China is rapidly transforming into a global hub for innovation. With significant R&D investment, modern infrastructure, and a vast pool of highly trained professionals, the country now offers more than manufacturing, it is a strategic base for research and technological development.
Major global companies such as Apple, Microsoft, Intel, Bosch and BASF have established R&D centres in China, alongside domestic leaders like Huawei, BYD, ByteDance, and Alibaba. These centres are often located in cities such as Shanghai, Shenzhen, Beijing, and Hangzhou, now recognised globally as innovation clusters.
China's expansive domestic market allows for real-time testing and iteration, while key sectors such as AI, energy, biotech, and advanced manufacturing benefit from strong government backing and a collaborative ecosystem.
The policy environment also plays a major role. Incentives such as tax breaks, funding schemes, and special zones target high-tech sectors and strategically encouraged industries reinforcing China's position as a global R&D destination.
Comparison of R&D Expenditure (2023)
| Country |
R&D Expenditure |
% of GDP |
| China |
RMB 3.3 trillion (~$458.5 bn) |
2.64% |
| USA |
$940 billion |
3.39% |
How to Choose the Right Location for an R&D Centre in China
Choosing the right location is essential. Key factors include proximity to innovation hubs, access to talent, infrastructure quality, and alignment with your sector.
Top cities like Beijing, Shanghai, Shenzhen, and Hangzhou offer dynamic ecosystems with universities, incubators, and world-class industrial parks, ideal for high-impact R&D.
Suggested Locations for Setting Up an R&D Centre in China
| City |
Key Industries |
Highlights |
| Shanghai |
- Biotech
- AI
- Semiconductors |
- Leading tech parks
- Global talent
- Strong IP systems |
| Beijing |
- AI
- ICT
- Cybersecurity |
- Tsinghua, Peking University
- Zhongguancun tech hub
- National R&D focus |
| Shenzhen |
- Robotics
- Electronics
- AI |
- Rapid prototyping
- Access to Greater Bay Area
- Home to Huawei, DJI, BYD |
| Suzhou |
- Nanotech
- MedTech
- Precision Manufacturing |
- Suzhou Industrial Park
- Cluster of high-tech foreign firms
- Lower costs, access to Shanghai |
| Hangzhou |
- Fintech
- E-commerce
- Cloud computing |
- Alibaba HQ
- DeepSeek, AI start-ups
- Blockchain & smart city focus |
| Chengdu/Chongqing |
- Aerospace
- Auto
- Advanced Manufacturing |
- Rising R&D presence
- Rich in STEM graduates
- Lower cost base |
The Role of Free Trade Zones and High-Tech Zones
Free Trade Zones (FTZs) and National High-Tech Zones offer valuable support to R&D-focused enterprises. While FTZs provide simplified procedures and fiscal advantages, high-tech zones may offer equally strong or even better local incentives.
FTZs are often located in areas with strong infrastructure, offering easier access to customs and foreign exchange facilities.
Companies with High and New Technology Enterprise (HNTE) status within or outside FTZs may qualify for reduced Corporate Income Tax (CIT) at 15% (vs the standard 25%).
Key Tax Incentives in Free Trade Zones
| Incentive |
Description |
Notes |
| Reduced CIT |
15% rate for encouraged industries |
Subject to local implementation and HNTE status |
| VAT / Customs Exemption |
On imported R&D equipment |
Requires pre-approval and use for in-house R&D |
| HNTE Status |
National-level policy, 15% CIT |
Supported by FTZ / local authorities |
| R&D Super Deduction |
Up to 200% for qualifying expenses |
Higher rate for manufacturers |
| DTA Access |
Avoids double taxation on cross-border income |
Treaty-based, FTZs may assist application |
Note: Some FTZs promote partial CIT relief for early-stage operations, but applicability depends on local rules and sectors.
Beyond FTZs: Other Strategic Innovation Zones
Many successful R&D hubs in China operate outside FTZs, within national high-tech development zones or municipal innovation parks. These zones often offer:
- Grants and R&D funding
- Subsidised lab space and facilities
- Talent recruitment support
- Streamlined administration
Examples include:
- Zhangjiang Hi-Tech Park (Shanghai): Pharma, AI, semiconductors
- Caohejing Hi-Tech Park (Shanghai): IT, electronics, smart manufacturing
- Xi'an High-tech Zone (Xi'an): Aerospace and software
- Tianfu New Area (Chengdu): AI and green tech
Companies outside FTZs can still access:
- 15% CIT rate (with HNTE status)
- Super deductions on R&D spend
- Project-based support from local authorities
Talent and Infrastructure: Foundations for Innovation
With over 2 million STEM graduates annually, China offers an abundant talent pool for R&D teams. Cities like Beijing and Shanghai serve as recruitment hubs, drawing both local and international researchers.
Local governments also offer benefits to attract high-level professionals, such as:
- Household registration and settlement support
- Housing and relocation subsidies
- R&D staff grants and incentives
Infrastructurally, China's tech zones are built for high-end research with:
- Fibre-optic networks and smart utilities
- Customisable office / lab environments
- Strong IP, legal and financial services
- Excellent transport and logistics access
How Fidinam Can Help Set Up an R&D Centre in China
Fidinam provides comprehensive, end-to-end support for companies looking to establish R&D operations in China.
Fidinam's services include：
- Strategic Site Selection: Identifying the right city and zone based on your sector, budget, and growth goals
- Incentive Navigation: Supporting HNTE / TASE certification, FTZ access, grant applications, and local policy alignment
- Business Setup & Compliance: Legal structuring, tax registration, accounting, and regulatory support
- Cross-Border Structuring: International tax planning, transfer pricing, and IP protection
With in-depth knowledge of local ecosystems and a global consulting approach, Fidinam helps clients reduce setup costs, secure incentives, and ensure long-term compliance.
Conclusion
China is a prime destination for companies building the future through innovation. The right location, combined with access to policy benefits and expert guidance, can significantly accelerate your R&D ambitions.
Fidinam is your trusted partner from strategy and setup to compliance and growth helping your R&D centre thrive in one of the world's most dynamic innovation landscapes.
Contact us at info@fidinam.com.cn or via the form below.
