Economists discuss gap between China, US on converting research into commercial success

By Li Qiaoyi Source:Global Times Published: 2017/4/10 21:38:39

Illustration: Luo Xuan/GT

Hong Han Photo: Li Qiaoyi/GT

Chen Xianhui Photo: Li Qiaoyi/GT

Editor's Note:

For China to become a global technology and innovation powerhouse - a crucial goal being pursued by an economy that has long competed largely on quantity - there needs to be not only continued efforts to enhance indigenous research and development capacities, but a growing focus on how to turn research findings into actual commercial successes. At the annual Lingnan Forum held on April 1 at Sun Yat-sen University in Guangzhou, capital of South China's Guangdong Province, Chen Xianhui, an academician with the Chinese Academy of Sciences, and Hong Han, a professor of economics at Stanford University, shared their input on the gap that exists between the world's two largest economies in converting research into commercial success.

Chen Xianhui

Every scientist longs to translate their scientific findings into industrial practices, thus making a contribution to humanity and society. However, scientists live in an ivory tower some of the time. This, compounded by the complex process of turning research into actual success which could be further complicated by institutional problems, has discouraged some scientists from venturing into a conversion. For some scientists who still want to try, it's expected that they'll face many difficulties down the road.

It's widely known that there's a boundary concern among Chinese scientists who often have some misgivings about converting their researches into actual businesses. But there's no such thing as a boundary in the US, where professors specializing in virtually any part of the technology sector are given the leeway in starting multiple businesses.

Why are professors in the US not bothered by the boundary concern? It's because most professors in the US get paid for nine months, purely for teaching. Their research is considered projects to be done in their spare time. Consequently, they feel at ease translating their findings into actual businesses, so long as they give a certain share of earnings from the businesses, for example, 30 percent, to universities and take the remaining 70 percent themselves. In China, it's quite different where professors largely fall within the boundary of university and college assignments.

Take anti-corrosion materials for example: China's need in this field is worth $10 billion, with US-made materials representing 80 percent of the total, although Chinese scientists have actually spent 10 years developing materials that defend against heavy erosion. This reflects the issue with commercialization. To convert research findings into actual business requires funds. Many businessmen have shown an interest in investing in the findings, but they tend to substantially hold down the stakes supposedly belonging to the scientists.

Hong Han

I think Stanford is not only a university, but also an enterprise. The university has its own funds and its first president already knew the idea of entrepreneurship and used his own money - which seems a pitiable amount now but was astronomical at that time - to invest in basically the first high-tech firm in Silicon Valley. Stanford University now invests in a lot of start-ups, which even stirs controversy.

In a radical sign, a Stanford alumnus was so creative that he launched a fellowship after his graduation, encouraging students to drop out of school and pursue their own business ventures instead. Stanford came out with a countermeasure, known as StartX - an incubator-like program out of the university which encourages students to start up their own ventures while continuing studying. Stanford has put a lot of effort into this, among the most important being the establishment of the Office of Technology Licensing which helps address the legal issues that are faced by ventures started by its students and faculty members. In legal terms, a large portion of the discoveries and research accomplishments attained at university are supposed to go to the university. As such, the university not only stimulates entrepreneurship, but relies on future patent proceeds generated by the university's scholar and student entrepreneurs for a substantial part of its income. The office plays a part in constructing an efficient mechanism for legal problems to be resolved.

The university also stipulates that incumbent faculty members can't assume the role of company CEO, but there's no problem with ownership of company stakes, which is essentially about equity distribution in start-ups. The most grey area appears to be intellectual property, as the university might not care whether your company could eventually float on the stock market or be profitable, but it would for sure get in touch with you to take a slice of the money if you make a profit, as the university has rules in place that attribute research discoveries to the university itself.

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