Li urges SOEs to focus on R&D
By Fu Jing (China Daily)
Updated: 2004-09-14 01:04

State-owned enterprises (SOEs) are being urged to spend more money on research and development to sharpen their international competitiveness.

Li Rongrong, minister of the State-owned Assets Supervision and Administration Commission (SASAC) Monday, listed the suggestion in a package of measures to help some of the 189 SOEs under the central government invest overseas and compete with international business giants.

"Compared with foreign giants, our companies' investment into research and development (R&D) is poor," Li addressed the China Business Summit 2004 which ended Monday in Beijing.

On average, overseas multinationals will invest 5 per cent about their operation income into R&D. But the rate for China's major SOEs stood at 1 per cent in 2003 and about 75 per cent of such SOEs spent less than 1 per cent of their operation income in the regard.

Other measures include restructuring the companies by adopting a shareholding system and attracting management skills.

Li said China has achieved initial success in implementing its "go-out" strategy to give a push to the growth of an export-oriented economy and investment in overseas regions.

He added that firms have made rapid progress in sharpening their competitive edge. China had only three enterprises on the global-500 list in 1995, but the number has increased to 18 this year.

Earlier report was cited that the government has already mapped out a plan to help set up hundreds of multinational enterprises of varying scale. By 2015, the aim is to have 50 Chinese enterprises among the top-500 in the world. Also in the pipeline are 500 medium-sized and 5,000 small-sized multinational companies.

Lu Zhaoxia, chief operating officer of China's leading software company Neusoft, told China Daily that the government strategy is in line with global economic development.

"The economic trend requires us to allocate resources worldwide and the leaders of China, economic engine of the world, should have such kind of version," said Lu.

But she said China's enterprises are still small compared with international giants.

Lin Yueqin, a researcher from the Chinese Academy of Social Sciences, said the government's strategy was vital to the overall development of China, which has already become the biggest recipient of direct foreign investment -- more than US$53 billion last year.

Lin said enterprises with distinct advantages should be encouraged to set up processing or assembly plants and improve their sales networks -- which would gradually nurture a number of Chinese enterprises engaged in multinational operations with their own brand names.

Lin's package of suggestions includes encouraging competitive household-appliance firms to set up plants in developing countries; enhancing high-tech co-operation by setting up enterprises in industrialized countries; and bolstering Chinese energy companies to help other countries explore oil and mineral resources.

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