Bursting with Brainpower
Wed Jul 10, 1:25 PM ET
By Michael Kanellos
abundance of manual labor is legendary in this country of 1 billion
people, but brainpower is quickly catching up.
While many technology
giants are expanding manufacturing plants in China, a significant
number of multinationals are increasingly combing the mainland for
engineers and researchers to handle projects for global applications
that, in recent years, would have been performed in labs in the
United States or Europe.
Ph.D.s with years of experience for less than what it would cost
to hire a new college grad out of Stanford," said Chief Executive
Al Sisto of Phoenix Technologies, a software company in San Jose,
At first glance,
the trend might appear to be a typical brain drain or a way for
U.S. companies to hire foreign labor while skirting political obstacles
related to the H-1B visa immigration controversy. But executives
on both sides of the Pacific say the hiring is more of a massive
talent search aimed at a new generation of engineers being churned
out of China's schools.
students are flocking to the industry for a combination of reasons,
including comparatively high salaries, government policies that
encourage technical education, and a booming domestic market. An
estimated 700,000 engineers graduate annually from China's schools,
and U.S. companies want to get the cream of the crop.
putting our design centers where the talent is," Intel CEO
Craig Barrett said when asked about the chipmaker's research centers
in China and Russia. "We'll just chase the best talent."
There is no
denying, however, that Chinese engineers cost far less than their
American counterparts. Single-degree engineers in China generally
make between $4,800 and $8,800 a year, depending on experience and
the company, according to various sources, not including payments
to housing, pension and medical funds that can raise the compensation
figure by 50 percent.
by U.S. standards, the engineer's salary is a goldmine in a country
where the average city dweller makes $4,300 or less. Those with
advanced degrees generally earn substantially more but are still
a bargain compared with Westerners, which means the labs in China
will continue to grow.
many U.S. multinationals say cost is a secondary consideration to
their need to find talent, especially people who are fluent with
the language and familiar with local conditions. For example, Sisto
said the primary language is now Mandarin at Phoenix, the leading
developer of BIOS (basic input-output operating system) software
that allows hardware to speak to software. The company has 18 doctorate
fellows on site at its offices in Nanjing, a city inland from Shanghai
on the Yangtze River.
of raw talent, the master's and Ph.D. students (in China) are absolutely
outstanding," said Dr. James Yeh, director of IBM's China Research
Work done by
Chinese engineers for Western companies runs the gamut, said Wen-Hann
Wang, who runs the Intel China Software Lab in Shanghai. Researchers
in his lab, one of four Intel research groups in China, have worked
on projects to enhance Linux (news - web sites) technology for Intel-based
telecommunications servers, make the Palm operating system work
with its Xscale chip, write software drivers for the Itanium processor,
create applications for e-mailing videos, and perform BIOS and XML
(Extensible Markup Language) research.
research, Chinese centers have carved out expertise in some fields.
Microsoft, Intel and IBM have all shifted major portions of their
"natural computer interface" research projects--such as
handwriting or face-recognition and voice-activation systems--to
China. While the work will eventually be incorporated worldwide,
some of the results have particular domestic resonance.
in Chinese, the interface systems (keyboards) are not natural,"
Yeh said. "I will often ask audiences, 'When was the last time
your mother sent you an e-mail?' The typical response is 'My brother
cellular traffic is also strong. During Chinese New Year, cellular
networks get swamped in a way that researchers from other countries
might never likely experience or fathom. "We are here as a
watch post for this market," Yeh added.
initiatives such as the 2/11 campaign and the Elite University Program
have boosted the number and quality of local universities. Through
the 2/11 campaign the government spread about $2.2 billion among
100 universities, while the Elite University Program spread about
$1.2 billion among 10 top universities. Overall, 2.9 percent of
the country's gross domestic product goes to education. The government
wants every middle school and most primary schools to be connected
with the Internet by 2005.
Beijing, Tsinghua--they are all famous universities," said
F.C. Tseng, deputy CEO of Taiwan Semiconductor Manufacturing Co.
"Less and less people are going to the U.S. for study."
is the dominant theme when it comes to China's educational system.
The state pays for elementary and middle school, but parents often
supplement it with private tutoring, piano lessons and other teachings.
education is one of the strongest drivers behind PC sales here.
It's not uncommon for younger children to start the day at 6 a.m.
and go to bed at 1 a.m., said Carl Yao, a former high-tech executive
in Boston who has returned to China to start businesses.
Many here believe
that such strong ambitions are fueled by the desire to move beyond
the repressive legacy of the Cultural Revolution. Red Flag Software
CEO Liu Bo, for example, cites a mandatory assignment he received
at the age of 15 to reap wheat 20 hours a day on a farm outside
Beijing in 1974.
years of hardship taught me to face difficulties," he said.
"What could be worse?"
work ethic, voluntary or imposed, has led to intense competition
within China's educational system. To get into college, students
must pass a three-day exam, which takes place each July. Students
are tested on physics, chemistry, geography, English, math and other
A decade ago,
only about 5 percent passed. Now, with the state building more colleges,
about one out of seven gets into a university.
can allow admission to top universities, which in turn can lead
to the best graduate programs and jobs in multinationals. But even
for those at the top of the academic pool, getting a premier job
The Intel China
Software Lab gets 3,000 to 4,000 resumes a year, according to Wang,
but only 35 get hired. IBM's lab receives 1,800 resumes from students
with doctorates or master's degrees. It hires 12.
These labs have
the most stringent hiring policies within their respective companies.
Yeh said that the rejection-acceptance ratio is higher than at other
working to provide an environment as good or better than any other
labs around the world," he said.
To get the best
recruits, companies form fairly close bonds with the select universities,
creating grant programs, joint research projects, and local computer
education initiatives for teachers and primary schools.
at the top
For all its
engineering talent, however, China remains glaringly low in one
important area: management.
mix science and engineering together and are more focused on science,"
Liu said. "We lack project managers, systems analysts and developed
Like many local
executives, Liu learned how to run projects at foreign companies.
After graduating from college and working at a Chinese institute,
he spent time at a Singaporean PC manufacturer, Informix, SCO and
is rapidly increasing investment in business degree programs and
executive training, having recently created 62 M.B.A. programs,
according to the China Education and Research Network.
the meantime, are taking the initiative to fill the void. Intel
and Phoenix, for instance, rotate Chinese engineers to U.S. offices
for three-month exchanges and subsidize advanced degrees. Employees
can also get free English language training.
need a huge injection of management," Wang said. "Growing
people is a lot harder than growing technology."
Danica Wang contributed to this report from Beijing.