UK Technology Activities in UK Technology Activities in RussiaRussia

Juan Matthews Juan Matthews

International Technology Promoter International Technology Promoter

RussiaRussia

2nd International Working Group of the ECNIBrussels 25-26 February 2002

Format of presentationFormat of presentation

1.1. UK DTI International Technology UK DTI International Technology ServiceService

2.2. Tacis programme “Innovation Tacis programme “Innovation Centres and Scientific Cities”Centres and Scientific Cities”

Department of Trade and Industry

Department of Trade and Industry

Foreign and Commonwealth Office

Foreign and Commonwealth Office

BRITISH TRADE INTERNATIONAL

BRITISH TRADE INTERNATIONAL

Office of Science and Technology,

Innovation and Business Development Directorate

Office of Science and Technology,

Innovation and Business Development Directorate

International Technology Service

British Embassy MoscowBritish Council Moscow

British Technology Support in RussiaBritish Technology Support in Russia

DTI International Technology DTI International Technology ServicesServices

• International Technology PromotersInternational Technology Promoters

• Information - Global Watch and Information - Global Watch and Global Watch OnlineGlobal Watch Online

• Overseas Missions programmeOverseas Missions programme

• International Secondments International Secondments programmeprogramme

International Technology PromotersInternational Technology Promoters

• Programme managed by PeraProgramme managed by Pera

• Currently 15 ITPs coveringCurrently 15 ITPs covering– North America (6), China (2), Japan (2), North America (6), China (2), Japan (2),

Europe (3), South Korea (1) and Russia (1)Europe (3), South Korea (1) and Russia (1)– Sector skills in Life Sciences, Energy and Sector skills in Life Sciences, Energy and

Environment, Electronics IT and Environment, Electronics IT and Telecommunications , and Performance Telecommunications , and Performance EngineeringEngineering

ITPs can help byITPs can help by• locating technology or potential partnerslocating technology or potential partners• making initial visits to potential partners on making initial visits to potential partners on

UK companies’ behalfUK companies’ behalf• provide cultural and language assistance in provide cultural and language assistance in

communicating with partners or on visitscommunicating with partners or on visits• helping find specialised assistance – legal, helping find specialised assistance – legal,

tax, customs, IP etctax, customs, IP etc• assisting with setting up missions and assisting with setting up missions and

secondmentssecondments

and in Russia alsoand in Russia also• link where appropriate to ISTC, eg for link where appropriate to ISTC, eg for

Partner Projects for good value R&DPartner Projects for good value R&D• clear activities with Russian Governmentclear activities with Russian Government• provide advice on security and avoidance provide advice on security and avoidance

of criminal activitiesof criminal activities• provide assistance to Russian partners to provide assistance to Russian partners to

help meet UK business expectationshelp meet UK business expectations

Increasing confidence of working in RussiaIncreasing confidence of working in Russia

My backgroundMy background• Originally a scientist and technical manager in Originally a scientist and technical manager in

nuclear sector with links to Soviet Union.nuclear sector with links to Soviet Union.• Broad background in advanced materials, Broad background in advanced materials,

processes and energy technologies.processes and energy technologies.• Six years experience setting up companies and Six years experience setting up companies and

JVs in Asia, involved in technology transfer, JVs in Asia, involved in technology transfer, manufacturing, technical services, software and manufacturing, technical services, software and equipment sales.equipment sales.

• Two years experience helping Russia R&D Two years experience helping Russia R&D organisations commercialise.organisations commercialise.

Why Russia?Why Russia?• High level of scientific and High level of scientific and

technological education (>20k new technological education (>20k new post graduates/year)post graduates/year)

• Strengths in specific sectors from Strengths in specific sectors from former state driven prioritiesformer state driven priorities

• Unique technologies that have not Unique technologies that have not yet been exploited commerciallyyet been exploited commercially

• Low costs and surplus capacityLow costs and surplus capacity

Russian ScienceRussian Science

• 4000 institutes with 400,000 4000 institutes with 400,000 researchers, 880,000 total staffresearchers, 880,000 total staff

• $2B investment in R&D , equivalent $2B investment in R&D , equivalent to $6B in PPP termsto $6B in PPP terms

• 40,000 science based SMEs 40,000 science based SMEs employing 200,000 staffemploying 200,000 staff

• 20,000 patent applications each year20,000 patent applications each year

Main OpportunitiesMain Opportunities• Transfer of specific technologies for Transfer of specific technologies for

exploitation in the UKexploitation in the UK• Supply of materials and equipment Supply of materials and equipment

produced in Russia produced in Russia • Low cost high technology manufacture in Low cost high technology manufacture in

Russia based on UK and Russian IPRRussia based on UK and Russian IPR• R&D services, software writing and other R&D services, software writing and other

activities than need skilled staffactivities than need skilled staff

Technology Networking in RussiaTechnology Networking in RussiaR&D InstitutesR&D Institutes

Institute Institute TechnoparksTechnoparks

City innovation City innovation infrastructureinfrastructureCity and RegionalCity and Regional

administrationsadministrations

Institutes Institutes subsidiaries and subsidiaries and related companiesrelated companies

Private Private CompaniesCompanies

Aid agenciesAid agencies(Tacis, ISTC, UNIDO)(Tacis, ISTC, UNIDO)

Ministries and Ministries and advisory centresadvisory centres

Consultancy Consultancy companiescompanies

BritishBritish EmbassyEmbassyDTI Trade PartnersDTI Trade Partners

British companiesBritish companiesin Russiain Russia

EU delegationEU delegation

National National AcademiesAcademies

British Council, British Council, RBCC, STIRBCC, STI

Location of Russia’s scientific activitiesLocation of Russia’s scientific activities

ST PETERSBURG

VOLGA

S

Tacis Project - Innovation Centres Tacis Project - Innovation Centres and Scientific Citiesand Scientific Cities

The Creation of Sustainable business in The Creation of Sustainable business in Russia’s scientific citiesRussia’s scientific citiesAnglo-French consortiumAnglo-French consortiumPhase 1 October 1999 to October 2001Phase 1 October 1999 to October 2001Phase 2 October 2001 to August 2002Phase 2 October 2001 to August 2002

Reasons for projectReasons for project• Commercialisation is the only way for science Commercialisation is the only way for science

cities to developcities to develop• Survival of scientific capabilitySurvival of scientific capability• Institutions need help to manage commercial Institutions need help to manage commercial

business and realise the benefits of changebusiness and realise the benefits of change• Institutions need help to generate income, Institutions need help to generate income,

improve quality, protect IPR and form strategic improve quality, protect IPR and form strategic partnershipspartnerships

• Institutions need help to attract investment to Institutions need help to attract investment to commercialise R&D resultscommercialise R&D results

Locations of Tacis ProjectLocations of Tacis ProjectPhase 1 Phase 1 • Obninsk, Russia’s first Obninsk, Russia’s first NaukogradNaukograd

- IPPE, Thermal Physics Department- IPPE, Thermal Physics Department- Medical Radiology Research Centre- Medical Radiology Research Centre

• Troitsk, many research bodiesTroitsk, many research bodies- Institute of Super-hard and New Carbon Materials- Institute of Super-hard and New Carbon Materials- Geoelectromagnetic Research Institute- Geoelectromagnetic Research Institute

• Reutov, home of Reutov, home of - NPO MashinoStroyenia- NPO MashinoStroyenia

• Koltsovo, near NovosibrskKoltsovo, near Novosibrsk- Vector Virology and Biotechnology Centre- Vector Virology and Biotechnology Centre

Phase 2 Phase 2 • Dubna Russia’s 3Dubna Russia’s 3rdrd Naukograd Naukograd• Tomsk, Akademgorodok, adjacent nuclear city SeverskTomsk, Akademgorodok, adjacent nuclear city Seversk

Phase 1 resultsPhase 1 results• 15 institutional appraisal workshops and reports15 institutional appraisal workshops and reports• 6 institutions selected and assisted6 institutions selected and assisted• 16 product plan evaluations and related workshops16 product plan evaluations and related workshops• 12 products assisted12 products assisted• 3 institutes restructured3 institutes restructured• 3 joints ventures and 2 legal partnerships3 joints ventures and 2 legal partnerships• 120 staff trained for cultural change and 120 staff trained for cultural change and

commercial skillscommercial skills• Methodology and training courses transferredMethodology and training courses transferred• 4 innovation centres equipped4 innovation centres equipped

Sustainable developmentSustainable development• Source of IP to drive innovationSource of IP to drive innovation

- in Europe and USA the universities- in Europe and USA the universities- in Russia R&D institutions- in Russia R&D institutions

• Right culture in R&D institutions to provide Right culture in R&D institutions to provide innovatorsinnovators

• Rights environment and infrastructure to support Rights environment and infrastructure to support innovationinnovation

• Link with universities and educational institutes Link with universities and educational institutes to provide staffto provide staff

• Development of Russian marketDevelopment of Russian market

The cultural change processThe cultural change process

• Institutional appraisalInstitutional appraisal

• Leadership from the topLeadership from the top

• Strategic planningStrategic planning

• Change actionsChange actions

• Training workshopsTraining workshops

• Restructuring to reinforce changeRestructuring to reinforce change

Evolution of R&D InstitutionsEvolution of R&D Institutions

MISSIONLED

MARKETTESTING

MARKETORIENTED

MARKETDRIVEN

MATURITY

Increasing business emphasis on cost control, management of resources,marketing and sales etc

Commercial Activities Transfer Set-up Re-organise Whole To privatetechnology commercial to face organisation sectorSpin-offs structure market commercialised

Evolution of R&D InstitutionsEvolution of R&D Institutions

MISSIONLED

MARKETTESTING

MARKETORIENTED

MARKETDRIVEN

MATURITY

Government actions Develop Diversify Distance Detach Divest

AEA Technology 1954 1965 1977 1986 1994

Examples of European Institutes nowCERN Switz CEA France Riso Denmark ECN Holland Studsvik, SwedenPSL Switz FZK Germany NPL UK TNO Holland Sinteff Norway SCK Belgium VTT Finland AEA Technology

Model of Commercial Structure of R&D BodyModel of Commercial Structure of R&D Body

Research activities

Managementand central services

Federal bodiesC

US

TO

ME

RS

Commercial activities

M&S

IP ManagementProduct Development

Local innovation infrastructure

IP holding company

Budget and project funding

Rent and IP payments

Institution boundary IP advice

Spin offs

payments for contract R&D

Production and service subsidiaries and JVs

Marketing and investment advice

Business planning advice

Rent payments

IP payments

IPpayments

Rent payments

Aid and conversion bodies

payments for research and restructuring

direct IP payments IP payments

Investors

Technology Generation and CommercialisationTechnology Generation and Commercialisation

Research

IPevaluation

Basic research funding

nostop

potential but needs further work

Product DevelopmentDevelopment funding

Market information

Business planning

nostop

needs further development

Select route to market

Evaluation funding

Exploitation funding

Sell Technology Exploit alone Find exploitation partner

protect

exploit

Instruments for technology transferInstruments for technology transfer• License agreements for patents or know-howLicense agreements for patents or know-how• Joint development agreements with shared access to Joint development agreements with shared access to

IPR (eg use of ISTC Partner Projects)IPR (eg use of ISTC Partner Projects)• R&D contracts - research against specific targets R&D contracts - research against specific targets

IPR owned by customerIPR owned by customer• Exploitation partnership or JV based on Russian IPRExploitation partnership or JV based on Russian IPR• Distribution agreementDistribution agreement• Sales of materials or equipmentSales of materials or equipment• Service agreement to supply resources for analysis, Service agreement to supply resources for analysis,

field activities, software development, technical field activities, software development, technical supportsupport

Options for exploitation of IPOptions for exploitation of IPOOppttiioonn IInnddiiccaattiioonn

EExxppllooiittaattiioonn wwiitthhiinn iinnssttiittuuttee,, bbuutt ccoonnssiiddeerr sseeppaarraattee ssaalleess ccoommppaannyy

UUssee ooff ffaacciilliittiieess tthhaatt rreellyy oonn ccoonnttiinnuuiinngg FFeeddeerraall ssuuppppoorrtt

SSuubbssiiddiiaarryy WWhheenn bbuussiinneessss iiss lliinnkkeedd ttoo mmaaiinn aaccttiivviittiieess aanndd nneeww ssttaaffff hhaavvee ttoo bbee rreeccrruuiitteedd

SSeeppaarraattee ccoommppaannyy wwiitthh sseerrvviiccee aanndd//oorr eeqquuiittyy lliinnkk

WWhheenn aa nnoonn--ssttaattee ccoommppaannyy iiss nneeeeddeedd ffoorr iinnvveessttmmeenntt oorr ffiinnaanncciiaall mmaannaaggeemmeenntt ppuurrppoosseess

JJooiinntt vveennttuurree WWhheenn aa ppaarrttnneerr iiss nneeeeddeedd ffoorr pprroodduuccttiioonn oorr ddiissttrriibbuuttiioonn

SSaallee ooff tteecchhnnoollooggyy ttoo aann uunnccoonnnneecctteedd ccoommppaannyy

WWhheenn tthheerree iiss nnoo ddeessiirree ttoo bbee iinnvvoollvveedd pprroodduuccttiioonn oorr ssaalleess

SSppiinn--ooffff wwiitthh nnoo ccoonnnneeccttiioonn SSmmaallll ssiizzeedd bbuussiinneessss wwhheerree tthhee rreettuurrnnss aarree nnoott wwoorrtthh tthhee ccoossttss iinnvvoollvveedd iinn mmaakkiinngg cchhaarrggeess

Coherency of business (in Obninsk)Coherency of business (in Obninsk)

IPPEIPPEMRRCMRRCKPCIKPCIARAEARAETyphoonTyphoonTechnologiaTechnologiaINPEINPE

Radiation relatedRadiation relatedNuclear materials controlNuclear materials controlDecommissioning and waste disposal supportDecommissioning and waste disposal supportLand remediationLand remediationEpidemiologyEpidemiologyAtmospheric and land monitoringAtmospheric and land monitoringIsotopes and radiopharmaceuticalsIsotopes and radiopharmaceuticals

State sectorState sector

Private sectorPrivate sectorSIGNALSIGNALCyclotronCyclotronSMEsSMEs

Environmental relatedEnvironmental relatedEnvironmental protection equipmentEnvironmental protection equipmentLand remediationLand remediationEpidemiologyEpidemiologyAtmospheric and land monitoringAtmospheric and land monitoring

Process industry relatedProcess industry relatedProcess optimisation - thermohydraulic, corrosionProcess optimisation - thermohydraulic, corrosionPharmaceutical productionPharmaceutical productionMaterials productionMaterials production

Energy relatedEnergy relatedEnergy productionEnergy productionEnergy system developmentEnergy system developmentEnergy efficiency optimisationEnergy efficiency optimisation

ConclusionsConclusions1. Research and production organisations need to internally 1. Research and production organisations need to internally

reorganise to prepare for more effective commercial activity.reorganise to prepare for more effective commercial activity.

2. The Federally funded research base needs to be preserved as a 2. The Federally funded research base needs to be preserved as a source of technology for business development. source of technology for business development.

3. Research and production organisations need to be flexible and 3. Research and production organisations need to be flexible and imaginative in the types of commercial activities they develop.imaginative in the types of commercial activities they develop.

4. The town should look for some coherency of business to 4. The town should look for some coherency of business to stimulate co-operation between organisations and attract stimulate co-operation between organisations and attract industry.industry.

5. The establishment of a city brand should be considered based 5. The establishment of a city brand should be considered based on the common science and technology activities.on the common science and technology activities.

6. Innovation activities should also be part of an overall plan 6. Innovation activities should also be part of an overall plan supported by an efficient infrastructure.supported by an efficient infrastructure.