Swiss pharmaceutical firm Novartis has announced plans to build a $100m (£53m) research centre in Shanghai.
China's pharmaceutical market is worth $13bn
Novartis chief Daniel Vasella said the centre was a "symbol of the ever growing importance of China and our willingness to trust the government".
The firm's Chinese annual sales growth slowed to 10% this year, from a rate of about 20% in the previous five years.
However, Mr Vasella said he expected double-digit growth to continue in coming years.
"The level of scientific expertise in China is rising rapidly," he said.
The 38,000 sq m (410,000 sq ft) centre will employ 400 scientists, with construction set to start in mid-2007.
The lab will combine modern drug research with traditional Chinese medicine, with an initial focus on the causes of cancer.