Huawei Technologies, the mainland's largest maker of networking equipment, is ready to outspend Ericsson of Sweden in research and development in a race to win over clients not just with cheaper products. After investing about 30 billion yuan (HK$37.6 billion) last year, Huawei was boosting its research budget this year to improve mobile and fixed-network performance as well as audio and video transmissions, said Li Yingtao, its head of research and development. The privately held company is seeking to work more closely with carriers to jointly develop products from radio-access networks to miniaturised antennae. "The bottom line when you talk to customers about building a network is that they will ask: 'Can you do it or not?'" Li said. "That ability depends mostly on innovation capacity. That's why we will continue to increase our investments." The comments underscore the mainland's latest efforts to move upscale from low-cost manufacturing. While it still ranks low -35th - on the list of the most innovative countries, China is at the forefront of emerging economies measured by growth in patent filings and is among the highest-rated for research and development spending, according to a World Intellectual Property Organisation report. Net research spending by European technology companies grew last year at the slowest pace in three years, data shows. With 21,400 research employees, Ericsson's research spending last year was almost the same size as Huawei's and accounted for 14.4 per cent of sales. The ratio for Huawei, where almost half of its 150,000-strong workforce is in research, was 13.7 per cent.