When it comes to digital technologies such as 5G, virtual reality, autonomous driving, mobile payment systems, robotics, and Artificial Intelligence, there is no bypassing China anymore. In all these sectors, the country has carved out leading market positions and is consequently transforming itself into an innovation-driven economy. With our electronic chemicals, OLED and LC materials, we’re not only a source of important impetus here, we also actively operate research and development in China and promote start-ups.
Investments in research and development
In China, all signs are pointing to digitalization. During a recent visit, this was once again confirmed to me. Experts assume that in the future, China will account for around half of global display production and will develop into one of the world’s largest manufacturers of semiconductors.
This hasn’t happened by chance. According to a paper published recently by the Mercator Institute for China Studies, China has meanwhile invested at least ten times more in quantum research than the United States. Estimates put the figure at around US$ 50 billion. And over the next ten years, the country wants to invest US$ 411 billion in the modernization of its telecommunications infrastructure to the 5G standard.
As a supplier of specialty chemicals used in displays and microchips, our company is an important driver of these developments, which is why China is a key market for us. As a result, our Performance Materials business sector, for which I am responsible, is continuously investing in production as well as research and development in this country. Over the past five years, we have invested double-digit million sums in a Liquid Crystal Center and our Shanghai Display Materials R&D Center, among other things. We have also established an application laboratory for pigment and cosmetics technology in Shanghai. The Display Patterning Materials R&D Center in Suzhou as well as the OLED application labs in Shanghai are our latest investments. By integrating the China activities of Versum and Intermolecular, two companies that we recently acquired, we’ll additionally strengthen our presence in the electronic materials sector.
Not only Performance Materials, but also our Healthcare and Life Science business sectors operate innovation hubs in China. Back in October, for instance, we opened a new hub in the New Bund World Trade Center as part of our Accelerator program. Merck will invite start-ups, academic institutions and other players in the industry to participate in joint innovation projects. During the establishment phase back in February 2018, a dedicated innovation team already began entering into the first partnerships. On November 15, another innovation center will be opened in Guangzhou to advance innovations in the fields of new materials, life science and health.
Seed fund for start-ups
The focus is always on collaborations with Chinese companies. These include partnerships with the largest players in the digital economy such as Alibaba and Tencent. In particular, we want to utilize their expertise in combination with leading technologies in areas relating to the Internet, Artificial Intelligence and e-commerce. On the other hand, we want to advance digitalization together with Chinese start-ups. The country is home to one-third of the world’s “unicorns”, as non-publicly listed start-ups valued at more than US$ 1 billion are called. That is why we recently established a new €13 million seed fund within the scope of our overall €300 million corporate strategic venture arm M Ventures. It is intended to advance relevant innovations from China and bring Merck closer to the Chinese start-up scene in light of the country’s increased focus on innovation. Ideally, all partners will benefit from collaborations of this kind.
A win-win situation
Merck will continue to play an active role in China’s transformation into an innovation-driven economy. At the same time, China’s growth in digital technologies will benefit us. We will therefore continue to invest heavily in our activities in electronic materials and display technologies. And this will allow Merck and China to shape their path to the digital future together.