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China's New Push to Integrate Tech and Industry: What Foreign Founders Need to Know
China's central government has issued new guidelines to deepen the integration of technological and industrial innovation. For foreign founders, this signals expanded opportunities in high-tech sectors, but also requires understanding of China's policy-driven innovation ecosystem.
China's New Push to Integrate Tech and Industry: What Foreign Founders Need to Know
China's central authorities have released a comprehensive set of opinions aimed at deepening the integration of technological innovation and industrial innovation. The policy, issued by the General Offices of the CPC Central Committee and the State Council, sets out a framework to build a new innovation system where enterprises play a leading role and various actors collaborate. For foreign founders registering or operating a company in China, this document outlines the direction of China's industrial and tech policy, highlighting sectors and mechanisms that could affect your business strategy.
Guiding Principles and Overall Approach
The policy is guided by Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era and aims to implement the innovation-driven development strategy. The core goal is to develop "new quality productive forces" and build a modern industrial system. The approach emphasizes:
- Systematic planning: Better coordination between science and technology (S&T) supply and demand, with innovation chains deployed around industrial chains and vice versa.
- Enterprise-led innovation: Strengthening the role of enterprises as innovation entities and improving market mechanisms to incentivize innovation.
- Reform to unleash vitality: Removing ideological and institutional barriers that hinder deep integration of technological and industrial innovation.
Key Measures Relevant to Foreign Founders
The document details 17 specific measures. Below are the aspects most pertinent to foreign founders considering or already operating in China.
1. Enhancing Enterprise Innovation Capacity
The policy calls for improving mechanisms for enterprises to participate in national S&T and industrial development strategies, plans, and policies. Notably, it proposes opening the National Natural Science Foundation to private enterprises on a pilot basis and expanding the scope and scale of enterprise innovation development joint funds. It also encourages state-owned enterprises to establish R&D reserve funds with independent accounting and exemption from value-preservation assessments, and supports small and medium-sized tech enterprises by increasing the R&D expense super-deduction ratio. Foreign-invested enterprises may benefit from a more open innovation environment, particularly if they engage in R&D.
2. Cultivating and Strengthening Tech Enterprises
China will optimize the cultivation mechanism for leading tech enterprises, support high-tech enterprises, and improve support for specialized and sophisticated SMEs that produce novel and unique products. The policy also encourages large enterprises to open their R&D platforms, application scenarios, and supply chains to SMEs, and to pilot first-use of innovative products from SMEs. Foreign founders with innovative products may find opportunities to collaborate with larger Chinese firms.
3. Promoting Collaborative Innovation Among Entities
Leading tech enterprises are encouraged to act as "chain leaders" and form innovation consortia. National laboratories, research institutes, and universities are urged to strengthen cooperation with leading enterprises, distilling scientific questions from industrial needs. Foreign firms can seek partnerships with these entities, though they should be aware of the policy's emphasis on domestic innovation capacity.
4. Fostering a Virtuous Cycle of Tech, Industry, and Finance
The policy aims to build a tech finance system that meets the financing needs of tech enterprises throughout their lifecycle. It calls for government-guided venture capital funds to invest early, in small firms, for the long term, and in hard tech, with improved long-term assessment, differentiated regulation, and exit mechanisms. The "innovation points system" will be promoted to quantitatively assess the innovation capacity of tech SMEs. A high-quality "tech board" in the bond market will be developed, and a tech insurance policy system established. Foreign founders may find more financing options, but should note the focus on domestic capital and hard tech.
5. Strengthening Talent Cultivation and Utilization
The policy emphasizes collaborative education aligned with S&T innovation and industrial development. It promotes university-enterprise cooperation, work-study alternation, and dual-mentor systems. Policies for researchers to take temporary posts, part-time jobs, and leave to start businesses will be improved. Enterprises are encouraged to hire innovative talents as industry mentors and professors. Foreign founders can leverage these schemes to access talent, but must navigate visa and employment regulations.
6. Building Integrated Innovation Platforms
China will coordinate the layout of national emerging industry innovation centers, national industrial technology engineering centers, national technology innovation centers, and national manufacturing innovation centers to strengthen key common technology supply. Concept verification centers and pilot testing platforms will be built to serve industrialization of new technologies and products. Foreign founders can utilize these platforms for prototyping and testing, though access may be prioritized for domestic entities.
7. Improving the Market Environment for Innovation
The policy calls for removing unreasonable institutional barriers to innovative products entering the market, piloting relaxed market access in new business forms and fields, and exploring a "commitment-based entry" system. It also mentions "sandbox regulation" for new technology applications and improving laws and regulations in frontier fields such as AI and biotechnology. Foreign founders should monitor these developments, as they may affect market entry and compliance.
8. Strengthening IP Protection and Standards
China will reinforce trade secret and IP protection in new business forms and fields, and improve benefit-sharing and risk-sharing mechanisms in industry-academia-research cooperation and tech transfer. The patent open licensing system will be fully implemented. The policy also emphasizes standard layout for major national S&T projects and strengthening research on national and international standards in frontier fields. Foreign founders should ensure their IP strategy aligns with these evolving frameworks.
9. Supporting Local Pilot Programs
Local governments are encouraged to carry out pilot programs for deep integration, leveraging their comparative advantages. National high-tech zones and independent innovation demonstration zones will pioneer policies. International and regional S&T innovation centers and qualified localities will conduct reform pilots for deep integration. Foreign founders may find local incentives and pilot policies that could benefit their operations, but should verify details with local authorities.
Implications for Foreign Founders
This policy underscores China's commitment to building a self-reliant and powerful S&T nation, with enterprises at the center. For foreign founders, it signals opportunities in high-tech sectors such as integrated circuits, industrial machine tools, high-end instruments, advanced materials, biomanufacturing, new energy, new materials, aerospace, quantum technology, hydrogen energy, brain-computer interfaces, embodied intelligence, and 6G. However, the policy also emphasizes domestic innovation capacity and security, which may mean a more regulated environment in sensitive areas.
Foreign founders should consider aligning their business plans with these priority areas, exploring partnerships with Chinese enterprises and research institutions, and staying informed about local pilot policies. It is crucial to conduct thorough due diligence and seek professional advice on market entry, IP protection, and compliance.
Call to Action: For assistance with registering and operating a company in China, foreign founders can contact ChinaMNC on WhatsApp / WeChat at +86 153 1898 8535.
This summary is based on information published by the relevant Chinese government website and is general information, not legal or tax advice.