The 2010 EU SURVEY on R&D Investment Business Trends

These 205 companies are responsible for R&D investment worth almost €40 billion, constituting around 30% of the total R&D investment of the 1000 EU Scoreboard companies. The main findings of the survey are as follows:

Expectations of future R&D investment and its location Companies’ R&D investment is expected to grow by 5%, more than double the expectations of last year’s survey.

On average, the companies surveyed expect their R&D investment to grow by 5% per year over the period 2010-13. This is more than double the rate of last year (2%) and reflects a generally improved economic climate. The expectations have however not yet reached the levels prior to the crisis (7% in the 2007 survey).

The responding companies carry out one-quarter of their R&D outside the EU.

The EU-based companies in the sample carry out one-quarter of their R&D outside the EU. The largest share of foreign R&D investment is in the US and Canada (13%), followed by India (2.6%), China (2.2%), other European countries (1.9%), Japan (1%) and the rest of the world. The shares of R&D investment

carried out in China and India are around 5%, which is a similar value to previous surveys and a relatively low share in the light of globalisation.

Their expectations for R&D investment growth within the EU have increased to 3%, but are the lowest compared to the other world regions.

Growth expectations have increased in all world regions compared to the past survey. For the EU, 3% p.a. R&D investment increases are expected (triple the rate of last year’s survey), leading to a considerable nominal increase of R&D in the EU in the coming years. However, growth rate expectations are much higher in China (25%), Japan (17%), the rest of the world (20%), India (8%), other European countries (8%) and the US and Canada (5%). This reflects the increasing participation of European companies in the global economy, in particular emerging economies, while maintaining their R&D focus in the EU.

Most companies chose their home country as the most attractive location for R&D, and identified the US, China, Germany and India as the most attractive locations outside their home country.

As in earlier surveys, two-thirds of companies considered their home country as the most attractive location for R&D. Of all locations outside the company’s home country, the US is the most preferred, followed by China, Germany and India. These four countries were also the most preferred in the last two surveys.

Innovation

R&D is the most important component of innovation for companies which invest most in R&D. In low R&D intensity sectors, greater increases in innovation investments are expected.

As might be expected, R&D is critical for innovation for 95% of the top R&D investing companies. Market research, training, design, acquisition of new machinery, purchase/licensing of knowledge and R&D outsourcing are also important. The importance of these activities inside the EU is generally higher than outside. Purchase or licensing of knowledge is relatively more important for the high R&D intensity sectors, and design for the medium R&D intensity ones. Outsourcing R&D is overall the least relevant activity for innovation.

The responding companies report that an average 27% of annual sales came from innovative products and services introduced in the past three years.

The share of annual sales from innovative products introduced in the past three years broadly correlates with the R&D intensity of the company. Companies from high R&D intensity sectors derive almost 40% of annual sales from these products, compared to 26% for the medium and 9% for the low R&D intensity companies.

Source: The 2010 EU SURVEY on R&D Investment Business Trends