Economic slowdown urges enterprise innovation

Two highly paid doctoral researchers recruited by a small private company is something of a rarity in China. But for its boss Wu Renshan, the investment is paying off.

"The market presses small and medium-sized enterprises (SME) like us to upgrade our technologies," said Wu, board chairman of Jiangsu Shenxi Construction Machinery Co., Ltd, in east China's Jiangsu Province.

Wu recruited the two researchers in 2009 to improve its technologies in the manufacturing of hanging platforms, often used for cleaning windows of high-rise buildings. In 2013, the company poured 4 million yuan (650,000 U.S. dollars), or 15 percent of its profit that year, in technological innovation.

"In China, there are too many enterprises that are the same size as mine. Some have failed, particularly in the past two years," said Wu. "Technology is the kingcraft (for survival)."

China's economy grew 7.4 percent in the first quarter this year, the lowest quarterly rise since the third quarter of 2012. The target is about 7.5 percent this year, the lowest since 1999.

The slowdown has meant SMEs like Wu's have to innovate.

Gao Jianfei, president of Wuxi Sunda Conveyer & Painting Equipment Co., Ltd., said, "Under current circumstances, small companies need to innovate to vie for a share of the market."

Wuxi Sunda's revenue hit 150 million yuan last year, slightly higher than the previous year. In 2011, the company set up a laboratory and recruited a team of 16 researchers to ensure technical support for its business expansion in cooperation with Tsinghua University in Beijing.

With traditional manufacturing industries such as textile and clothing and machinery, foreign trade is important to Jiangsu. Trade volume was 550.8 billion U.S. dollars last year, or 13.2 percent of the country's total.

Due to industrial upgrading, Chinese enterprises are engaging in more value-added business, shifting from selling cheap goods to developing high-end products.

CSR Corporation, China's leading railway car manufacturer, signed an export contract worth 2 billion U.S. dollars with South Africa in March. The deal is the biggest rail transport equipment export order for China.

CSR established a central research institute last year to provide intellectual support for "China intelligent-making". It will serve as an innovative engine, said Wang Jun, CSR vice president.

"To have more say in international trade, quality is more important than quantity," said Zhu Naixin, a researcher with Jiangsu Academy of Social Sciences.

Medium and low-end manufacturing is important for providing jobs, but more efforts should be made to expand high-end sectors, he said.

"We look forward to the implementation of reforms in science and technology, finance and taxation systems, so that we can go in this direction," said Gao Jianfei.