Companies are moving aggressively to make their innovation more global. More than two-thirds of the respondents said they are conducting product development for the rest of the world in China.

Participants had big ambitions for the future, with 74 percent saying they expect to be conducting global R&D in China for the rest of the world 10 years from now.

The survey found that vehicle manufacturers and computing and telecommunications companies are the most likely types of enterprises to undertake global R&D in China, closely followed by companies involved with consumer goods, health and life sciences and industrials.

"One example of the kind of innovative products is the Chevrolet Sail car, manufactured by SAIC-GM. The latest model was designed and engineered at Shanghai GM's Pan-Asia Technical Automotive Center, and it is exported to India, Latin America, North Africa and the Middle East," said Steven Veldhoen, a global partner at Booz.

More than half of the respondents forecast that R&D work in China would offer higher value-added than that carried out elsewhere over the next decade.

"I think it is because China has the most diversified consumer segments and the fastest-changing shopper behavior, factors that propel us to keep innovating," said Zhu Jianwen, the Beijing-based president of the R&D center Procter & Gamble Co, a leading consumer goods company based in the United States.

China-based innovation becomes viable also because of its huge market size and incomparable talent pool, said Shen Yuanqing, chief operating officer of Microsoft Corp's Asia-Pacific R&D group.

"The country churns out some 500,000 university graduates annually with computer science-related degrees, bringing fresh impetus to our innovative work. It also ships the largest number of electronic devices," he said.

Respondents to the survey named Alibaba Group Holding Ltd, Huawei Investment& Holding Co Ltd and Tencent Holdings Ltd as the country's top three innovative companies.