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Corporations tap China's talent pool

Zhang Benyu, a research associate at the Microsoft lab in Beijing works on his computer in a company lounge, in this photo taken in June. 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. PHOTO: NY TIMES

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, laboratories and high-technology ventures, his office occupies a corner of Microsoft Research Asia, the software giant's ambitious effort to tap scientific brainpower in China.

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 US," Shum said. Pointing outside, he added: "Nowhere in this universe has a higher concentration of IQ 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 laboratories 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 US and other developed countries.

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.

Inexpensive scientists

When Microsoft opened its Beijing laboratory 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 Rashid, the senior vice president of Microsoft Research, said in a telephone interview from corporate headquarters in Redmond, Washington. "We felt there was a tremendously deep pool of talent there."

"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 laboratory 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 laboratory who is now a company vice president in charge of Microsoft's mobile technology.

The expansion of foreign laboratories in China is bound to spark further debate, similar to the controversy over offshoring of technology services, about the implications of the increasing globalization of corporate research.

Executives at Microsoft and other companies argue that their Chinese laboratories are not taking jobs away from the US or elsewhere. "There's an internationalization of research going on," Rashid said. "That's a good thing. The more smart people, the more innovation, and the more benefits for companies like Microsoft."

Advanced research

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.

Recently, Oracle opened a laboratory in Beijing to tailor its Linux operating software to suit its Asian customers, and companies like Motorola, Siemens, IBM and Intel are going even further, running full-scale labs that work on their companies' most advanced products.

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, Von Zedtwitz said.
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