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On October 31, the “Decoding ‘Little Giants’ – Specialized and Innovative Enterprises in China” online theme promotion event officially launched in Fujian, with the first-day interview team visiting two representative private enterprises in Fuzhou’s Gulou District and Mawei District to explore the path to becoming a ‘Little Giant’.
Maintaining R&D investment at over 20% of revenue for nine consecutive years
Staff from the Fuzhou Gulou District Tax Bureau conducted research visits to Rockchip Electronics Co., Ltd. to understand the company’s R&D and operational conditions. Rockchip Electronics Co., Ltd. is a company focused on chip design and R&D, dedicated to providing high-performance, low-power solutions for global customers. The latest generation of their flagship chip, the RK3588, which features high process technology and performance, attracted attention for its applications in automotive smart cockpits. The vehicle-mounted solution based on RK3588M can achieve multi-screen display, direct access for multiple cameras, and audio partitioning in the cockpit, all while providing strong computing power. The company has laid out five major directions in automotive electronics: smart cockpits, dashboards/central control, vehicle-mounted cameras, vehicle audio, and video transmission. Several models equipped with RK3588M have already entered mass production, with more models in collaborative development; they plan to introduce more new projects and continue to increase investment in automotive electronics to enhance their market share in this field. Wang Haimin, Vice General Manager and CFO of Rockchip, stated that the company’s products and technologies revolve around three keywords: “general-purpose, AI, and platform,” aiming to become a leader in AIoT chips in China and a platform company that meets the needs of various industries. Focusing on the technological development directions of “large audio, large video, large perception, and large software,” they are deeply cultivating the AIoT market and actively exploring new tracks, such as automotive electronics. Wang Haimin mentioned that after more than twenty years of innovative development, the company has rich experience and technical reserves in high-performance chip design, image processing, high-definition video encoding and decoding, neural network processing, and system software development, forming multi-level, multi-platform, and multi-scenario professional solutions that empower various fields including automotive electronics, machine vision, education and office, consumer electronics, commercial finance, and industrial applications. The reporter learned that Rockchip has always focused on long-term high-quality sustainable development, maintaining R&D investment at over 20% of revenue for nine consecutive years. In terms of talent incentives, the company has implemented three phases of equity incentive plans since its IPO in 2020, covering approximately 700 individuals, fully stimulating the enthusiasm of employees at all levels and enhancing the company’s cohesion, driving rapid and sustainable development. Wang Haimin noted that the company has benefited from several national tax incentives, such as a 15% preferential tax rate for high-tech enterprises, R&D expense deduction policies, export enterprise “exemption, offset, and refund” policies, and immediate refund policies for software integrated circuits. This year, they have enjoyed an immediate refund amount of 19.8749 million yuan; and approximately 373 million yuan in R&D expense deductions. He also mentioned that the tax department has established a communication group for specialized and innovative enterprises, conducting government-enterprise symposiums and on-site visits by expert teams to deliver tax benefit policies “face-to-face” and “point-to-point,” ensuring that enterprises are fully informed of the tax incentives they are entitled to.
Walking the path of independent innovation in “specialized, refined, distinctive, and innovative”
Workers are busy debugging equipment in the pilot workshop of Fujian Newland Auto Identification Technology Co., Ltd. This company has independently developed a new decoding algorithm to meet the complex industrial barcode decoding needs, providing core technologies for image acquisition, optical defect detection, measurement, and positioning in industrial manufacturing. Some of its performance has surpassed that of internationally leading industrial barcode equipment, achieving domestic substitution in multiple industrial fields. Zheng Yongyi, Vice General Manager and CFO of Fujian Newland, stated that innovation-driven development leads the company to high-quality growth, and the company insists on following the path of independent innovation in “specialized, refined, distinctive, and innovative”. He mentioned that the company dares to invest in technology R&D and talent cultivation. Currently, over 50% of their workforce is engaged in R&D, with 90% holding bachelor’s degrees or higher and 20% holding master’s degrees or higher. Over the past five years, the annual average of R&D expenses has accounted for over 10% of their operating income. Zheng Yongyi stated that the government has introduced a series of tax incentives to stimulate high-quality development in enterprises, not only increasing the strength of R&D expense deductions in the manufacturing sector but also allowing enterprises to enjoy R&D expense deductions as early as the third quarter of the current year; additionally, new policies allow advanced manufacturing enterprises to deduct 5% of the current deductible input tax from their payable VAT; these measures have optimized the efficiency of capital turnover for enterprises.
From “people seeking policies” to “policies seeking people” – tax incentives as an engine to boost enterprise development
The interview team conducted interviews at Rockchip Electronics Co., Ltd. In Fujian, there are many specialized and innovative enterprises like Rockchip and Newland. As of now, Fujian Province has 2,325 provincial-level “specialized and innovative” small and medium-sized enterprises and 349 national-level specialized and innovative “Little Giant” enterprises. The reporter learned from the Fujian Provincial Tax Bureau that as of October 2023, specialized and innovative enterprises in Fujian (excluding Xiamen) have enjoyed R&D expense deductions totaling 5.21 billion yuan, with corporate income tax reductions of 1.303 billion yuan; and tax exemptions on income from technology transfer projects amounting to 230 million yuan. A relevant person from the Fujian Provincial Tax Bureau stated that in recent years, the tax bureau has continuously increased its service efforts for specialized and innovative enterprises, shifting from “people seeking policies” to “policies seeking people,” accurately pushing preferential policies; during the application period, they provide “full-process follow-up” services to ensure the effective implementation of tax incentives. It was reported that this year, the state has introduced new policies allowing enterprises to enjoy R&D expense deductions when prepaying corporate income tax for the second quarter in July, based on the deductions enjoyed in October. As of now, Fujian Province has cumulatively pushed over 35,000 cases of unclaimed benefits during the application period, and after reminders, over 2,000 enterprises have paid over 1 billion yuan less in corporate income tax. (Reporter Lin Xianchang)
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Source: State Taxation Administration
Editor: Municipal Bureau Office
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