"China is going to become the technological platform for innovation in terms of resource substitution, consumption and efficient use of resources," said the A.T. Kearney chief.

One advantage for the country is it can mobilize resources in "uniformity of purpose", Laudicina said, meaning that when China decides to do something, it commits all its resources.

As China's labour cost advantage continues in coming years, and its importance as a market for global companies increases, multinationals will continue to invest in China and the country's focus will turn to research and development (R&D), he said.

According to the A.T. Kearney FDI confidence index report, about 75 per cent of 1,000 executives said they would consider doing R&D in Asia and Eastern Europe. China and India were highlighted as top spots.

Laudicina said developed countries, facing labour shortage in the coming several decades, will have to outsource some low-end jobs to developing countries like China and India.

It is estimated that by 2010, the United States will be short of 7 million workers, while the gap will be widened to 35 million in 2030, so it must either export jobs or import workers, he said.

However, Laudicina warned China should pay more attention to intellectual property rights (IPR) protection and keep an open mind to innovations.

"If China does not attract foreign investors in innovation, it will take a much longer time to progress, so the IPR concern of investors must be addressed properly," he said.

(China Daily 11/24/2006 page12)

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