Feature: Trade hub to innovation hotbed

The Chinese government has ambitious plans to reinvigorate the country's economy through innovation. This major shift must be supported by making science and technology a major priority, as the country's most recent five-year-plan emphasized.

The city of Guangzhou is well-placed to succeed in this new landscape. Dubbed the "southern gate of China", with Hong Kong and Macao as its neighbors, Guangzhou, capital of Guangdong Province, has been one of China's most important port cities and commercial centers since it was the departure point on the Maritime Silk Road during the Tang Dynasty (618-907).

Today the city's GDP per capita exceeds 20,000 U.S. dollars, the third highest of the country's large cities after Beijing and Shanghai. In 2015, the value of Guangzhou's high-tech products reached more than 842 billion yuan (130 billion U.S. dollars) and the number of new patent licenses surged past 6,000, a rise of almost 50 percent from 2014.

While car manufacturing, petroleum and chemicals are Guangzhou's traditional pillars, emerging sectors such as electronics, biological and pharmaceutical research and new materials have developed rapidly. The city is also home to 13 of China's 50 most innovative companies as selected by U.S. business magazine Fast Company.

As well as being a commercial hotspot, the municipal government also wants Guangzhou to become an international science and technology innovation hub. Already home to most of the research centers in its province (79 universities, 141 research organizations and 19 national key laboratories), under local government plans the city could see a doubling of the number of incubators that help accelerate the growth of sci-tech startups. Land and financial support is also being allocated for development of high-tech enterprises and the construction of companies with in-house R&D capabilities.

SUPPORTING RESEARCH COMMERCIALIZATION

The Guangzhou government spent 7.17 billion yuan (approximately 1.1 billion U.S. dollars) on science and technology projects last year, almost five times the amount spent in 2010. It has committed to increasing the budget to 10 billion yuan by 2017, a significant portion of which will be used to commercialize the city's research effort.

Since mid-2015, policies to facilitate research commercialization have been rolled out, with particular emphasis on the role businesses must play. The Guangzhou Science, Technology and Innovation Commission, which is in charge of science and technology affairs under the Guangzhou municipal government, says more than 80 percent of the city's science and technology funding will support projects led by business by 2018. The government will also help more than half the city's industrial enterprises above a designated size establish R&D bases in Guangzhou.

"The policies are similar to those of other cities, developed against the backdrop of China's development of an innovation driven economy and implementing the amended Law on Promoting the Transformation of Scientific and Technological Achievements in October 2015. We will see the effect of the policies this year," says Chen Yanling, vice director of the innovation service department of the Guangzhou Science, Technology and Innovation Commission.

Enterprises buying scientific and technological patents can seek government subsidies of 5 percent of the value of research result transactions. Newly-established sci-tech companies can also apply for subsidies of 50 percent of their rent for three consecutive years, according to the commission.

"We encourage enterprises to cooperate with universities and research institutes," Chen says.

Another new policy also encourages scientists and technology experts in universities and research institutes to commercialize their research. It directs administrators at these organizations to expand the criteria they use to evaluate researchers beyond their publication record, to include commercial achievements such as the number of patents they hold, or their efforts to translate their research.

INCUBATING SCI-TECH COMPANIES

At the heart of Guangzhou's development district in the city's east sits Guangzhou Science Town. Spread over 20 square kilometers, the town was built in 1998 to facilitate research commercialization by positioning businesses in the same precinct as researchers and entrepreneurs.

The science town is home to Guangzhou's first modern business incubator, which helps startups establish themselves by sharing equipment and support staff, as well as offering management training and cheaper office space. The town now boast 45 incubators - including some set up by the government, universities or research institutes - collectively assisting about 3,000 sci-tech companies.

"The incubators provide the space and services for the transformation of scientific and technological achievements. As researchers and university professors are unfamiliar with commercial registration procedures and legal and financial issues of business, the incubators help solve those problems," says Xia Jian, deputy secretary of the Technological Innovation and Intellectual Property Bureau of the Guangzhou Development District.

One recently established incubator set up by the Guangzhou Research Institute of Optical - Mechanical-Electrical Technology, which specializes in bio-medical, financial and laboratory monitoring equipment, has helped launched several science startups or businesses based on the institution's research.

One spin-off from the institute, Guangdong Spectrastar Instruments, has successfully commercialized near-infrared spectroscopy technology developed by one of the institute's research teams, led by Chen Xingdan, an academician of the Chinese Academy of Sciences (CAS). Chen was responsible for measuring the light radiation of China's first nuclear test in the 1960s. He has spent more than two decades studying near infrared spectroscopy, and is enthusiastic about his research results being used outside the lab.

Products made by Guangdong Spectrastar Instruments entered the market in 2015. "Its output value is expected to reach 10 million yuan in 2016," says Ren Hao, deputy director of the institute. He says the corporation aims to list on the stock market in 2017.

The incubator is also helping to realize the visions of university graduates developing a new satellite and a group of technicians from Taiwan developing a mini supercomputer.

"The research organizations have a responsibility to help transform and upgrade China's small and medium-sized enterprises. Guangzhou is at the frontier of economic and trade activities that provide us with sufficient market and commercial information. We want to find a new development mode together with business," Ren adds.

COLLABORATIVE INNOVATION

Collaborations between businesses and academic centers are another important source of innovation in Guangzhou. Several alliances have formed between industry and universities or research institutions in fields such as new materials, 3D printing, industrial robotics and biological medicine. The local government has handed out 100 million yuan annually for the last five years to support collaborative innovation and research commercialization in the field of health care.

Animal vaccine-producer Guangdong Winsun Biopharmaceutical Corporation is one company that has benefited from alliances with research institutions. Originally a state-owned enterprise established in 1958, the organization was restructured into a private holding company in 2002. At the time, it had no in-house R&D capabilities and competition from other companies threatened to drive it out of business.

After restructuring, the company established stronger connections with the China Institute of Veterinary Drug Control, the South China Agricultural University, the Sun Yat-sen University, the Guangdong Ocean University and the East China University of Science and Technology to develop and test new vaccines.

"We either buy their research results or jointly develop new vaccines. Our major source of profits comes from cooperation with institutes and universities," says general manager Lin Xuye. The corporation produces 43 different vaccines, with sales revenue exceeding 300 million yuan in 2015. Now it invests about 8 percent of its sales value in R&D every year.

Another hotbed of profitable cooperation is the Guangzhou Institutes of Biomedicine and Health of the CAS. In 2009, it set up a drug discovery pipeline to research and develop new medicines and bio-medicine technologies, which aims to combine the resources of research organizations, universities and companies in south China to accelerate development of key drugs.

As a result of the platform, AD16, a new anti-neuroinflammatory agent to treat Alzheimer's disease has passed preclinical trials and has been granted a clinical trial approval by the China Food and Drug Administration (CFDA). An oral kinase inhibitor for the treatment of leukemia is now awaiting CFDA clinical trial approval. Enditem

(This article was originally published on the international weekly journal of science, Nature, on May 12. Read more at http://www.nature.com/naturejobs/science/articles/10.1038/nj0483?from=timeline&isappinstalled