More than 54.79 percent of industrial companies above designated size in Zhoushan, East China's Zhejiang province have set up research and development (R&D) institutions as of the end of September this year, local media reported.

These R&D institutions include 56 provincial high and new technology R&D centers.

Thanks to increased investment in R&D and the implementation of production standards, Zhejiang Yuanbang Material Technology Co Ltd has improved its product quality and technological content, with some of technologies leading the industry.

"Investment in R&D has brought us tangible results," said Lou Shan, manager of Yuanbang, adding that the profits generated by old products is decreasing year by year while that of new products is gradually increasing.

Lou noted that Yuanbang invested 3 million yuan ($448,000) to develop high-end material products this year which have helped the company rake in 10 million yuan in profit and tax, a year-on-year increase of more than 40 percent.

Yuanbang will continue investing more in developing new technologies and new products, according to Lou.

This year, Zhoushan has rolled out a series of policies to encourage local companies to increase investment in R&D and establish a reserve fund system for R&D.

Companies will receive a reward of up to 500,000 yuan if their annual R&D expenditure reaches 2 million yuan and maintain a year-on-year growth of 10 percent or more for two years in a row.

Fifty percent of the fees for technology services bought by Zhoushan companies can be covered by the local government up to 200,000 yuan.

In the first nine months of this year, industrial companies above designated size in Zhoushan invested 2.61 billion yuan in R&D, a year-on-year increase of 311.4 percent.