An international hub of R&D innovation

Despite global economic headwinds, city maintains its charm as place for corporations to invest in

Shanghai remains a destination for global companies to set up and upgrade research and development centers in 2024 amid global market uncertainties, showcasing its attractiveness among global investors.

In the first half of 2024, 15 companies received recognition certificates from the Shanghai government for their R&D centers, increasing the total number of foreign R&D centers in the city to 575.

In line with its goal to transform Shanghai into an international innovation hub, the city's government has been enacting measures to promote the establishment and upgrade of foreign R&D centers in recent years.

In March, Shanghai released a plan to encourage the establishment of more foreign R&D centers and upgrade the innovation capacity of current ones. According to the plan, the Shanghai government will optimize the customs clearance procedures for R&D materials; support legitimate cross-border flow of R&D data; step up financial support; better protect intellectual property rights; provide supportive talent policies and introduce more favorable fiscal and tax policies for foreign R&D centers.

Foreign R&D centers are being encouraged to set up public nonprofits for fundamental scientific research funds in Shanghai. While biosafety risk assessments are still needed, the period of quarantine on imported genetically modified animals and plants and biological materials introduced by foreign R&D centers for national or municipal research projects will be shortened, with entry and follow-up supervision procedures optimized.

Work permits or residence permits granted to high-end foreign talent working at foreign R&D centers will be valid for as long as five years, according to the new plan.

For global companies, Shanghai's ongoing efforts to boost innovation created huge growth opportunities, which will support their long-term growth in China.

Big goals

Carrier Global Corporation, a global leader in intelligent climate and energy solutions, received the accreditation for its global R&D center in Shanghai in 2023.According to Kuang Yuhui, head and technical director of Carrier Shanghai R&D Center, the research facility of Carrier boasts more than 400 employees and serves as an incubator for a large number of talented workers.

"Carrier's Shanghai R&D center stands as a key among Carrier's global R&D facilities, supporting the company's worldwide business operations," said Kuang. "Shanghai, for Carrier, signifies not only a critical market but also a wellspring of advanced technologies and innovative solutions. By establishing our R&D center here, we can leverage the city's dynamic innovation ecosystem and collaborate with local partners, universities and research institutions to accelerate the development of new products and services."

In November 2023, Carrier launched its fourth Carrier i3 (imagine-innovate-ignite) Lab in its Shanghai R&D center, joining labs in Poland, the United States and India. Kuang said that the Carrier i3 Labs are designed to harness the innovative ideas of all employees, seize customer opportunities and advance and validate technologies and business models through a 100-day incubation process.

"The ideas focus on incorporating advanced digital technologies to create differentiated solutions and high-value business plans. Through the Shanghai i3 Lab, Carrier aims to provide life cycle solutions for customers across different segments; create more heating, ventilating, air conditioning — or HVAC, integrated building solutions; contribute to the sustainable development of the industry; help to meet China's carbon reduction goals and protect the environment," said Kuang.

Carrier has set out on a path to establish itself as a worldwide front-runner in intelligent climate and energy solutions, emphasizing HVAC and refrigeration. The company is also dedicated to utilizing its proficiency to support China in achieving green development goals. The Shanghai R&D center is deemed to play a pivotal role in materializing Carrier's global vision.

"The R&D center in Shanghai enhances technological innovation and industrial upgrading by fostering a collaborative environment where Carrier's engineers can work with counterparts from around the world. This R&D center will become a crucial hub for our technological innovation, playing a crucial role in improving the supply chain by leveraging Carrier's other R&D centers globally," said Kuang. "By developing sustainable technologies for HVAC systems and engaging in rapid innovation cycles, the center contributes to Carrier's leadership in intelligent climate and energy solutions, thereby better serving the global market."

Contributing worldwide

In 2020, Herbalife, a US nutrition developer, established its Product Innovation Center in Shanghai with the goals of expanding local operations and supporting global innovation. The center was awarded the Certificate of Foreign-Funded R&D Center in Shanghai from the municipal government in 2024.

Stella Tsai, managing director of Herbalife China, said that the center — which primarily focuses on developing new product portfolios, flavors and packaging — has introduced more than 40 new products to the markets in the past four years. These products include a gummy with DHA (an omega-3 acid) and shake drinks tailored for young consumers.

Since 2022, the center has played a crucial role in supporting Herbalife's product packaging development in the Asia-Pacific region, Brazil and European markets, contributing to the company's global innovation efforts.

"In 2023 and 2024, the center's product packaging designs have received four international design awards and eight domestic industry awards and secured 11 patents," said Tsai.

Tsai praised Shanghai for its talent pool, transport networks, comprehensive industrial support systems, premium government services and policy support, all of which played a crucial role in the company's decision to set up its R&D facility in the city.

Shanghai's initiatives to improve government efficiency by streamlining business approval procedures and reducing approval times, fostering openness and transparency and maintaining a stable business environment have all contributed to Herbalife's expansion in the region.

"Shanghai offers an exceptional investment environment and stands as a primary investment destination for Herbalife in China," said Tsai. "Since Shanghai has served as the location for Herbalife's regional headquarters for many years, we have established strong roots here and have reaped the benefits of the city's favorable business environment. Herbalife aims to capitalize on its robust presence in Shanghai and is committed to achieving even greater development in the future."

Stronger position

Henkel, a German chemical and consumer goods business, announced in 2021 that it is to transform its Zhangjiang site in Pudong New Area of Shanghai. The site will become the Inspiration Center for China and the Asia-Pacific to embrace the Chinese market and empower the country's industrial and consumption upgrade.

With a floor area of 33,000 square meters, the center will accommodate more than 30 labs and a 300-sq-m customer center, according to the company. More than 500 Henkel experts and scientists are to work in the facility and collaborate across departments to develop new technologies that support all Henkel Adhesive Technologies business and service areas.

According to Anna An, president of Henkel Greater China, the new site, with an estimated total investment of 500 million yuan ($70 million), will strengthen the position of Henkel Adhesive Technologies to serve a variety of industries and develop leading adhesives, sealants and functional coating solutions for customers in the region.

"Serving as an important pillar of our global innovation network, this innovation center will reinforce our business foundation and support high-quality development in China, while creating a driving force for future business growth in China and APAC," said An. "The facility will allow us to co-create solutions that are highly customized to meet their specific needs and inspire new opportunities. It will also improve Henkel's responsiveness to market changes and help to accelerate the development of solutions that address both current and future trends, such as urbanization, mobility and sustainability."

In addition to the construction of the Inspiration Center for adhesive technologies, Henkel marked the inauguration of the Henkel Consumer Brands Asia R&D Center in Shanghai in January. The total investment amounted to 100 million yuan.

"As the largest innovation facility for the business in Asia, this new center will strengthen local R&D capabilities in both the hair and laundry, as well as home-care categories, facilitating agile product innovations based on local consumer behaviors and insights," said An.

"Shanghai is a dynamic hub for innovation and business growth, offering a strong technological environment, high-end talent from across the world and a favorable business environment. As Henkel continues to deepen its roots in China, we look forward to driving more impactful innovations here."

At the 36th International Business Leaders' Advisory Council for the Mayor of Shanghai in September, senior government officials of Shanghai reiterated the role of technological innovation in economic growth. They extended an invitation to multinational corporations to integrate into the city's innovation ecosystem, fostering Shanghai's high-quality advancement.