Asia becomes the top region for corporate R & D spend

Volkswagen, Samsung and Intel top three R&D spenders of 2015 according to a PwC study

Asia has become the top destination for corporate R&D spend in 2015, accounting for 35% of total in-region R&D, including both domestic and imported R&D. This places Asia ahead of North America and Europe, which dropped to third, in a complete reversal from 2007 when Europe was the previous leader.  This is according to the newly released 2015 Global Innovation 1000 Study, from Strategy &, PwC’s strategy consulting business, which uniquely examined the R&D footprint of 207 of the world’s largest corporate R&D spenders.

Robust growth in China and India drove Asia’s growth, recording increases of 79% and 116%, between 2007 and 2015, in imported spend, respectively, as more R&D moves into these regions mainly from the US.


Europe Falls Behind On Corporate R&D Spending; France & Germany Main Factors

The study finds that Europe’s fall to the third largest region for corporate R&D spend is a result of low growth in domestic and imported R&D, coupled with a substantial rise in exported R&D – particularly from France and Germany. At the same time, European countries have increased their R&D allocation to high-cost offshore countries in North America and Asia, but not to nearshore Western Europe.


Globalization Advantage

As globalization increasingly becomes the norm (94% of firms conduct R&D beyond just their home country), companies are reaping the benefits of conducting R&D outside of their home country. Companies with more global R&D footprints now perform as well or better than companies with a narrow footprint, the study finds, suggesting that there are material advantages to exporting R&D and that multinationals are able to coordinate successfully across many global sites.

Additionally, companies seem to derive benefits from a diverse global footprint as survey respondents say access to technical talent (71%), being close to customers (68%) and gaining insight into local market needs (64%) are important attributes in choosing where to conduct R&D.

In addition, Strategy&’s annual analysis of the world’s 1000 largest R&D spenders found:

  • R&D has returned to its long-term growth trend post-financial crisis: In 2015, R&D spend by the Global Innovation 1000 has increased 5.1% to $680 billion, the largest year-over-year increase within the last three years, moving it back to a long-term average growth rate post the financial crisis, with a 10-year CAGR of 5.4%. 

  • Industry Breakdown: The three largest industries for R&D Spend in 2015 are computing and electronics (C&E), healthcare and auto. 

  • Top 20 R&D Spenders: Within the Top 20 R&D spenders of 2015, the top three companies have remained fairly consistent over the years – Volkswagen, Samsung, Intel. For the first time Apple has joined the Top 20 R&D spenders 0f 2015 list at #18.

     

Top three Most Innovative companies in the world for 2015:  Global innovation professionals have ranked Apple, Google, and Tesla as the three most innovative companies in the world, with Tesla jumping to third place from fifth in 2014.

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