Moving Up the Chain: Foreign technology helps China move up in global value chains

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China no longer serves the world as just a factory. It is striving to become one of the world's brain power centers at the 21st century. And Shanghai, where most foreign companies' China headquarters are based in, is a frontrunner in this new race. Yang Chengxi reports.

Coming soon to China: More Artificial Intelligence. At the World AI Conference last month, US tech giant Microsoft announced it is launching a research center in Shanghai.

HON HSIAO-WUEN MANAGING DIRECTOR, MICROSOFT RESEARCH ASIA "Shanghai has the potential to be the center for the entire Asia and even the world as the new development of AI."

Many foreign companies enter China by way of Shanghai. Today, more than 400 of them have set up research and development arms in the city, giving Shanghai one fourth of China's foreign-owned R & D centers.

HON HSIAO-WUEN MANAGING DIRECTOR, MICROSOFT RESEARCH ASIA "It's really a combination of Shanghai government's support, also talent, and also our partners. We have many many partners in different vertical, like pharmaceutical, like financial industry, etc."

What's valuable to these foreign firms is the cluster of Chinese partners available in Shanghai, says pharmaceutical firm Novartis.

JOERG REINHARDT CHAIRMAN, NOVARTIS "We see a bio-tech field that is evolving. We ourselves now have relationships with 40 different bio-tech companies, all of that it only happened in the last few years."

Shanghai's Zhangjiang area in the eastern Pudong district remains very active in attracting high-technology investments. 

YANG CHENGXI SHANGHAI "This area is also home to the China R&D center of US conglomerate General Electric. The company is cooperating with its Chinese partners in such areas as electronics, medical devices and high-end equipments."

One of GE's joint venture subsidiaries in China has used its expertise to help develop the flight system in China's first commercial jetliner, the C919.

RACHEL DUAN PRESIDENT & CEO, GENERAL ELECTRIC CHINA "GE actually has been in China for 100 years. But obviously our fastest growth has been the last three decades. So we have been here since the very beginning of the China opening door policy and economic reform. We benefited from it a lot."

By cooperating locally, these R&D centers are now playing an increasingly bigger role in helping China move up the global value chain.

YCX, CGTN, SHANGHAI.