China bucks global drop in R&D spending

The economic crisis cut corporate research and development spending 1.9 per cent worldwide in 2009, but China defied the trend, increasing its research investments by a whopping 40 per cent.

Sharp drops in 2009 research spending in Europe and the United States were balanced out by a hefty rise in Asia, according to European Union data released Tuesday.

It showed that R&D investments by European companies fell 2.6 per cent in 2009 as their sales declined 10.1 per cent.

Research spending by U.S. corporate giants fell 5.1 per cent in 2009, according to the EU's annual scoreboard of corporate investments indeveloping new products and services.

Japanese firms held to their high investments in 2009 and companies elsewhere in Asia raised theirs significantly. After China, India followed with a research and development increase of 27.3 per cent, Hong Kong was up 14.8 per cent, South Korea up 9.1 per cent and Taiwan 3.1 per cent.

For the second consecutive year, the EU report said, Japanese carmaker Toyota was the world's biggest R&D investor with 2009 spending of $9.5 billion US. It was followed by Swiss pharmaceutical giant Roche (No. 4 in 2008) with 2009 spending of $9.1 billion and Microsoft (No. 2 in 2008) with $8.4 billion.

Innovation emergency

EU research commissioner Maire Geoghegan-Quinn said the gap between European and American companies in areas like software and biotechnology and the rapid rise of Asian-based companies "highlight the innovation emergency Europe is facing."

The EU is pushing its member states to raise research and development spending to three per cent of the 27-countrybloc's GDP. Today it is two per cent, compared with2.6 per cent for the U.S. and 3.4per cent for Japan.

Global demand for information and communication technologies is a market worth $2.8 trillion, and Europe accounts for only 25 per cent of that, according to EU data.

The scoreboard showed European companies' performance to be weak in key high-tech sectors. U.S. companies invested five times more in R&D for semiconductors, four times more in software research and eight times more in biotechnology.

The EU's scoreboard monitors the world's top 1,400 companies 400 from the EU and 1,000 from other parts of the world ranked by investments in research and development.