Developing partnerships with Chinese universities can help companies recruit future employees, supplement research and development activities, and strengthen government relationships.
In recent years, companies have been investigating innovative ways to supplement their existing capabilities while minimizing costs by developing partnerships with Chinese universities. These partnerships have helped businesses defray the costs of research and development, recruit new employees, and improve government affairs functions. While these partnerships provide a number of benefits, companies considering this type of collaboration should be aware of the challenges they may face in setting up and managing Chinese university partnerships.
TALENT RECRUITMENT
Demand for qualified employees frequently outstrips availability, especially for skilled technical talent, and many foreign companies operating in China are looking for new and innovative ways to recruit and train potential employees. Companies in China are increasingly looking to replicate international practices of partnering with public institutions to conduct innovative research and create a platform for the company to play an active role in the educational development of potential talent.
The US-China Business Council (USCBC) recently interviewed several member companies to understand the reasons companies enter into these relationships in China and the potential challenges associated with such collaboration. A number of companies indicated that they viewed partnerships with Chinese universities as an opportunity to shape university curriculum, prepare a more qualified workforce, and recruit potential employees.
One company—a chemical manufacturing company with more than 20 joint research and development (R&D) projects with Chinese universities and research institutes—stressed that such projects allow for targeted training of specific skills desirable in their engineering teams. Once the research projects are completed, the company has a pool of qualified, pre-trained individuals to consider for employment.
To cultivate potential employees, Microsoft Corp. uses summer internships, technology clubs at universities across the country, and a visiting faculty program, which brings talented young faculty members to Microsoft’s Asia research center for a six-month fellowship in advanced Microsoft training.
RESEARCH AND DEVELOPMENT
Many companies that enter into research relationships with Chinese universities focus on developing new or localizing pre-existing technologies for the China market. According to a recent report, there have been more than 200 joint R&D entities set up between foreign companies and Chinese universities. IBM Corp. and Tsinghua University have set up a collaborative information development center; Alcatel-Lucent has established a joint lab with Shanghai Jiaotong University; and the Procter and Gamble Co. recently established its 19th global R&D center with Tsinghua University. Companies expressed concern over intellectual property (IP) ownership and protection, but representatives said they felt that managing IP within the context of a partnership with a Chinese university was easier than managing IP in a commercial joint-venture. University partnerships generally have a more well-defined and narrower scope of cooperation in which IP must be managed. Nevertheless, even though companies said the IP risks were manageable, they also noted that IP protection is a serious consideration and should always be discussed from the beginning of partnership negotiations. They noted that effective IP protection strategies include:
- Requiring all researchers to sign China-specific nondisclosure agreements;
- Evaluating sensitive technologies with confidential information restricted to key personnel;
- Clearly outlining how to register any newly discovered IP in the partnership agreement;
- Ensuring university researchers working on company projects are not also working on projects for competitors; and
- Understanding if the researcher or their lab is receiving any government funding as this could impact use of IP discovered in the collaboration.
Companies interested in forging research relationships with Chinese universities should be aware that the collaboration landscape is changing. Previously, universities pursued partnerships with foreign companies primarily for funding and capacity-building purposes. This allowed companies to largely dictate the research agenda with minimal input from their university partner.
Many companies that enter into research relationships with Chinese universities focus on developing new or localizing pre-existing technologies for the China market.
Recently, however, due to the large influx of government funding and abundance of opportunities for collaboration with foreign companies, universities are much more selective about starting new partnerships. Companies just starting to seek research partners may find that potential partners already have relationships with competitors. Their standard partnership contracts may also have less favorable terms than in the past. Universities that decide to collaborate are also more assertive in setting the research agenda to meet their own research priorities. Finally, most university researchers are focused on publishing work to raise their standing in the academic community, which may be at odds with company practices to protect IP.
GOVERNMENT RELATIONS
A number of companies indicated that improving government relations and influencing industry policymaking were important factors in initiating partnerships with Chinese universities. The Chinese government often uses universities and think-tanks to review draft policies and provide comments before public release. Companies say that as the relationship with the partner grows, consultations on relevant government policy often increase. One company noted that controversial sections of a draft environmental protection law were removed after raising concerns with their research partner.
The reputation of a company’s university partner is important. The Chinese government tends to solicit the opinion of researchers at top universities in their respective fields. In addition, this type of influence takes time to develop. Investment will not necessarily immediately lead to policy influence. Companies should be prepared to cultivate relationships for several years before they are consulted on relevant government policy. One company that pursued a partnership exclusively for the perceived government relations benefits recommended starting with projects that would make use of the researchers on mostly secondary or tangential projects and not include any sensitive IP, but would still boost the company’s public profile with relevant agencies.
[author] Jake Parker ([email protected]) is manager of business advisory services and Lingling Jiang ([email protected]) is manager of business and policy research at USCBC’s Shanghai office. [/author]
