March 2023
Di Wu and Teresa Huang
On January 11, 2023, the General Office of the State Council forwarded the Several Measures for Encouraging Foreign Investment in the Establishment of Research and Development (R&D) Centers (hereinafter referred to as the “Measures”) issued by the Ministry of Commerce and the Ministry of Science and Technology, informing all relevant departments to assist in implementing the contents of the Measures.
The Measures set out 16 policies and measures in four areas, including providing more support in respect of scientific and technological innovation, enhancing R&D convenience, encouraging overseas talented people to work in China and strengthening the protection of intellectual property rights, aiming to encourage foreign investment to establish R&D centers in China to carry out scientific and technological research and innovation activities, specifically as follows:
1. Providing more support in respect of scientific and technological innovation
In terms of foreign-invested R&D centers to carry out scientific and technological innovation activities, the Measures propose six measures, including optimizing scientific and technological innovation services, encouraging basic research, promoting industry-university-research collaborative innovation, establishing open-ended innovation platforms, improving financial support for scientific and technological innovation, and ensuring unimpeded channels for participation in government-funded projects, which means that if a foreign investor sets up a R&D center in China, it can enjoy support of preferential policies in various aspects such as tax policy, infrastructure, cooperation with universities, finance, and participation in government projects.
2. Enhancing R&D convenience
In terms of R&D convenience, the Measures propose to support the legal cross-border flow of R&D data, optimize the management processes of outbound transfer of intellectual property rights and the import and export of technologies and improve the process of customs clearance and supervision of scientific research materials, which means that foreign-invested R&D centers in China can enjoy more convenient and efficient approval services under the premise of meeting the requirements of current laws and regulations.
3. Encouraging overseas talented people to work in China
In terms of encouraging overseas talented people to work in China, the Measures propose to improve the convenience of overseas talented people working in China, i.e., to provide more convenient and efficient services in terms of residence permit and work permit application; to encourage overseas talented people to apply for the titles of professional experts, provide more incentives for overseas talented people, and take measures to facilitate their cross-border receipts and payments.
4. Strengthening the protection of intellectual property rights
In terms of the protection of intellectual property rights, the Measures propose to speed up the improvement of the system of rules for trade secret protection, strengthen the construction of intellectual property protection centers, and intensify the enforcement of intellectual property laws. In particular, the Measures mention to clarify the scope of trade secret protection, infringement acts and legal liability, improve infringement litigation procedures, and strengthen the judicial protection of trade secrets of all market entities. Besides, the Measures also mention to fully implement the punitive damages system for intellectual property infringements.
On top of that, the Measures stipulate that the Ministry of Commerce and the Ministry of Science and Technology shall, in conjunction with the relevant departments and units, strengthen organizational guarantee according to the division of responsibilities, enhance collaboration, effectively carry out policy advocacy and formulate supporting policies in a timely manner to ensure that the relevant measures will take effect. In addition, the Measures also require all local governments to optimize the administration and services and promote the full implementation of the relevant measures in light of specific conditions to ensure that eligible foreign-invested R&D centers can enjoy the support policies in accordance with the law. This shows the government’s determination and support for foreign investors’ establishment of R&D centers. Foreign-invested enterprises that have plans to set up R&D centers in China may pay attention to the relevant policies of the local Department of Commerce and Department of Science and Technology, and actively communicate with the government departments to enjoy the preferential support policies.
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