Let a Thousand Ideas Flower: China Is a New Hotbed of Research

By CHRIS BUCKLEY

Published: September 13, 2004

http://www.nytimes.com/2004/09/13/technology/13china.html?ex=1252900800&;en=ead8646519768624&ei=5090&partner=rssuserland

Summary:

BEIJING - 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.

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.

"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.

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.

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.

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.

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.

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.

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.

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.

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