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Posted: Nov 29, 2010

Integration of technology and market Is key for development of China's new materials industry

(Nanowerk News) The new materials industry, China's rising strategic industry and one of its backbone industries in the future, is facing unprecedented opportunities, for it has won close attention of the state and governments at all levels with strong support in finance, land use and taxation. However, an investigation on various new materials enterprises indicates that the integration of technology and market is still needed to achieve a sustained rapid growth in the industry.
Despite fruitful scientific achievements in the new materials industry, there is a lack of key technical patents in China.
China has recorded significant progress in materials science research in recent years as shown by the increasing quantity of papers and patent applications. Statistics show that from 1999 to 2009 (by August 2009), China's scientific and technical professionals published a total of 649,700 papers, ranking No. 5 in the world. Those papers were quoted for 3.4 million times, ranking No. 9 in the world (up 1 place from the previous year). Each paper was quoted for 5.2 times on average, also higher than the previous year's 4.6 times. Among all the subjects, materials science was the best player. Papers on materials science in China accounted for 17.4% of the world's total in this field, next to the US only, and China ranked No. 3 as to the times of quotation. In addition, from January 1, 2004 to June 30, 2009, a total of 690,000 pieces of patents on materials science were applied for in China, ranking No. 3 in the world and next to Japan and the USA only. Since 2008, China has held the No. 1 position around the globe in terms of quantity of patent applications on materials science.
However, China's new materials industry is also confronted with patent blockade by foreign multinational companies.
Take the advanced cell materials as an example, DMLFP as a leading lithium cell anode material features little pollution, high safety, high loading capacity and long service life, and it is reputed to be a key material for the next-generation power cells. Meanwhile, China's national policies and indices show that energy-saving automobiles represented by mixed-power automobiles would witness a huge sales volume in the next few years, and that DMLFP may be adopted for the production of power cells for new-energy automobiles, mixed-power automobiles and energy-saving automobiles, which indicates a promising future of DMLFP in China.
However, patents on this new material which concerns several pillar industries in China are controlled by overseas companies. After protracted and costly legal proceedings and negotiations between the patent holders, the University of Texas and two Canadian companies, and the American companies including Gorbel and Valence, cross authorization as a compromise was agreed, and the world's DMLFP market fell under their joint control. Although the University of Texas has not applied for a DMLFP patent in China, the global situation has made it difficult for related Chinese products to enter the overseas markets.
Furthermore, as an anode material, the production of DMLFP also involves patents on carbon-coating technology, the Chinese version of which was acquired by a Canadian company in 2008. Dozens of Chinese cell enterprises are filing a lawsuit against the Canadian company in an effort to invalidate this patent in China. In case they lose the lawsuit, China's DMLFP cell enterprises would have to bear huge patent fees.
The gap between R&D and the commercialization of scientific and technical achievements is the main reason for the paradoxical situation.
Take the Central South University as an example, as a leader in new materials R&D and achievement commercialization in China, the university has been encouraging scientific and technical professionals to exchange their intangible assets, technological achievements for instance, for stakes since 2000, where great achievements have been recorded. By now, it has attracted investments of nearly RMB 1 billion and incubated more than 70 fast-growing specialized companies, through which lots of scientific research achievements have been commercialized. However, its production, education and research system is still confronted with many pressing problems, including the lack of pilot test platforms.
Professor Duan Xuechen, a PhD supervisor in the Materials Science School of Central South University, is one of the earliest experts engaged in the study of nano materials and ceramic materials in China. His research on nano metal complex oxides conductive pulp was included by the nation's 863 Program in the 10th Five-Year Plan Period, and he succeeded in developing the ITO material for LCD production. Although the research started as early as mid 2005, his achievements have not been commercialized so far due to the lack of pilot tests. According to Professor Duan, there are a great many leading-edge technologies and high-quality achievements in Central South University awaiting commercialization for the same reason.
Why does the pilot test platform become an obstacle in the commercialization of new materials achievements? Generally speaking, a pilot test requires a space of 200-300 square meters and devices worth RMB 2 million. Through pilot tests, technicians could identify and clear the obstacles on the products' way to market. The lack of pilot test platforms cannot be simply relieved with university financing, private equities or venture capitals. For the moment, Central South University has been providing one pilot test platform for each school, but they are usually used to support only certain fields of new materials, metal alloy for instance, while it is still quite difficult to meet the overall demand for the commercialization of technological achievements. In addition, private equities and venture capitals are also reluctant to invest in pilot tests, while attaching more importance to technologies and programs that have completed pilot tests and can go to market directly to generate quick profits.
What is the solution to get out of the dilemma and realize the integration of R&D and achievement commercialization?
First, the role of government in the cooperation among industries, universities and research institutes should be reinforced. Traditionally, the commercialization of scientific and technical achievements in China relies on the cooperation among industries, universities and research institutes in order to give full play to their respective advantages and maximize the benefits of each side. Such cooperation has evolved to become a market behavior with a weakening governmental interference. However, as the new materials technology has a bearing upon China's economy and serves as the basis of other backbone industries and rising strategic industries, the governmental role should be reinforced instead of being weakened. The governments should release more favorable policies, give priority to new materials programs and increase investments to strengthen the connection between new materials R&D and applications and to establish a long-term mechanism for the commercialization of research findings.
Second, governmental investments in specialized technology service platforms should be increased. These platforms include science and technology enterprise incubators, technology innovation alliances, risk investment agencies and public technology service platforms, which are all innovative organizations supporting the development of the new materials industry clusters. As such platforms involve a large number of enterprises and feature a relatively large investment and low profitability, local governments will need to consolidate local new materials innovation and technology resources. Actually, the governments and trade associations in the US and Japan have already been investing substantial funds, technology and manpower resources to build specialized technology service platforms to help the development of small and medium-sized enterprises.
Thirdly, market assessment mechanisms and trading platforms of specialized technologies are required. As compared with traditional materials, new materials products require substantial capital input during their research, development and commercialization process, and new materials enterprises face higher risks due to the relatively big share of intangible assets and uncertainties in products, technologies, market and financing. Therefore, commercial banks are reluctant to provide loans to such enterprises, while it is also difficult for the governments to invest in promising technologies due to the lack of a market assessment system for specialized technologies, which are affecting the timely commercialization of various specialized technologies and scientific research achievements. In this case, a credible technology assessment system can not only lower the risks faced by the new materials industry, but also attract funds to accelerate the commercialization of new materials.
Finally, instead of solely relying on the research forces in universities and scientific research institutions, China's new materials R&D should see more active involvement of the enterprises, with the governments encouraging and directing technical professionals to join the enterprises. Meanwhile, the talent incentive mechanism should be improved and measures should be taken to improve the enterprises' innovative capabilities. According to Mr. Xu Jian, head of the expert panel for new materials development in the "11th Five-Year Plan", even small enterprises abroad have their own R&D system, while many large enterprises in China have none. Currently, the country's drive for innovation comes mostly from the universities and research institutes – such a situation needs changing.
Source: CCID Consulting
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