Chinese firms pour money into U.S. R&D in shift to innovation

Sun Jun 21, 2015 9:17am EDT
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By Jason Lange

WASHINGTON(Reuters) - Surging investment by Chinese companies in U.S. research labs is yielding a fast-growing trove of patents, part of a push to mine America for ideas to help China shift from being the world's factory floor to a driver of innovation.

Largely absent from American research hubs a decade ago, Chinese firms including Huawei Technologies HWT.UL and ZTE Corp (000063.SZ: Quote) are now using U.S. researchers to create patents ranging from new software to internet infrastructure, according to an analysis of Thomson Reuters' global intellectual property database.

The rapid growth in China's U.S. investments will be a key topic at economic and security talks on Tuesday and Wednesday between top U.S. and Chinese officials in Washington.

They are negotiating a bilateral investment treaty that could deepen ties between the world's two largest economies even amid tensions over China's military assertiveness.

Even without a treaty, China is pouring capital into U.S. research as well as buying other assets. While its firms are still newcomers to investing in America and few work on the technological frontier, the Thomson Reuters data offers a glimpse of the advanced economy China aspires to build.

Patented inventions by Chinese firms that involved at least one U.S. researcher roughly doubled worldwide in each of the last three years, reaching 910 in 2014.

"We have established a beachhead," said Vincent Xiang, who heads international investment at Humanwell Healthcare Group (600079.SS: Quote), a Chinese drug company that has put over $50 million into a New Jersey subsidiary that employs dozens of U.S. researchers.

Rather than compete with powerhouses like U.S. drug maker Merck (MRK.N: Quote) to invent blockbuster medicines, Humanwell's U.S. researchers are making smaller refinements such as figuring out how to administer some drugs as pills rather than injections.   Continued...

A worker adjusts the logo at the stand of Huawei at the CeBIT trade fair in Hanover March 15, 2015. The world's biggest computer and software fair will open to the public from March 16 to 20.    REUTERS/Morris Mac Matzen