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City’s quest to be innovation hub hinges on the right incentives
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CHINA may be a leader in terms of the number of papers its scientists and academics publish in journals such as Science and Nature. Numbers, however, are not necessarily the best indicator of scholarly strength or innovative potential.
According to some experts, preoccupation with academia’s publish-or-perish mandate has stifled creativity within Shanghai’s scholarly community. If such is the case, then the implications are obvious for Shanghai’s long-running campaign to establish itself as a leader in innovation.
“A key point of Shanghai’s bid to build itself into a global innovation center is the reform of its R&D system,” said Chen Jianxun, senior researcher with the Institute of National Economy at Shanghai Academy of Social Sciences, a government think-tank.
To succeed in this goal, Chen told Shanghai Daily, academia has to abandon the notion that publication lists are the only yardsticks by which to measure research prowess. For example, while China is the top source of research papers on new materials such as carbon fibre, its actual development in this area are decades behind those in the United States and Japan, according to Chen.
But much-needed overhauls may now be on the horizon. In May, authorities in Shanghai published guidelines on “how to facilitate the process of building the city into an innovation center with global influence.” These guidelines were widely interpreted as a signal of authorities’ willingness to further relax their grip on certain sectors and introduce innovation-friendly changes.
Revamping R&D
Also known simply as the 22 Clauses, the document mentioned an urgent need to revamp the R&D system to make it more market-oriented.
Indeed, a key deficiency in China’s R&D system is that it discourages scientists from undertaking research projects aimed at satisfying market needs, say experts. “Some companies are willing to pay more than 5 million yuan (US$805,840) to finance research they badly need, but somehow feedback is lukewarm,” Chen said.
This is due less to ineptitude on the part of scientists than to a lack of incentives, said Chen.
Generally speaking, researchers are inclined to apply for projects backed and favored by the state. In addition to rewards they can receive from such projects, eligibility also carries the promise of extra perks and career advancements, such as candidacy for coveted professorships — opportunities which corporate-funded research cannot provide.
Chen noted that the 22 Clauses represents a major step toward encouraging individual researchers to undertake corporate research — and reap the benefits stemming therefrom.
More needs to be done though to make sure the right incentives are in place to foster a greater interest in research commissioned by the private sector. “This calls for a link between research done for companies and individuals’ prospect of promotion,” Chen said in the interview.
Therefore, the current criteria by which R&D personnel are assessed and promoted are also in need of a shake-up which would reflect the market value of research endeavors.
Chen put forward a belief — one generally shared by other observers — that Shanghai’s quest to cast itself as an innovation hub could be significantly aided by drawing from foreign experiences.
A good template can be found in an initiative launched by US President Barack Obama to build national laboratories in partnership with universities and colleges. There are more than 720 such facilities in the US, some of which have already produced cutting-edge breakthroughs in nanotechnology and communication technology.
This no doubt has been a source of inspiration for authorities in Shanghai, reflected by a similar proposal included in the 22 Clauses which advocates the creation of Shanghai’s own high-tech labs.
This ambitious goal has a better chance of success if Shanghai sets out to match the technological needs of various industrial parks with the expertise of local universities specializing in science and engineering, said Chen.
While innovation has become a veritable national frenzy, it’s important to bear in mind that most would-be innovators will fail along the way.
Indeed, many will fail multiple times before they find their recipe for success. Individuals must have the freedom to try and fail.
Unfortunately, tolerance for failure is limited at China’s big state companies, which continue to represent a huge chunk of the national economy and are hardly known for their appetite for risk.
They often have little stomach for spending on innovation precisely because those in charge could face heavy consequences if their ill-considered investments result in a loss of state resources.
Major change
This could all change soon though.
According to the 22 Clauses, state firms’ expenditures on innovation will be seen as profits, thereby effectively insulating their top executives from censure or punishment in case their investments fail.
“This is a major change, and hopefully it will embolden state companies to embrace innovation more,” said Chen.
State firms are not the only beneficiaries of such innovation-friendly policies. Verified innovation outlays made by private and foreign businesses will entitle them to tax breaks. “This is also a wholly different arrangement,” Chen observed.
He added that one common misconception about bolstering Shanghai’s capacity to innovate is that such efforts must be built on never-before-seen breakthroughs.
In fact, observed Chen, this is one aspect of innovation, which can be realized through both tech-savvy professionals and business talent with market knowledge.
A good example of this would be Jack Ma, executive chairman of Alibaba Group, China’s leading e-commerce player.
Ma’s innovations mainly involved reinventing an established business model rather than producing new technologies, said Chen. “Tech-savviness and business acumen are important in equal measures in Shanghai’s innovation aspirations,” he claimed.
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