INDIA Is a New Hotbed of Research
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September 13, 2004
Let a Thousand Ideas Flower: China Is a New Hotbed of Research
By CHRIS BUCKLEY
EIJING - Harry Shum's office may be one of the best places to witness
the next stage of China's rise as an economic powerhouse.
Set in the heart of the Haidian District in Beijing, with its canyons
of universities, labs and high-tech ventures, his office occupies a
corner of Microsoft Research Asia, the software giant's ambitious
effort to tap scientific brainpower in China.
Dr. Shum oversees 170 scientists who huddle around computers in gray
cubicles to brainstorm and tinker with ideas that may one day drive
Microsoft's technological empire to even greater heights.
"Microsoft began to realize we can't find all the talented people in
the U.S.," he said. Pointing outside, he added: "Nowhere in this
universe has a higher concentration of I.Q. power."
Microsoft is not the only multinational company to use China as a base
for research and development. In recent years hundreds of them have
set up laboratories here, and Chinese officials claim the number is
growing by 200 a year.
The labs vary in size and ambition, but as they multiply and expand
they may help China grow from mostly a user and copier of advanced
technologies developed elsewhere into a powerful incubator of its own,
industry executives and experts say. And the shift may eventually
reshape applied research, jobs and policies in the United States and
other developed countries.
"The Chinese are going to become sources of innovation,'' said Denis
Fred Simon, a specialist in Chinese science and technology who is
provost of the new graduate-level Levin Institute of the State
University of New York. "They will find themselves enmeshed in global
R.& D. more and more.''
But it is far from certain that China will reap the full rewards of
this flowering. Planting and nurturing corporate labs is a delicate
business, and in China they are buffeted by concerns about protecting
patents, retaining and training researchers, and managing the
distances - physical and cultural - between here and headquarters.
When Microsoft opened its Beijing lab in late 1998, it was among the
first multinationals to establish a large research center in China. It
hoped investing in research here would help pry open the door to two
dazzling prizes: China's large reservoir of skilled but inexpensive
scientists, and its consumers, still relatively poor but growing
richer and eager for new technology.
After considering several sites in Asia, Microsoft settled on the
Haidian District, home to some 40 universities, 138 scientific
institutes and many of China's 810,000 research scientists and
engineers.
"China was really the No. 1 target from the beginning,'' Richard F.
Rashid, the senior vice president of Microsoft Research, said in a
telephone interview from corporate headquarters in Redmond, Wash. "We
felt there was a tremendously deep pool of talent there.''
Microsoft, like other companies setting up research facilities here,
was able to lure scientists from government-run labs, which do not pay
as well and often are not working on cutting-edge developments.
"There are a lot of really good scientists and engineers coming from
Chinese universities,'' said Maximilian von Zedtwitz, who teaches
management at Qinghua University here. "Their first choice is to go
abroad, but their second choice is to work in China for foreign
companies."
When the Microsoft lab first announced openings for 50 positions, it
was deluged with tens of thousands of applications, said Zhang Ya-Qin,
the former managing director of the lab who is now a company vice
president in charge of Microsoft's mobile technology.
It is no surprise that Microsoft Research Asia has such popular
appeal. It is one of the few labs here spared the pressure of
developing products for direct application; its researchers, like
those in Microsoft's labs in Redmond, San Francisco and Cambridge in
Britain, are given leeway to explore ideas with no immediate
commercial payoff.
But Microsoft researchers here also said they were conscious of their
untested "outsider" status, which makes them especially eager to find
product applications for their theoretical findings. Among other
things, researchers are working on computer graphics, speech
recognition and text translation.
"We're a young lab and an experiment of having a lab in a developing
country in Asia, so there was a need to prove ourselves," said Zhang
Hongjiang, who runs a new division devoted to shepherding research
findings into applications. He and many other researchers in the lab
said it felt more like an adrenaline-fueled start-up than an academic
institute.
If Microsoft ever overtakes Google in online search, for example, some
credit may belong to Ma Wei-Ying. His group, now up to 10 researchers,
is working on new ways to drill deep into the Internet and select and
organize the information found there.
"We've progressed fast because we have a lot of really smart people
and we discuss and brainstorm a lot," Dr. Ma said. "In the U.S., the
research is much more individual and each researcher is more like a
professor. Here it's more a team."
The expansion of foreign labs in China is bound to spark further
debate, similar to the controversy over outsourcing of technology
services, about the implications of the increasing globalization of
corporate research.
Executives at Microsoft and other companies argue that their Chinese
labs are not taking jobs away from the United States or elsewhere.
"There's an internationalization of research going on," Dr. Rashid
said. "That's a good thing. The more smart people, the more
innovation, and the more benefits for companies like Microsoft."
The starting point for this research boom is China's growing
importance and sophistication as a market for technology, especially
telecommunications and the Internet, industry executives said.
"People realize that with the expansion of China's market they need to
tailor products to the China market," said Martin Hirt, who works for
McKinsey & Company, the consulting firm, and has advised companies on
technology development in China. "A 50-year-old Finnish or American
engineer is not going to understand the needs of an 18-year-old
Chinese youth."
Recently, Oracle opened a lab in Beijing to tailor its Linux operating
software to suit its Asian customers, and companies like Motorola,
Siemens, I.B.M. and Intel are going even further, running full-scale
labs that work on their companies' most advanced products.
Last year, General Electric opened a large research center in
Shanghai, where it plans to employ 1,200 researchers by next year. And
Nokia, the Finnish mobile telephone maker, has moved its software code
writing to China. Chinese officials in charge of the sector say no one
knows exactly how many international companies have research labs in
China, but an official from China's Ministry of Commerce recently
stated publicly that the country had as many as 600 and was adding 200
a year.
Dr. von Zedtwitz was more conservative, estimating that China had as
many as 300 foreign research centers, most of them founded over the
last three years. But he said that within five years China could
overtake Britain, Germany and Japan as a base for corporate research,
leaving it second only to the United States.
Although experts say that China's growth as an international research
base will continue, many also said that growth could be slowed or
ultimately endangered by the growing pains and legal uncertainties.
The most immediate threat is China's laxity in safeguarding
intellectual property rights, which makes it too easy for innovations
and industrial secrets to leak out, only to reappear in a Chinese
competitor's product catalogue. Multinationals' growing resentment of
theft of patents and trade secrets is leading some to threaten to quit
China for India, Dr. von Zedtwitz said.
The other serious challenge is retaining and managing researchers who
are young and relatively inexperienced, but also eager for rapid
promotions and raises. "You can get all the smart people you want,''
said Dr. Simon of SUNY, who has studied many labs run by
multinationals in China, "but they'll run around like a herd of cats
without leadership."
The recent rise of China as a base for multinationals to conduct
research has not yet seriously affected their advanced operations
elsewhere. Indeed, it may be helping them. But Mr. Hirt, the McKinsey
consultant, cited examples suggesting that at the lower end of applied
research, some jobs were indeed shifting from the United States, Japan
and other developed countries to China.
Some Chinese officials have a converse worry - that the foreign labs
may become isolated enclaves, siphoning off China's best talent but
creating few beneficial spillovers. But a growing number of Chinese
officials and experts seem to believe that the main threat to China's
future in innovation does not come from foreign aggression but from
the inertia of Chinese industry.
China has more than doubled what it spends on scientific research to
1.3 percent of national economic output, compared with 0.6 percent in
1992. But little of that money was invested by local businesses.
"The development trend is good, but the problem is our businesses,''
said Zhou Jizhong, a specialist in applied research at the Chinese
Academy of Sciences. "They're the key, and they're quite weak."