other factors
1,14
0,0
0,5
1,0
1,5
2,0
2,5
0,4
0,8
1,2
1,6
2,0
2014
R&D financing
2013
Human capital management focused on recruiting

and retaining most valuable people
0,0

Trademark
Copyright
Industrial design
None
19
As in theprevious survey, themost important factor

affecting thelevel of expenditure on R&D over
thenext two years is to be theavailability of more
types of incentives this was chosen as themost
important factor by more than 50% of companies in
Bulgaria, Estonia and Romania, and almost 54% of
companies in Poland.
Thenext most important factors are theavailability of
skilled and experienced researchers (particularly important in Bulgaria and Lithuania, where it is themost
important factor for over 60% of companies) and
issues related to thecost of R&D activities (selected by
50% of companies from Lithuania).
Theinternational experience of GM indicates

that theavailability of incentives for R&D
activities, that may be anelement of along-term
development strategy, significantly facilitates
acquisition and execution of high-tech projects
by companies in local countries.
Pawe Widel, Governmental Relations Director,
General Motors Poland Sp. zo.o.
Respondents indicate that theavailability of grants

stimulates spending more than theavailability of tax
incentives. This is particularly thecase for companies
in Bulgaria and Poland, where 48% or more chose this
answer. Theimportance of grants is growing too in
2014, they were chosen by 34.5% of respondents
across theregion, compared to 22% in 2013.
20
In Slovakia, while over 50% of companies declare

that grants are more important than tax incentives in
influencing their R&D expenditure, only 12% say more
tax incentives would not be aninfluencing factor. This
is of significant importance as anew tax incentive
is to be introduced there on July 1st 2014, which is
expected to have apositive impact on R&D spending
in Slovakia.
One factor that has declined in importance is
thestability of theregulatory environment. In 2013,
this was thefactor with thegreatest impact on
expenditure for 22% of respondents; in 2014, it has
fallen to 18.8%. This may mean that there is agenerally positive attitude to those authorities that have not
made significant changes in thelegislation regulating
R&D.
Almost 47% of companies in Latvia consider
thepossibility of co-financing thecosts of IP protection procedures, including thecosts of maintaining
protection, to be afactor with no influence on their
R&D spending.

Companies R&D policies and Intellectual Property / know-how protection
Almost 21% of companies Costs

in theregion
say they have
of researchers
no R&D policy. Clearly above average in having no
Access
to and
/ research
policy
arecooperation
companieswith
fromuniversities
Estonia (50%),
Hungary
(42.2%), Croatia (28.2%) and Poland (27.8%).
Thekey factors for themajority of R&D policies are

sources of funding and theavailability of appropriate human resources. In terms of R&D financing,
anabove average number of responses indicate
that this isAccess
themost
factor
for companies
to theimportant
R&D sectoral
benchmarks
from
Romania
(57.1%),
Slovakia
(45.5%)
and Poland
(43.1%).
At thesame time, 15.6% of companies from Hungary

declare that this is afactor without any influence at all
on their R&D policy.
Significant numbers of companies in Romania (60.7%),
Slovakia (54.5%) and Lithuania (50%) recognise
and retaining themost valuable people as themost
important factor.
Other factors
0,5
0,0
Please rate importance of thefollowing aspects in your firms R&D policy

(0 - no influence, 3 - highest influence)
1,0
1,5
2,5
2,0
R&D financing
1,96

1,92
1,80
1,48
1,46
1,44
1,34
0,0
0,4
0,8
1,2
1,6
2,0

Trademark
Copyright
Industrial design
None
0%
10%
20%
30%
40%
50%
60%
70%

21

Themost common means of protecting IP / know-how

(atsectoral
64.8%benchmarks
firms across theregion) is thecompany
Access to the R&D
secrets
policy.
This is above average in Estonia (87.5%),
including costs of protection
maintenance
Croatia
(79.5%)period
and Poland (76.4%). Thetrademark
is themost popular form of protection in Romania
Other
factors(53.3%). 44.2% of companies in
(75%) and
Bulgaria
theregion benefit from patent protection, but only
23.1% doso in Croatia and 20% in Latvia. While 9.7%
0,5
0,0
1,0
of companies in Central Europe donot protect their
IP / know-how, this figure is significantly higher in
Hungary and Lithuania (25%). All respondents from
RomaniaR&D
andfinancing
Estonia declared that they protect their
Human capital management
on recruiting
IP /focused
know-how.
Themost efficient and effective

way to manage intellectual
property rights is atailor-made
policy that combines patents
2,5
2,0
and1,5trade secrets
protection.
ukasz Socha, Vice President, HS Wrocaw sp. zo.o.

0,0
0,4/ know-how0,8
1,2
How doyou protect Intellectual
Property
in your company?
1,6
2,0
64,8%
43,0%
Trademark
41,5%
Copyright
30,0%
Industrial design
None
0%

on how risks related to classification
My company is familiar with R&D tax incentives but uncertain
about which activity could be classified as R&D and how to prove
that its activities are R&D (classification of activities as R&D activities)
22
I believe that my company does not carry out any R&D activities /
projects that would be eligible for R&D tax incentives
20,0%
9,7%
10%
20%
30%
40%
50%
60%
70%
0,0
0,5
1,0
1,5
2,0
2,5
0,0
0,4
0,8
1,2
1,6
2,0
R&D financing
Usage of R&D grants and tax incentives
Increasing numbers of companies say they are not very

benefitting from it, leading to astrong preference for
familiar with themethods of managing risks associCompany secretsgrants
policy (as shown by theanswer to theprevious quesated with theclassification of their activities as R&D;
tion). There is alack of knowledge about tax incentives
this has risen from 19% in 2013 to 22.7% in this
years
Patents
/ utilityamong
design 67% of companies from Bulgaria. In Latvia,
report. Also rising are those saying that R&D tax regu60% of companies state that they donot carry out
Trademark
lations are not clear and present thecompany with
any R&D activities or projects that would be eligible for
too many risks (up from 18% to 22.1%). These findR&D tax incentives. This is animportant finding given
ings may mean that thesystems of R&D tax incentives Copyright
theintroduction of anew R&D tax incentive on July
are becoming unclear; fewer companies are therefore
1st 2014.
Industrial design
None
0%
Companies statements about R&D tax incentives
10%
20%
30%
40%
50%
60%
70%
27,6%
25,3%

27,3%
27,5%

22,7%
18,5%
22,1%

17,6%

22,1%
23,2%
18,8%
20,6%
My company is familiar with how to prove that its activities are R&D
but the companys reporting / cost tracking / time sheet / etc. systems
are not capable of appropriate recording / proof of related costs
13,3%
12,9%
11,5%
Other
11,6%
0%
5%
10%
15%
20%
25%
30%
2014
2013
23

Across theCE region, 37% of companies are familiar
My company is familiar with how to prove that its activities are R&D
with and use R&D grant opportunities (up from 31%
but the companys reporting / cost tracking / time sheet / etc. systems
in the2013
survey).
This
are not capable of appropriate
recording
/ proof
of proportion
related costsis particularly high
in theCzech Republic (almost 60%) and far below

Other At thesame
average in theBaltic countries (16%).
time, 23% of respondents across theregion are not
very familiar with R&D grants (rising to 43.6% in
0%
5%
Croatia and 42.9% in Romania).
In addition, 19.4% of respondents indicate that

they donot have sufficient resources to monitor
grant opportunities and submit asuccessful
application (down from 25% in 2013); in Poland,
however, thefigure is almost twice as high at 36.1%
(anincrease from 29% in 2013). Such answers about
discouraging bureaucracy and doubts concerning
10% of available
15% sources
20%
25%
30%
theuse
of support
are particularly
alarming when we consider that companies claim that
their R&D spending is largely determined by theavailability of external funding.
Companies statements about R&D grants
37,0%
30,5%
23,0%
21,9%
19,4%
Has no sufficient resources to monitor such opportunities

24,5%
13,6%
Do not use them
15,5%
Grant opportunities relevant for our company would

require involvement of partners (consortium), but the nature
of our R&D project / our business interests do not allow
such co-operation with third parties
9,4%
4,3%
0%
5%
2014
2013
24
10%
15%
20%
25%
30%
35%
40%
Other
0%
10%
5%
15%
20%
25%
30%
Do not use them

of our R&D project / our business interests do not allow
0%
5%
10%
15%
20%
25%
30%

D grants and use them

Co-operation
with third parties while carrying out R&D projects

Do not use them
Avery high proportion (78.2%) of companies say they

While most companies in theCE region co-operate
work
with
third
parties
during
theimplementation
of
with universities / academies of science, there is
ofR&D
our R&D
project
/ our
business
do While
not allow
projects
(up
from
65%interests
in 2013).
themost
anincrease in theimportance of public and private
itor such opportunities
important primary factor driving co-operation across
R&D / scientific institutes (29.8% and 35.7% respecuccessful application(s)
15%
25%
30%
35%
40%
10%
0%
5% tively,
theregion is that its vital to carrying out projects,
up from
25.8%20%
and 33.8%).
grant requirements and thepossibility of receiving
Do not use them
higher funding are almost equally important in Poland.
For those companies that have their own R&D centres
or our company would
(either within theimmediate structure of thebusiness
ortium), but the nature
or in asister firm in thesame capital group), this is
interests do not allow
themost important reason for not collaborating with
ation with third parties
third parties.

miliar with R&D grants
0%
5%
10%
15%
20%
25%
30%
35%
40%
Cooperation with third parties when thecompanies are carrying out R&D projects
7,4%
43,1%
21,8%
25,2%
43,1%
68,6%
78,2%
22,5%
20,8%
Our Company has got anR&D Centre
Yes
It is needed for conducting out research projects
Our Company has got anR&D Centre in other firm

of capital group
No
It is required in order to receive higher cash grant for

conducting anR&D project
Other reason
It is required to apply for grant

Other reason
25
35%
Regional contacts
R&D and Government Incentives
CE Clients & Markets
CENTRAL EUROPE
Partner
Phone: +48 225110065
E-mail: mburnatmikosz@deloittece.com
LATVIA
Jnis upns
Director
Phone: +371 (6) 7074171
E-mail: jcupans@deloittece.com
BULGARIA
Georgi Sarakostov
Partner
Phone: +359 (2) 8023118
E-mail: gsarakostov@deloittece.com
LITHUANIA
Tatjana Vaiiulien
Director
Phone: +370 (5) 2553004
E-mail: tvaiciuliene@deloittece.com
CROATIA
Sonja Ifkovi
Director
Phone: +36 12351915
E-mail: sifkovic@deloittece.com
POLAND
Partner
Phone: +48 (22) 5110065
E-mail: mburnatmikosz@deloittece.com
CZECH REPUBLIC
Ludk Hanek
Director
Phone: +420 246042108
E-mail: lhanacek@deloittece.com
Micha Turczyk
Director
Phone: +48 (12) 3944338
E-mail: mturczyk@deloittece.com
ESTONIA
Veiko Hintsov
Partner
Phone: +372 6406512
E-mail: vhintsov@deloittece.com
HUNGARY
Dr.Csaba Markus
Director
Phone: +36 (1) 4286793
E-mail: csmarkus@deloittece.com
26
ROMANIA
Oana Petrescu
Partner
Phone: +40 (21) 2075288
E-mail: opetrescu@deloittece.com
SLOVAKIA
Martin Rybar
Director
Phone: +421 258249113
E-mail: mrybar@deloittece.com
Halina Fraczak
Director
Phone: +48 (22) 5110021
E-mail: hfranczak@deloittece.com
Cem Turan
Manager
Phone: +420 234078464
E-mail: cturan@deloittece.com
Local contacts
Ahmed Hassan
Managing Partner
Tel.: +40 (21) 2075260
E-mail: ahhassan@deloittece.com
Oana Petrescu
Partner in Charge, Management Consulting
Tel.: + 40212075288
E-mail: opetrescu@deloittece.com
Tiberiu Negulescu
Manager, Management Consulting
Tel: + 40212075307
E-mail: tnegulescu@deloittece.com
Ioana Bardan
Senior Co-ordinator, Clients & Markets
Tel: + 40212075452
E-mail:ibardan@deloittece.com
27
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Romania

Corporate R&D Report

Reasons given for this low spend include alack of

It is my pleasure to introduce this report, which

That said, it is encouraging to note that over 80% of

Romania Corporate R&D Report 2014

According to theRomanian companies participating

Thedevelopment of animportant innovation or of

Graph 1: What best describes your R&D activity?

Development of new products / processes / services

Joint realization of research projects aiming at improvement

Cooperation with external entities by means of purchasing

Developing important innovation / a breakthrough solution

Human capital management focused

Patents / utility design

Changes / improvements of existing products / processes /

Development of new products / processes / services

19% of respondents said their companies didnt

Thespecialist literature considers employee retention

Changes / improvements of existing products / processes /

Development of new products / processes / services

Developing important innovation / a breakthrough solution

R&D organizational structure

Patents / utility design

Romania Corporate R&D Report 2014

on retaining most valuable people

R&D organizational structure 0%

Human capital management focused

Only 3% of Romanian respondents told us that they

Thehighest spending (over 5%) is claimed by 22% of

R&D organizational structure

Patents / utility design

Although most of therespondents state that they

However, it is interesting to note that 15% of

Higher than in 2013

Higher than in 2013

Patents / utility design

Asignificant percentage of companies (71%) intend

25% of companies expect to maintain R&D spending

Graph 6: How would you foresee theR&D spending of your company?

Higher than in 2013

lom (hasznlati mintaoltalom)

senek eszkzeink a vdelemre

bility of more types of benefits

ity of experienced researchers

mpared to R&D tax incentives

ailability of skilled researchers

of the regulatory environment

Access to and cooperation

Romania Corporate R&D Report 2014

Higher than in 2013

One of thekey questions of this survey focused on

Although access to R&D sectoral benchmarks,

Availability of more types of benefits

More R&D cash grants compared to R&D tax incentives

Availability of skilled researchers

Protection of intellectual property rights

Stability of the regulatory environment

Access to and cooperation

Access to the R&D sectoral benchmarks

More R&D tax incentives compared to R&D cash grants

Accelerated depreciation of assets used in R&D

Usage of R&D grants and tax

Graph 1: What best describes your R&D activity?