CHINA: Specialist and manager: challenges of R&D in China26.06.2012, 18:09
The Swedish educational company Chalmers Professional Education has successfully completed its two-week China R&D Executive Programme (see no 178 page 7) in April. news2biz had the pleasure to have interviews with Dr. Max von Zedtwitz, Professor of International Business and Innovation, Director of the Research Centre for Global R&D Management and Reverse Innovation, Tongji University at Shanghai, and Mr. Bruno Raymond, Nokia's Head of Basic Applications Development, Beijing, China, and MP Feature Phone Product Development.
- n2b: What are the advantages of R&D in China?
Raymond: Access to a much larger talent pool. And proximity to new markets, not only China, but South East Asia as well.
- n2b: What are the challenges?
Zedtwitz: Rising wages, high turnover rate, slowing economy, high turnover rate, IPR protection, all these concerns are valid. Add also effective collaboration with local research institutions, such as universities and national research labs.
China R&D programme in Beijing. Photo: news2biz
Raymond: Performance of employees, retention, salary expectations.
In China employees are asking for much faster salary hikes than in Europe. Depending on different cities and industries, wage inflation could easily go to 5-15% a year, as compared to maybe 2% in Europe. This is somewhat understandable, because consumer inflation here is much faster than in Europe, and the labour market is growing at this rate. But some staff could not tell the difference between market performance and their job performance.
It is also new to R&D managers that Chinese employees tend to drop and change jobs much, much more often than in Europe.
- n2b: Are there any challenges from cultural differences?
Raymond: It is true that some staff from the Asian, or oriental, background tend to be more passive and work under orders. But there are also examples, especially in the younger generation, that Chinese team members are even more proactive and outspoken than their Western managers. So, it is more of a company culture issue. In Nokia, we hire people who would be happy to fit in our company culture.
And it is also about communications. It is about how you communicate your objectives to your team members, how you assign works to them and how you follow up the works. So, we also hire managers who can communicate better and we facilitate communications among different teams.
In short, cultural differences need to be understood and company culture needs to adjust itself to the local one, as well as employees adjusting to company culture. The balance takes time.
- n2b: Is it possible to secure funding in China for R&D?
Zedtwitz: Essentially, there is no funding from the Chinese government for foreign R&D in China. On paper it is permitted, but I haven't heard of any multinationals or foreign SMEs to receive funding for R&D yet.
- n2b: What about the concern of IPR protection?
Raymond: The picture may vary among industries. For mobile phone, things are moving so fast that the concept of IPR protection does not look very different whether you do R&D in China or elsewhere. You have to be proactive and reactive wherever you are. That's why I think it is more interesting to come to a market like China, to be closer to see all the dynamics, all the swift changes. Speed is coming from Asia nowadays.
- n2b: R&D by European companies used to be more oriented to adapting their products/services to the Chinese market. How about now?
Raymond: Adaptation is usually the starting point of operations in China. But most international companies grow away from this and develop products in China for the international markets, doing this 100% from China or in cooperation across multiple international teams.
Dr. Max von Zedtwitz,
of China R&D
- n2b: Is there any influence on R&D activities from the slowing economy?
Zedtwitz: In general, multinationals are still expanding R&D in China, as R&D is developing new products for an increasingly large Chinese market.
Raymond: We are not so worried, mostly because our business is international and China is just one market, important one of course but not the only one.
Besides the programme for R&D executives, Chalmers Professional Education also offers a 13-day programme for production executives on international management of production. Both programmes are offered in China, Japan and India, according to Prof. Niklas Sundgren.