The ability of private enterprises to play a significant role in technological innovation lies in intense market competition and their strong profit-driven guidance. Without innovation, these businesses cannot survive.
The role that businesses, especially private companies, plays in technological innovation is vital to the construction of an innovative nation and high-quality economic development. Recently, the first meeting of the Central Comprehensive Reform Commission reviewed and approved documents such as Opinions on Strengthening the Principal Status of Enterprise Technology Innovation and Opinions on Promoting the Development and Growth of the Private Economy. The meeting specifically mentioned “actively encouraging and effectively guiding private enterprises to participate in major national innovations,” indicating that policymakers hold high hopes that private enterprises can spur technological innovation, regarding them as “our own family.”
This expectation is grounded in fact. China’s private enterprises contribute over 70% of technological innovation achievements, encompass 80% of the nation’s specialized and innovative small giants and 90% of high-tech enterprises. According to the 2022 Top 1,000 Private Enterprise Innovation Status Report released by the All-China Federation of Industry and Commerce, the total research and development (R&D) spending of the 1,000 top private enterprises in China was 1.1 trillion yuan, accounting for 38.6% of national R&D investment and 50.2% of corporate R&D expenditure. The year-on-year growth rate was 23.1%, which was 8.5 percentage points higher than the national average. Additionally, the total number of R&D personnel was 1.65 million, accounting for 12.98% of total employees and 28.9% of R&D personnel nationwide. It is evident that the technological innovation of private enterprises is not only fruitful but also highly efficient.
At the same time, a large number of private enterprises have risen to prominence through independent innovation, driving China’s industrial upgrading. A research center under the China Intellectual Property Administration released the Top 10 Chinese Private Enterprises in Invention Patent Authorizations (2021), with Huawei ranking first. As of the report’s publication, there were more than 210,000 declared 5G standard essential patents worldwide, involving 47,000 patent families, of which Huawei declared more than 6,500 5G standard essential patent families, accounting for 14%. In fields such as new-energy vehicles, the mobile internet, photovoltaics, new materials and equipment manufacturing, a large number of leading private enterprises have also emerged. In emerging technologies like artificial intelligence and the Internet of Things, private companies have likewise played a leading role.
The detailed enumeration of private enterprises’ achievements in technological innovation serves to emphasize the indisputable fact that they have become the mainstay in driving technological innovation in China. Without private enterprise, it would be impossible to discuss the construction of an innovative nation. In terms of technological innovation, private enterprises are indispensable, and they should naturally be trusted. The central government has repeatedly emphasized that “innovation does not discriminate based on origin” — an attempt to eliminate class consciousness and enable private enterprises to take bold steps in technological innovation.
The fundamental reason private enterprises can play a significant role in technological innovation is the intense market competition and strong profit-driven guidance they operate under. Without technological innovation, private enterprises cannot survive. They have a clear understanding of “for whom to innovate, who should innovate, what to innovate, and how to innovate,” and are characterized by sensitive perception, flexible mechanisms and efficient decision-making in technological innovation.
Innovation does not discriminate based on origin, and actively encouraging and effectively guiding private enterprises to participate in national major innovations is predicated on fair treatment. The Ministry of Science and Technology has explicitly stated that both state-owned and private enterprises should be treated equally in terms of innovation, with equal opportunities, rules and rights. The Enterprise Technology Innovation Capability Enhancement Action Plan (2022-2023) issued by the Ministry of Science and Technology and the Ministry of Finance proposes improving the fairness and convenience of private enterprises in obtaining innovation resources, forming a policy environment in which “innovation does not discriminate based on origin.” This attitude is commendable, and there have been some encouraging developments in practice. Among the top 1,000 private enterprises in R&D investment, 236 have participated in the construction of national engineering research centers, national key laboratories, and other innovation bases. This is a promising start.
However, the participation of private enterprises in major national innovations is far from sufficient. There are many constraints, weak representation, and systemic barriers limiting their innovation that still need to be removed. The relationship between private enterprises and government departments, such as those overseeing science and technology, is quite sensitive and delicate. Even when funding and projects are allocated to enterprises, state-owned enterprises often enjoy an advantage under equal conditions. This issue is not new, but it is more important than ever to change it. This has become the most prominent contradiction in China’s technological innovation and must be resolved as soon as possible. Achieving equality for all types of enterprises in innovation involves a series of issues related to concepts, interests and systems, and there is still a long way to go.
Private enterprises’ investment in technological innovation is closely related to confidence in their own development and expectations for stability. For them, technological innovation is a risky investment. When companies are optimistic about their future growth prospects, they naturally adopt proactive strategies and even invest ahead of time. In recent years, contractionary policies have been more prevalent, with many private enterprises hesitating or even openly declaring their intention to “survive the winter.” To stimulate the innovative momentum of private enterprises, it is essential to allay their anxieties and inspire confidence. Policymakers have attached great importance to this issue, and governments at all levels have responded accordingly. If the confidence of private enterprises can be restored, China’s technological innovation will undoubtedly accelerate.
Emphasizing the significant role of private enterprises in technological innovation does not mean they can conquer all challenges single-handedly. Operating in a market with profit-driven guidance is both an advantage and a limitation. This is particularly evident in basic research with strong positive externalities. Therefore, to promote the formation of an innovation system where enterprises are the main body, with efficient and in-depth integration of industry, academia, and research, it is necessary to coordinate and leverage the roles of governments, universities, research institutions and enterprises of various ownership types. This requires a well-developed mechanism that leads not only independent exploration but also learning from international best practices.
In tandem with China’s industrial upgrading, private enterprises’ technological innovation has progressed rapidly but still holds untapped potential. Now is not the time for complacency. While the outlook is bright, the journey is fraught with challenges, and stagnation means regression. The desire of private enterprises to produce innovative breakthroughs is stronger than ever. We hope that private enterprises can routinely participate in the planning and formulating the policies needed to drive national technological innovation. In tackling key core technologies, the involvement of private enterprises should not be a last resort but a necessity. The pressing task is to leverage the momentum of deepening reform in science and technology, such as the establishment of the Central Science and Technology Commission and the reorganization of the Ministry of Science and Technology, to create a favorable institutional mechanism for “innovation without discrimination based on origin.”
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