November 2010

Claus Lønborg / claus@innovationcenterdenmark.cn

China 3.0In transition to become the World’s Largest Innovation Nation?

Contents

• Innovation Center Denmark – In Brief…• China’s Transition: China Today & Tomorrow• China as an Innovation Nation• Market Drivers & Developments

Innovation Center Denmark

Brief overview of the Innovation Centers

New type of representation in international ”hot spots”. Facilitates access to innovation drivers like capital, networks, knowledge, technology, and markets.

Centers in Silicon Valley (June 2006), Shanghai (September 2007), and Munich (June 2008).

Clear Focus

1) Strenghten Danish Research and Innovation

2) Promote Denmark as a knowledge society

Synergies and collaboration

Investment promotion Science, Research and Education

Commercial Innovation

Attract foreign companies to invest in Denmark

Connect Danish and foreign research institutions and universities

Support Danish companies with improving their innovation efforts through tech scouting, connecting to new partners, assisting in establishing a platform abroad etc.

Areas of Operation

Innovation Center

Denmark

Innovation Center

Denmark

Commercialize Innovation

Commercialize Innovation

Management ConsultancyManagement Consultancy

Local R&DLocal R&D

Technology Scouting

Technology Scouting

Business IncubationBusiness

Incubation

Innovation Collaboration

Innovation Collaboration

China’s Transition: China Today & Tomorrow

• Size equal to Europe

• Cultural differences

• Rich & Poor• Brutal competition• Rapid and

significant changes

Understanding ”What is China”?

Financial Crisis in China….?

GDP

Time

X 3

X 2

China

USA

2010 2025 2050

In 2050, large parts of China will still be a developing country…

Global Fortune 500Global Fortune 500

Where China is Headed

1. World’s largest economy by 2025

2. From Exports to Domestic Consumption

3. From Imitation to Innovation

4. More harmonious Society

5. From fragmentation to consolidation

6. From Domestic Players to Global Champions

Over 100 auto companies, over1000 steel companies, over 5000 cement producers

Consolidation -> better efficiencies, bargaining power and managerial capabilities

Over 100 auto companies, over1000 steel companies, over 5000 cement producers

Consolidation -> better efficiencies, bargaining power and managerial capabilities

From “east” to “west”

From the “cities” to the “countryside”

From “growth at all costs” to “sustainable, balanced growth”

From “east” to “west”

From the “cities” to the “countryside”

From “growth at all costs” to “sustainable, balanced growth”

Abundant pool of low cost scientists and engineers

Government plan to incresae R&D-to-GDP ratio from 1,3% in 2005 to 2,5% in 2020.

China’s unique needs as drivers of innovation

Abundant pool of low cost scientists and engineers

Government plan to incresae R&D-to-GDP ratio from 1,3% in 2005 to 2,5% in 2020.

China’s unique needs as drivers of innovation

25% annual growth in exports (of last 10 years) is unsustainable

Need for stronger social safety nets

25% annual growth in exports (of last 10 years) is unsustainable

Need for stronger social safety nets

Source: Insead

China as an Innovation Nation?

China’s Innovation System

15

Chinas present academic level on a global scale

World Regional National

Harvard University 1 1 1

Yale 2 2 2

Cambridge 3 1 1

Tokyo 19 1 1

University of Hong Kong 26 1

Hong Kong UST 39 2

Chinese university of Hong Kong 42 3

Copenhagen University 48 1

Peking university 50 2

Tsinghua university 56 4

Aarhus university 81 3

Jiaotong university 143 5

Nanjing university 144 6

Source: Times higher education ranking 2007

5 reasons to do more academic collaboration with China

• Volume – number of students and academic institutions• Quality – number of patens, research article, academic rewards,

seminars etc.• Investments (funding) in research, delevopment and infrastructure• Talent• Dynamics

Imitation + Innovation = Imivation ??

MNC

ChineseCompany“Shan Zhai”

Source: Innovation Center Denmark, Shanghai

18

Some of the Shan Zhai products

MidtNET Value Proposition

MidtNET Value Proposition (Innovation)

MidtNET Value Proposition (Innovation)

Does China have a need? Can we quantify and qualify it and identify the target group and decision makers?

Does the Nordic Company have the corresponding competences and are they willing to develop a winning value proposition and product?

Does the Nordic company need help to execute their China strategy – and does Valcon have the competence?

Market Drivers in China

Renewable Energy, Healthcare & ICT

Renewable energy in China

　　 20052005 20102010 20202020

Hydroelectricity capacity(100 GW)Hydroelectricity capacity(100 GW) 1.17 1.17 1.90 1.90 3.00 3.00

Wind power capacity(10 MW)Wind power capacity(10 MW) 131131 30003000 1000010000

Biomass electricity(10 MW)Biomass electricity(10 MW) 200200 550550 30003000

Solar PV capacity(10 MW)Solar PV capacity(10 MW) 77 3030 180180

Solar thermal energy(10Solar thermal energy(104 4 mm22)) 80008000 1500015000 3000030000

Biomass gas (10Biomass gas (1088 m m33)) 8080 190190 440440

Bio-fuels (10Bio-fuels (1044 tons) tons) 102+5102+5 200+20200+20 1000+2001000+200

资料来源：中国能源发展报告 2007

Renewable energy utilization in China

China Major wind power bases:

The planning of 10 GW-scale wind power bases in Gansu, Xinjiang, Hebei, the eastern and western part of Inner Mongolia, Jilin and the coastal area in Jiangsu. According to the plan, all these wind power bases will contain a total installed capacity of 138 GW by 2020, and on the assumption that a supporting grid network is established.

Location of wind power bases

Wind energy in China

•Wind Farm Production Forecasting Using Numerical Model•Offshore Wind Resources Assessment and Offshore Wind Farm Development Feasibility Study•Inter-tidal and Offshore Wind Farm Construction Solutions •Corrosion Protection of Offshore Wind Turbines •Floating Support Structures - For Offshore Wind farm•Manufacturing of Composite Wind blade via VARTM•Offshore Delivery and Installation of Wind Turbine

Donghai Bridge Offshore Wind Farm34*3 MW offshore turbine installed in Shanghai

Technology needed for offshore wind market:

Chinese Solar Cell Production and Installation 1994–2008

China’s Installed Solar Hot Water Capacity1997–2009

Solar Energy in China

On the Chongming island of Shanghai, a 2-3MW PV generation demonstration project has been constructed.

Solar energy in ShanghaiSolar energy in ShanghaiSolar energy in ShanghaiSolar energy in Shanghai

PV R&D in Zhangjiang high-tech industrial zone Zhangjiang is now one of the most important solar PV R&D zone with a annual growth of 50%.

Focused area include:•Solar cell & photo-electricity material

•Crystalline cell manufacture•Solar thin film manufacture

Chinese Solar giant Linuo company has set up a joint R&D center with Solar Energy Institute of SJTU, focus area will be concentrated on:

• Solar water heating technology• Solar air conditioning technology

• Solar industrial heating and drying• Solar thermal generating

Solar Energy in China

On the Chongming island of Shanghai, a 2-3MW PV generation demonstration project has been constructed.

PV R&D in Zhangjiang high-tech industrial zone Zhangjiang is now one of the most important solar PV R&D zone with a annual growth of 50%. Focused area include:

•Solar cell & photo-electricity material•Crystalline cell manufacture•Solar thin film manufacture

Chinese Solar giant Linuo company has set up a joint R&D center with Solar Energy Institute of SJTU, focus area will be concentrated on:

•Solar water heating technology•Solar air conditioning technology•Solar industrial heating and drying•Solar thermal generating

Solar R&D in Shanghai

Microalgae for biodiesel

R&D project of SJTU Biomass centre sponsored by Shanghais Science Committee are now tested in Shanghai Caojing power plant

Danish partners could participate in:•Algae species selection;•Algae carbon sequestration;•Dewatering and dry technology of Algae with low energy consumption;•Microalgae for biodiesel technology •Microalgae for hydrogen technology

Also in China, joint project on microalgae for biodiesel has been set up between China Academy of Science and CNPC (china national petroleum corporation).

Bio Mass

Healthcare in Greater Shanghai

1. Elder Care

• 2009; Expected life-span in Shanghai: 81.73; 3.2 million elders (22.5%)

• Elderly rate: 2015 28.1%; 2020 34.1%; 2030 38.0%

• A huge demand for proper affordable (!) elder care facilities

• Nordic elder care demo ward for the Shanghai society• Presenting nordic elderly-friendly hardwares, architects, softwares,

and nursing staff; • Collaborating with a local top hospital / healthcare center• A portal for local society to experience the advanced nordic designs• A platform for Danish companies to develop a most suitable product

for the Chinese market

2. Reform of Health-care System

• “Safe, effective, convenient and affordable"

• A total investment plan of 850 billion CNY for country-wide from 2010 ~ 2012

• Shanghai’s Focus: increase the resources hugely to the community healthcare center and second tier hospitals, to build a true 3-tier structure

• Expand a full coverage of basic health-care system in the rural area, on the basis of systems of public health, medical service, medical insurance and medicine supply.

Changing Life Styles

• Rocket boost of healthcare demands in certain ”new” areas in Shanghai, mainly due to the fast change of life-style

• Diabetes:* Treatment of diabetes: 173,4 billion RMB (about 25 billion USD)* Accounts for 13% of the total expenditure on medical treatment.* In the next 10 ~ 20 years, the number will rocket up.

• IVF:* Much older average marriage and first-pregnancy age in Shanghai today* Much higher pressure and fast life rhythm* Over 10 million couples in China seeking for medical support for difficulty in fertilization, mainly from the major cities.

Chinese Capital to Danish Bio-tech/Pharma

• Chinese pharmaceutical manufacturers have accumulated quite big capital from the past success

• Chinese pharmaceuticals began to be aware of the importance of owning its own IP, but lack of appropriate platform/pipelines

• A new trend is to in-liscence / acquire attractive pipelines to start with--- a successful case, A Swedish pharma has just accepted a Shanghainese investment heavily in Nov 2011.

• Match-making between Danish knowledge and Chinese Capital

ICT in Greater Shanghai

1: Internet of Things (IoT)

ICT areas of interest in Greater Shanghai

• August 7th 2009, Chinese Premier Wen Jiabao visits ”Wuxi Micro-nano and Sensing Engineering Technology Research and Development Center”.- > kicks off “Sensing China” strategy and national focus on Internet of Things.

• Wuxi Sensing China R&D Center – National Sensing Net Innovation Demonstration Park by State Council of PRC.

• Huawei (R&D in Shanghai) and China Telecom prioritizes IoT:

when the big starts, the small follow.

• Shanghai Institute of Microsystem and Information Technology (SIMIT)

Leading R&D institute and innovation platform

Wuxi IoT R&D and demonstration center

2: Interactive Media

ICT areas of interest in Greater Shanghai

• Huge gaming industry in China. USD 3.57bn in revenue in 2009. USD 4.5bn in 2010.

• Heavy weights like SNDA and Giant Interactive Group are based in Shanghai.

• Big R&D centers (SNDA has 300 people in Shanghai) and big interest in technology and solutions, e.g.:• Music search, Visualization technologies, text-to-speech.

• Online companies are aggresively expanding into online interactive media• online music, video, books, etc.• SNDA is aiming to become the ”Apple of China”.

2: Interactive Media (cont.)

ICT areas of interest in Greater Shanghai

• Challenge: strong government regulations on e.g. online content.

• The business model should not be to compete on content.

• Instead Danish companies can find a business in being a supplier of technology and solutions to the large Chinese companies.

• Example:• SNDA is expanding into online music and online e-books. They are

working on solutions for both – and many more deparments – but are strongly considering licensing or buying third party technology, when possible.

Innovation Center Denmark, Shanghai

100 Qin Zhou Road

200336 Shanghai

Tel: +86 21 6085 2000

Mail: info@innovationcenterdenmark.cn

www.innovationcenterdenmark.cn

THANK YOU

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