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Shanghai issues guidelines on research achievements transfer

Jun 27, 2017

The Shanghai Municipal Government’s Information Office held a press conference on May 5 on the city’s guidelines on the transfer of research achievements.

Shou Ziqi, director, Shanghai Science and Technology Commission
Jiang Hong, inspector, Shanghai Education Commission
Zhu Qigao, deputy director, Shanghai Science and Technology Commission


Xinmin Evening News: In September 2015, the Shanghai Municipal Government launched a promotion to further improve the transfer of scientific and technological achievements to help commercialize technology research accomplishments. What is the current situation in this regard? What are the differences between the newly-released guidelines this month and the decision in 2015?

Shou Ziqi: What you have asked is a matter of concern for the general public. The decision and the guidelines have different legal validities. The guidelines are formulated by the city’s legislative body, the Municipal People’s Congress, and as such they have the highest legal validity at the local legislative level. So if the two documents contradict each other, the guidelines will have a higher legal validity.

Secondly, the lengths of the two documents are different. The decision only has 19 segments while the guidelines have 43 segments so the guidelines are more systematic.

Thirdly, the timing and background of the issuing of the documents are different. The decision was launched in 2015 just after the enactment of the new national technology fruit transfer law so some systematic bottlenecks and problems were not fully exposed and tackled. The guidelines were launched much later and problems and experiences have been considered and they have been formulated on the basis of consensus of negotiations and discussion on these issues.

STV: The guidelines mention three ways for investment; could you name them? How are these three ways decided? How will the three ways of investment break existing bottlenecks? Researchers have to pay very high personal income tax before getting revenue and will the set of guidelines loosen the income tax rate for researchers?

Shou Ziqi: Tax collection comes under the purview of the central government. The taxation of equity incentives is a concern. Previously researchers had to pay tax for equity incentives after five years of receiving the incentives but now they only have to pay tax before transferring the equity. This is a piece of progress so this problem has been solved.

Secondly, we will address the taxation of cash incentives. According to existing regulation, cash incentives will be taxed according to an escalating tax rate from 3 percent to 45 percent. If the cash sum is big, the tax rate will be high. We have submitted collected opinions to relevant departments of the central government, so I believe that technology research achievements transfer will have a much better environment and much more consensus will be reached on this matter.

The following are the three ways of investment. The first is the school or the university invests first and then distributes and shares the returns with technology researchers. Second is the university or institute invest through a wholly-owned assets management company or an assets management institution and after investment, they distribute and share the returns with researchers. The two ways are regarded as “investing before distribution”. The concern here is whether assets management companies have distribution rights? The guidelines clarify that a wholly-owned assets management company of a university or an institute has this right.

The third way is to negotiate a ratio of distribution first before investing in the technology research process.

Shanghai Radio: What are the new guidelines’ demands on universities’ systems? What other adjustments should the universities make besides administration systems?

Jiang Hong: The guidelines and the newly amended national science and technology research achievements transfer promotion law both have demands on university and college departments for the transfer. Both laws encourage eligible universities and colleges to set up exclusive institutions to be in charge of research fruits transfer.

First, specific responsibilities have been clarified for the department of research achievements transfer at colleges and universities in local guidelines. This is not clarified in the national law. The responsibilities are divided into six parts, such as accepting reports on R&D information of scientific fruits, analyzing the application value of the fruits and applying for intellectual property right to manage and protect the fruits. The national law states that if there are no specific departments, colleges and universities should appoint relevant institutions and responsible persons to promote such transfers. The central government’s regulations also state that no new administrative establishments should be added and that specific departments, institutions or responsible persons should work under existing administrative establishments.

Second, the guidelines also add many detailed demands on management and specific operations. The guideline formulators hope that colleges and universities will set up connecting action plans. The action plans should mention incentive problems, intellectual property rights protection, researchers’ on-the-job business starting activities and part-time employment at business organizations as well as professional title evaluation. These specific regulations, formulated by colleges and universities, will definitely make the implementation of the national law on fruits transfer and local guidelines much better.

Third, the guidelines mention that research institutions, higher education institutes and state-owned companies’ relevant officials will not be held responsible for losing value of technology research fruits if they tried their best and didn’t seek illegal benefits. The guidelines also explain what “tried their best” means — formulating systematic internal charter and regulations such as democratic decision-making process, implementing relevant obligations and supervision responsibilities.

The guidelines also raise new demands for colleges and universities: they are supposed to submit annual reports of science and technology fruits transfer, which should list the number of transfers, state results of transfers and so on. The reports will benefit government departments’ evaluation on research achievements transfer tasks at colleges and universities and will also serve as a reference for fiscal support.

21st Century Business Herald: I have a question for director Shou. With the development of the construction of scientific and innovative center, what impact does it have on the commercialization of research findings? What bottleneck problems have you encountered in the process?

Shou Ziqi: In general, the commercialization of research findings is a complicated system. And the problem is not just our own, it is a problem across the globe, as it not only has a connection with the output of research findings, but is also linked to market conduct, supporting service capabilities, and of course includes the transformation of government functions. The construction of the scientific and innovative center this time covers all these aspects and we shall do the work well. For example, we will set up a batch of platforms, we will ensure a nice environment so that more intermediary service agencies will gather here, we will push forward further support of scientific renovations by the financial industry, and we will set up more high-quality incubator spaces. All this work is aimed at promoting the commercialization of research findings. It also includes human resources. The commercialization of research findings is a systematic problem, and the construction of scientific and innovative center should improve the whole system.

The second pertains to the bottlenecks we have encountered, which is another aspect of the first problem. The commercialization of research findings is related to four systematic problems, including popularity and supportive policies. So in the regulations we have mentioned some specific rules on the breakthrough of bottlenecks in the commercialization of research findings.

Wenhui Daily: Shanghai will also launch a municipal action plan for science and technology fruits transfer to further clarify the contents of the guidelines. What contents will the action plan have?

Shou Ziqi: The action plan will have custom-made measures and specific tasks following the spirit of the guidelines. The plan will improve integration of production, study and research and other similar problems. Opinions are still being sought for the draft of the action plan and it will be further revised. We will strive to release the final edition soon.

Jiefang Daily: I noticed that the regulations stipulate that the scientific finding achiever has the duty to disclose information and cooperate in the commercialization process. This aspect has been rarely mentioned before. Is it possible for director Zhu Qigao to provide an explanation?

Zhu Qigao: According to clause 5 of the regulations, scientific finding achiever has the duty to disclose information and cooperate in the commercialization process. The purpose is to allow related parties to have timely and accurate information on the commercialization of research findings so that the units can take action on authentic right, management and protection of IP rights. The achiever should release the authentic right and IP right application information to related commercialization parties organized by universities and scientific research institutions in time. The commercialization parties will take charge afterwards.

Second, commercialization is a complicated process. The works of research, development, application and promotion are all related to the active involvement of the scientific finding achiever. So, two duties are clearly written in the regulations this time.

Eastday.com: I have a question for director Jiang. The regulations are clear on the evaluation and investment of universities; what impact do the regulations have on the commercialization of research findings of universities?

Jiang Hong: I think it is an important move for the regulations to include the clause on evaluation and investment. Prior to this, there were numerous misunderstandings in universities, and it is hard to evaluate research findings as intangible assets like tangible assets. It is not a new concept overseas. However, it is a new one in China. Without it, it’s very difficult in actual operation. In addition, whether stocks can be given as rewards to scientific researchers is an old question.

The regulations make it clear that scientific findings can be evaluated for investment, which is a key measure in the national law and Shanghai regulation. The regulations have made one sentence in the national law more detailed, where the clause says: “the research finding should be evaluated for investment as stock share or investment ratio”. The operation management of productive assets of all universities is made through asset management companies of universities. Apart from asset investment and management on appreciation and maintenance, the asset management companies can do nothing else, which is a firewall for them. The third type is to adopt the “divide first and invest later” model as the way of evaluation and investment regarding the actual operation state of some universities.

In my view, the method is stimulating and very important for scientific researchers in at least two ways. One is to put together the interest of all parties involved, it’s no longer a one-off transfer. Second, the research findings can hardly be directly put into manufacturing and application as universities cannot make full technical incubation on every technology, not to mention the production development to meet market demand. The deep cooperation between enterprises and researchers can help the technology transfer and help researchers to understand market needs.

The way of evaluation and investment as stipulated in the regulations can help judge whether a research finding has real value through market mechanism. Meanwhile, scientific researchers can be better stimulated by market mechanism. Thus it is a very good way for both sides.

China News Service: Do the regulations pay more attention to support for universities and research institutions instead of companies?

Shou Ziqi: In the drafting of the regulations, our guiding thought or starting point was to make clear the obligations, apart from giving universities incentives so that they are willing to commercialize research findings. As for market players, including enterprises, our aim is to provide necessary service instead of making detailed obligations. In general, we have emphasized on the side of universities and research institutions in the regulations. The arrangement has been made to tackle the problems or bottlenecks in practice. And we have also listed them in the regulations in order to seek further solutions.