Originally Published on wsj.com
By Timothy W. Martin
SEOUL—As the U.S. and China tussle over trade and technology, American companies maintain a major advantage over their Chinese rivals in a critical area: spending on research and development.
U.S. firms, led by Amazon.com Inc. and Google parent Alphabet Inc., invested more than $5 in R&D for every $1 spent by Chinese companies, according to a new report from PricewaterhouseCoopers LLP, which logged the top 1,000 spenders among publicly traded companies. PwC’s report tracked the year ended June 30.
Chinese tech giants— Baidu Inc., BIDU -3.37% Tencent Holdings Ltd. TCEHY 1.80% andAlibaba Group Holding Ltd. BABA -2.42% —each spent less than at least 44 other companies, including Panasonic Corp. PCRFY -2.68% , the Japanese industrial and consumer-electronics conglomerate.
The disparity reflects an approach toward innovation by Chinese firms over the past decade in which they excel at “applications of existing technology, rather than original research,” said Edward Tse, chief executive of Gao Feng Advisory Company, which advises Chinese and foreign firms. He cited mobile payments and messaging apps as examples.
PwC’s figures don’t include private companies, however, which leaves out China’s state-owned monoliths and closely held Huawei Technologies Co., the world’s largest maker of telecommunications equipment. Huawei said it spent more than $13 billion on R&D last year.
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