China is 'on the way' in innovation, report says

China's increasing research and development spending is strengthening its ability to compete with the United States in the global marketplace, says the director general of the World Intellectual Property Organization, or WIPO, a United Nations agency.

Francis Gurry, a member of a panel that discussed countries' ranking in the 2013 Global Innovation Index in New York on Monday, said China's performance shows that the country is "on the way".

"You can see the enormous investment China is putting into research and development - now the second biggest developer in R&D after the United States," Gurry told China Daily in an interview following the panel discussion.

The index is jointly published by Cornell University, France's Insead business school, and WIPO, and was released in Geneva on July 1 at the United Nations Economic and Social Council meeting. In innovation, the Chinese mainland fell one spot from last year to 35 in the index. Hong Kong moved up one to seventh. The US moved from 10th last year to rejoin the five most-innovative nations , while Switzerland retained its position as No 1. Index authors attributed the ranking changes mainly to changes in methodology rather than to changes in the countries' level of innovation.

Gurry said China's overall score doesn't reflect its growth as an innovator. "China is such a vast country, that there are certain parts which are world-beaters, and there are other parts which are relatively less developed," he said.

China's leadership has strived to make innovation a strategic priority, as the country moves toward a market-driven economy from an investment-driven one. The report said that despite challenging economic times, research and development spending levels are passing 2008 levels in most countries.

Dan Huttenlocher, Cornell University's dean of Computing and Information Sciences, said China needs to continue to upgrade its academic institutions to move into the upper echelon of innovation leaders.

"That's something that just takes time. Academic institutions change more slowly than commercial institutions," Huttenlocher said. "China has made incredible strides. Its schools are starting to get into the very top echelons, but if you look at the global rankings of academic institutions, China still isn't really there. That's a very important piece when you are looking at innovations - continuing to invest in and grow the excellence of the academic institutions."

Study co-author Soumitra Dutta, dean of Samuel Curtis Johnson Graduate School of Management at Cornell, called China "a great success story." Notwithstanding the ranking drop, "China is doing extremely well," he said, noting that "the quality of its outputs" - in terms of knowledge, technology and creativity - was "very strong".

As Huw Andrews and Stephen Kemper, consulting partners with PriceWaterhouseCoopers, wrote in a February column in China Daily, China's efforts to adopt innovation as a strategy for development are showing results.

"Traditionally, Chinese companies have succeeded in the marketplace by competing on cost, and by rapidly customizing proven product concepts to create products that are copies or incrementally modified versions of the originals," they wrote.

That emphasis is starting to change as Chinese companies focus management time and attention on innovation. Leading multinational corporations like Siemens AG, General Electric Co, Procter & Gamble Co, PepsiCo Inc and Nokia Corp have ramped up their China innovation centers, tasking them to create products for both domestic and international consumption, according to Andrews and Kemper.

"Overall, there are now more than 1,500 foreign research and development centers in China, according to the Ministry of Commerce, and this rapid evolution is also driving Chinese companies to focus management time and attention on innovation," they wrote.