New Measures of Further Encouraging Foreign Investment in Establishing Research and Development (R&D) Centers in China

Recently, the General Office of the State Council communicated Measures of Ministry of Commerce and the Ministry of Science and technology (MOST) for Further Encouraging Foreign Investment in Establishing Research and Development (R&D) Centers in China.

It points out that foreign-invested R&D centers are a significant part of China’s science and technology innovation system. To accelerate the innovation-driven development strategy and expand international science and technology exchanges and cooperation, China needs to increase supports for foreign-invested R&D centers in China to carry out science and technology R&D and innovation to better play its positive role in serving to build a new development pattern and promote high-quality development. 

The Measures set out 16 policy measures in 4 areas.

First, support for scientific and technological innovation. With regard to optimizing innovation-related services, the Measures call for implementation innovation-supporting tax policies, better guidance and service in application for and accreditation of new- and high-tech enterprises, and more input to enhance policy awareness and guidance. With regard to encouraging basic research, the Measures propose support for foreign-invested R&D centers in using large research instruments, scientific and technological reports and related data, and in infrastructure, purchase of equipment, talent services and funding. With regard to coordinating innovation efforts of enterprises, universities and research institutes, cooperation is encouraged among higher education institutions, research institutes, vocational schools and foreign-invested R&D centers in technology breakthroughs, technological collaboration, training bases and joint laboratories. With regard to supporting the development of open innovation platforms, guarantee of land, equipment, infrastructure and other factors will be strengthened, and modes of registration, such as “one address, multiple licenses” and clustered registration, are available to enterprises established on the platforms. With regard to improving financial support for innovation, local commercial authorities are required to launch bank-business matchmaking activities. With regard to facilitating participation in government projects, foreign-invested R&D centers are encouraged to take part in national science tasks and major national science programs and projects.

Second, greater R&D facilitation. On cross-border data flow, security management will be strengthened to ensure secure and orderly flow of R&D data. On outward transfer of intellectual property rights (IPR) and technology import and export, local authorities will be instructed to make institutional preparations, align mechanisms and optimize procedures for outward IP transfer, and facilitation will be considered for intra-company cross-border technology transfer in multinational corporations. On customs clearance and supervision of research supplies, quarantine and review arrangements will be offered, and support will be given for extending re-exportation period for key research equipment and test vehicles.

Third, incentives for attracting overseas talents. On making it easier to work in China, residence for work may be applied as a team, and procedures for work permit adjustment or renewal will be optimized. On applying for professional titles, a “green channel” will be provided for high-end and much-needed overseas talents, for whom seniority and years-of-experience requirements will be relaxed, and overseas work experience, performance and achievements may be taken into account in accreditation. On awards and grants, local authorities are encouraged to offer support for housing, children’s education, spouse’s work and healthcare and to provide grants to key R&D projects of industry-leading talents and their teams. On cross-border transaction, convenient arrangements will be implemented for overseas talents in foreign-invested R&D centers.

Fourth, better IPR protection. The Measures require further clarification as to the scope of protection, actions of infringement and legal liabilities, improved infringement procedures, and more effective judicial protection. On services, the rapid and coordinated protection mechanism will be further enhanced, and IPR protection centers will be upgraded to provide one-stop services covering swift review, determination of rights and rights protection. On enforcement, the punitive compensation system will be fully implemented, and special enforcement actions against IPR infringement will be carried out.

The two ministries and related authorities will fully implement the decisions of the CPC Central Committee and the State Council, by expeditiously putting the Measures in place in full through collaboration across different sections and at all levels. This will encourage foreign investors to build more China-based R&D centers, boost their development, and enable their greater role in advancing innovation and achieving high-quality development.