China Top Internet Firms Pump 45% More Into R&D

Asia's largest spender in technologyChina's top 100 internet companies have increased their investment in research and development (R&D) activities, spending 153.87 billion yuan (US$21.85 billion) last year. This marks the highest collective spend by the group, to date, and a 45.1% climb from 2017, according to stats released by the Internet Society of China, which is affiliated with the Ministry of Industry and Information Technology (MIIT). 

On average, the country's top 100 internet companies 10% of their revenue for R&D, with four in the pack slicing off 30% to 35% for such initiatives, reported state-run media China Daily. Led by Alibaba Group, the group includes Tencent and Baidu--which are second and third, respectively--but also comprises Alibaba's subsidiary Ant Financial. 

Together, the top 100 have secured almost 80,000 patents. These companies are assessed based on various criteria including revenue, profit, innovation, social influence, and corporate responsibility. 

Jiao Xulu, who is an official with the MIIT, said local internet companies showed "intensified efforts" in driving innovation and were emerging in areas such as cloud computing, big data, and artificial intelligence (AI). 

Chief engineer at the ministry Zhang Feng concurred, adding that the top 100 companies would see continued revenue growth this year as online technologies becoming crucial components of China's digital economy. 

Zhang said: "Th internet will effectively promote supply-side reforms, optimise industrial structure, enhance efficiency, and help widen imports and exports."

The top 100 companies last year collectively clocked revenues worth 2.75 trillion yuan (US$390.52 billion), up about 1 trillion (US$142.01 billion) from 2017.

China's internet market expanded 17.9% in the first half of 2019 and currently supports 830 million users. 

Alibaba last year said it was aiming to serve 2 billion consumers and 10 million businesses by 2036. In its latest quarterly earnings, its cloud revenue hit US$1.13 billion and accounted for 7% of overall sales. 

China is expected to remain Asia's largest spender in technology, forking out US$256 billion this year and US$273 billion in 2020, and lead global markets in 5G where the country's investments in telecommunications account for 57% of its overall tech expenditure. It outspent the US by US$24 billion in 5G since 2015, with its three major telcos unveiling plans to launch commercial 5G networks by next year, according to Forrester. 

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