Abundant talents

Agreeing with Merieux, Zhang from Sandvik said the reason the Swedish company plans to expand its R&D team and capability in China could be partly attributed to the Chinese government's support for technology innovation and the strategic importance of the Chinese market to Sandvik.

China is the fourth-largest market for the company, accounting for 7 percent of the total external sales of the group. From 2002 to 2011, the average growth in annual sales of Sandvik China was more than 25 percent, with the total sales amounting to 7 billion yuan ($1.12 billion) in 2011.

Another consideration is the "rich talent resources, especially engineers", he said.

For Li Zhengqin, vice-president of Merck & Co and general manager of Merck Sharp & Dohme China R&D Center, China is "better than" other emerging markets for multinationals to enhance their R&D facilities.

"It's about government support and a rich talent pool. China's new leaders have decided to invest 800 million yuan in technology research this year and the fund will grow 20 percent annually in the coming years," said Li.

For the talent pool, there are "not only locally cultivated engineers but also overseas returnees, who have an international perspective and have accumulated experiences in other markets," he added.

MSD, the world's second-largest pharmaceutical company, announced at the end of 2011it would make a cumulative investment of $1.5 billion in R&D in China within five years.

So far, everything is "progressing smoothly", said Li.

Despite the slowdown, China's economy still enjoys fairly good growth worldwide and the new leadership is committed to delivering reforms and stimulating domestic consumption in the coming years. This has proved to be greatly attractive to foreign businesses, said experts.

"There are four factors that are important to them — and rapidly growing market consumption in China is the most important of all. They also look at reasonable labor, mature industrial chains and an improving business climate when they plan to expand," said Wang.