Recruiting in China

Kathy Chen
Jason Dean
The Wall Street Journal, 14 March 2006

BEIJING -- Multinational companies, drawn by a huge and inexpensive talent pool, are pouring money into research and development in China -- a trend that promises to broaden the country's huge role in the global economy.

The total number of foreign-invested RnD centers in the country has surged to about 750 from 200 four years ago, according to China's Ministry of Commerce. And in a survey of multinationals published in September by the United Nations Conference on Trade and Development, China was by far the most frequently cited location for RnD expansion, well ahead of the U.S. and third-place India, China's chief rival as an emerging innovator.

Still, China's growth as a global RnD hub faces some constraints. Among them is the country's weak protection of patents and other intellectual-property rights. That has encouraged some foreign companies, fearful of risking their trade secrets, to keep more cutting-edge research out of China, analysts say. But others have rushed to expand the scope of their development efforts here.

Whereas RnD investment in China initially focused on adapting existing products and technologies to the Chinese market, companies such as Procter & Gamble Co., Motorola Inc. and International Business Machines Corp., among many others, have been investing to expand their Chinese RnD operations to develop products for the global market.

PnG opened a research arm in China in 1988, consisting of two dozen employees concerned mainly with studying Chinese consumers' laundry habits and oral hygiene. Today, the U.S. consumer-products giant runs five RnD facilities in China with about 300 researchers who work on innovations for everything from Crest toothpaste to Oil of Olay face cream.

The Chinese facilities have been a lead site for developing a new grease-fighting formula of Tide laundry detergent that sells in Asia, Eastern Europe and Latin America. At one facility in Beijing's university district, researchers use computer modeling to tinker with other promising formulas that chemists in white lab coats and protective glasses then mix and test. "We are developing capabilities in China that we can use globally," says Dick Carpenter, director of PnG Technology (Beijing) Ltd.

Giving impetus to the RnD expansion in sectors from biotechnology to pharmaceuticals to semiconductors is China's government. Having enlisted foreign investment to transform China into a manufacturing powerhouse over the past few decades, Beijing now is mounting a campaign to strengthen domestic innovation that could help push the country into more advanced niches of the global economy.

In his annual report at the National People's Congress in Beijing, which ends tomorrow, Chinese Premier Wen Jiabao said the central government will increase spending on science and technology by nearly 20% this year. "China has entered a stage in its history where it must increase its reliance on scientific and technological advances and innovation to drive social and economic development," he said.

China's State Council, or cabinet, recently said the country would seek to boost RnD investment to 2% of gross domestic product in 2010 and 2.5% by 2020. At a news conference Friday, senior officials outlined tax breaks and other tools they plan to use to meet that target. Last year, total RnD spending in China -- not including foreign investment -- reached $29.4 billion, rising steadily from $11.13 billion in 2000, according to the government.

China faces numerous obstacles to joining the ranks of the world's innovation leaders -- beyond its weak intellectual-property protections. Research spending is still small compared with that of developed countries; the U.S., for example, spends about 2.7% of GDP on RnD, compared with 1.3% of GDP in China last year. And much of what is spent in China still comes from foreign companies: Less than a quarter of Chinese midsize and large enterprises had their own science and technology institutions in 2004. Of China's high-tech exports, valued at $218.3 billion last year, nearly 90% was produced by foreign-invested companies, according to the Ministry of Commerce.

Still, the RnD trend is bolstering China's position relative to other developing countries, particularly India, which is also seeking to build its innovation abilities. India's total domestic spending on RnD rose an estimated 9.7% to $4.9 billion, or 0.77% of GDP, in the fiscal year ended March 2005, according to India's Ministry of Science and Technology.

India is also trying to build RnD, "but the scale of investment is not much" because of budgetary constraints, says V.S. Ramamurthy, a top official at the ministry. Foreign investment in Indian RnD has also lagged behind that of China, he says. And while Mr. Ramamurthy argues that the amount of investment isn't the only way to measure RnD success, "it is a concern for us."

Zhang Jun, director of the China Center for Economic Studies at Shanghai's Fudan University, says that given time, "China's advantages in this area will become more obvious...and its attractiveness will increasingly become stronger than India's."

Among China's draws, he says: the relatively low cost of hiring engineers and researchers; a huge talent pool, including five million university graduates annually (one-fifth majoring in science or engineering); and China's own huge market of 1.3 billion consumers. China offers its students abroad incentives to return once they graduate, including generous research grants and chances to run their own RnD projects.

One early returnee is Enge Wang. Mr. Wang, who had worked as a research associate at the University of Houston, decided to return to Beijing to conduct research under a Chinese Academy of Sciences program in 1995. At the time, he says, his U.S. colleagues and friends questioned his decision, but he says he is glad he made the move. Today, Mr. Wang is director of the Institute of Physics under the academy, one of China's top research organizations, which is engaged in several RnD cooperative ventures with foreign companies.

China's "research funding is getting much better," Mr. Wang says, and as a result, overseas Chinese are flocking back from top U.S. institutions like Harvard University and Lawrence Berkeley National Laboratory. Talented returnees can secure enough backing "to build up their own lab and extend their research in one direction for 10 years," he says. "It's hard to find such conditions elsewhere."

"There's been a paradigm shift among foreign companies in China," says Chen Zhu, a Chinese Academy of Sciences vice president. "Now, more foreign companies realize

China is not just a market but a country with huge amounts of talent."

Motorola, which began investing in low-level RnD in China in 1993, now has 16 RnD offices in five Chinese cities, with an accumulated investment of about $500 million. The U.S. company has more than 1,800 Chinese engineers, and the number is expected to surpass 2,000 this year. They have recently begun developing new phones and other products for sale not only in China, but also overseas, executives say.

One phone developed in China, the A780, lets users write on the screen with just a finger, rather than a stylus. It's now available in the U.S. and Europe. Another phone that can scan contact information from business cards using a built-in camera and enter it into a contact database is expected to be marketed in the U.S. "China is moving from the manufacturing center into advanced RnD," says Ching Chuang, who heads Motorola's Chinese RnD operations.

Microsoft Corp.'s basic-research lab in Beijing was only its second outside the U.S. when it opened in 1998. That China lab now employs about 200 full-time scientists, and the software giant expects its total RnD headcount in China to double in this year to about 800 researchers.

At IBM's research lab in Beijing, Chinese scientists have led the development of several technologies now being used abroad. Among them: "voice morphing" software that can convert typescript or a recorded voice into another voice. "Our RnD now has a global mission," says Thomas S. Li, director of IBM China Research Lab.

At the state-run Institute of Computing Technology, engineers are tackling one of technology's tougher challenges: designing a computer microprocessor. Though still many years behind industry leaders like Intel Corp., the institute last year unveiled its second-generation microprocessor, with about the same computing power as mainstream chips in the late 1990s. This year, it plans to finish work on a third-generation chip that could narrow the gap.

China is also emerging as an RnD force in such sectors as nanotechnology, biotech and genetically modified crops. It was the first country to establish a full rice genome database, which has helped Chinese scientists develop hardier and higher-yielding strains of the staple cereal.

Swiss pharmaceuticals companies Novartis AG and Debiopharm SA have teamed up with the Shanghai Institute of Materia Medica under the Chinese Academy of Sciences to conduct research into traditional Chinese medicines to look for treatments for malaria and Alzheimer's disease. "This last decade, the progress we have seen in China's scientific research sector is phenomenal," says Ju Li-ya, director of Debiopharm's China department.

DEERFIELD, Ill., March 22 /PRNewswire-FirstCall/ -- Baxter International Inc. announced today plans to invest approximately $60 million over the next five years to expand production capacity at its four manufacturing facilities in China to support sales growth in the company's Medication Delivery and Renal businesses. Baxter's sales in China, which were approximately $100 million in 2005, are expected to more than double by 2010, given the anticipated increase in demand for the company's intravenous solutions (IV) and peritoneal dialysis (PD) products.

"This investment symbolizes Baxter's strong commitment to meeting local needs for critical products and advancing healthcare in China and across the Asia Pacific region," said Peter J. Arduini, president of Baxter's Medication Delivery business. "It also underscores the importance of this key market in Baxter's continuing geographic expansion and growth."

Baxter provides hospitals throughout China with a range of intravenous solutions and specialty products that are used in combination for fluid replenishment, general anesthesia, nutrition therapy, pain management, antibiotic therapy and chemotherapy. The company also serves a growing population of patients within the country with products and services to treat end-stage kidney disease.

In addition to four manufacturing facilities in China, Baxter operates seven others in countries across the Asia Pacific region, including India, Japan, Singapore, Australia and the Philippines.

"In the last year and a half, Baxter has significantly strengthened its regional presence, including the recent opening of the company's new Asia Pacific headquarters in Shanghai," said Gerald Lema, president of Baxter Asia Pacific. "Baxter's new regional focus positions the company well to meet the growing healthcare needs of patients across the region."

Baxter International Inc., through its subsidiaries, assists healthcare professionals and their patients with the treatment of complex medical conditions, including cancer, hemophilia, immune disorders, kidney disease and trauma. The company applies its expertise in medical devices, pharmaceuticals and biotechnology to make a meaningful difference in patients' lives.

This release includes forward-looking statements concerning investment and sales growth in China. The statements are based on assumptions about many important factors, including the following, which could cause actual results to differ materially from those in the forward-looking statements: the continuing development of demand for company products in China, competitive market dynamics, local regulatory requirements with respect to products and investment, and other risks identified in the company's most recent filing on Form 10-K and other SEC filings, all of which are available on the company's web site. The company does not undertake to update its forward-looking statements.

Baxter International Inc.

CONTACT: Media Contacts, Deborah Spak, +1-847-948-2349, or Tom Kline,+1-847-948-2251, or Investor Contacts, Mary Kay Ladone, +1-847-948-3371, orClare Sullivan, +1-847-948-3085, all of Baxter International Inc.

Web site: http://www.baxter.com/

Wednesday, March 22, 2006

Qualcomm today announced in Shanghai that it is working with China TechFaith Wireless Communications Technology (TechFaith) to create a new Chinese firm, TechSoft. Qualcomm and TechFaith will invest up to $35M to found TechSoft, a new company focused on developing application software for wireless devices. The investment by Qualcomm is part of a $100M effort the firm announced in 2003 to invest in early- to mid-stage Chinese companies building CDMA-based products. TechFaith is a handset application software provider based in China.

http://www.socaltech.com/fullstory/0003549.html

Company Cites Growing Global Demand for Clean-Air Products for Passenger Cars

CORNING, NY - March 29, 2006: Corning Incorporated announced today that its board of directors recently approved a capital expenditure of approximately $15 million to expand the manufacturing capabilities for clean-air products at Corning Shanghai Company, Ltd. (CSCL) in Shanghai, China.

This investment will increase the manufacturing capability of the facility to meet anticipated demand for Corning advanced ceramic substrates for light-duty vehicle applications. Corning advanced ceramic substrates include thin-wall products that deliver higher performance for emission reductions. The expansion is expected to be fully operational by mid-2007.

"The tightening of emissions standards in Asia and around the world continues to drive demand for Corning clean-air products," said Thomas Appelt, vice president and general manager, Corning Automotive Technologies. "Through the expansion of our facility in China, we will be better able to supply clean-air products to our global customers, while still maintaining a strong presence in China."

"Corning is proud of its long history in China," said Curt Weinstein, general manager, CSCL. "We value our highly skilled, dedicated employees and the many relationships we have developed over the years. This additional investment in the facility is further proof of our commitment to the region."

In China, demand for cleaner vehicles is being driven by the Euro III and upcoming Euro IV regulations that will require lower emissions. Tighter global regulations, along with growth in the China economy, make China an attractive market for Corning.

CSCL, which is wholly owned by Corning Incorporated, is a state-of-the-art, high-tech emissions control substrate facility, that first began shipping product in early 2001. In addition to manufacturing advanced substrates, CSCL also includes sales, marketing and engineering operations that provide world-class service for Corning customers in China and throughout Asia.

Corning is a leading supplier of advanced catalytic converter substrates and particulate filters, supplying all of the world's major manufacturers of gasoline and diesel engines and vehicles. The company invented an economical, high-performance cellular ceramic substrate in the early 1970s that is now the standard for catalytic converters worldwide. Corning also developed the cellular ceramic particulate filter to remove soot from diesel engine emissions in 1978.

http://www.theautochannel.com/news/2006/03/29/002345.html

Wednesday March 22, 11:26 am ET

STAMFORD, Conn., March 22 /PRNewswire/ -- GE Real Estate today announced its first commercial real estate investment in China. GE will invest US $20 million and be the sole Strategic Investor in the newly formed CITIC Capital Vanke China Property Development Fund.

The Fund, together with China Vanke Co., Ltd., the largest publicly listed real estate developer in China, plans to invest a total of US $100-150MM in residential real estate assets in specified economically developed regions in China, including the Pearl River Delta Region, the Yangtze River Delta Region, the Pan Bohai Region and other selected inland cities.

The Fund will be managed by CITIC Capital, a member of the CITIC Group (CITIC), a Chinese transnational financial services conglomerate. China Vanke Co., Ltd. will be the exclusive development manager for all Fund investments. A CITIC group entity and China Vanke Co., Ltd. will also make a substantial capital commitment to the Fund. The Fund will be domiciled in the Cayman Islands and governed by Cayman Islands law.

Michael Pralle, President and CEO of GE Real Estate, commented, "The CITIC/Vanke China Property Development Fund is the ideal vehicle for entry, as we are partnering with two of the most reputable companies in China."

"Investing in residential properties is the right entry strategy, because it is the most robust and liquid commercial real estate segment in China. The value of this partnership exists in learning this market and establishing a confident presence in multiple business centers throughout China," noted Mark Hutchinson, President, GE Real Estate Asia-Pacific. "Also, as the sole strategic investor we have a right to further co-investment, giving us the potential to scale up the portfolio managed by this partnership significantly."

Pralle added, "Also, we will be exploring investment opportunities in other asset types throughout China, including retail, hotel, office and industrial properties. We have a pipeline of deals totaling several hundred million dollars which we will review as we move forward. We see great potential in China."

Following this transaction GE Commercial Finance Real Estate Asia-Pacific will have real estate investments and operations in Japan, South Korea, Australia, New Zealand, India and China.

Notes to editors:

About GE Real Estate

GE Real Estate (http://www.gerealestate.com) is a world leader in real estate capital. Formed in 1972, the business has more than $35 billion in core assets with 34 offices located throughout North America, Europe, Asia, and Australia/New Zealand. GE Commercial Finance Real Estate, backed by its parent company's AAA rating, offers a broad range of financing, equity and servicing solutions including: intermediate and long-term mortgage financing, restructuring and acquisition capital, niche equity investment/joint ventures, capital markets securitization and placements, and asset management. As one of the fastest growing units within GE Commercial Finance, Real Estate has experienced annual growth of more than 10% for the last ten consecutive years.

GE Commercial Finance (http://www.gecommercialfinance.com) offers businesses an extensive array of financial services and products worldwide. With approximately $217 billion in assets and an expertise in the mid-market, GE Commercial Finance provides loans, operating leases, financing programs and innovative structured capital to help customers grow. GE Commercial Finance is a wholly-owned subsidiary of the General Electric Company (NYSE: GE - News), a diversified services, technology and manufacturing company with operations worldwide.

http://biz.yahoo.com/prnews/060322/phw025.html?.v=51

By Li Dapeng (China Daily)
Updated: 2006-04-10 05:40

The mainland's first job fair directed at Taiwanese was held on Saturday in Xiamen, Fujian Province, with hundreds of job-hunters flocking to the fair in hope of snapping up one of 500 vacancies on offer.

The job fair, organized by human resources companies across the Taiwan Straits, was especially open to Taiwanese graduates and professionals.

More than 200 job-hunters attended the fair, including about 100 students and professionals from Taiwan, as well as 100 Taiwanese studying in universities on the mainland.

Lin Jia-yi, a Taiwanese college student, was one of many job-hunters travelling between different company booths at the job fair.

A recent graduate of Taiwan National Chengchi University, Lin is focusing on the mainland for her career.

"There are many more job opportunities here than in Taiwan," Lin said. "Though I may earn less in the short term, my career prospects are very attractive."

About 50 mainland and mainland-based Taiwan and overseas companies and institutions had over 500 vacancies on offer at the fair.

Wang Jianzhong, an official with Kunshan Human Resource Centre from East China's Jiangsu Province said: "We didn't find the suitable professionals we needed today, but we did get valuable information about the expectations and needs of Taiwanese people in relation to their career development on the mainland."

"Job information about the mainland is still not transparent enough for Taiwanese talent, which has been the main obstacle for them starting their careers here," said Steve Tsai, chief executive officer with Pan Asia Human Resources Management and Consulting Corporation, the fair's Taiwan organizer.

"So the human resources organizations on both sides should co-operate to offer more information to help them," Tsai said.

"Both sides are trying to make this kind of cross-Straits job fair a regular event," added Tsai.

"The gap in salary between Taiwan and the mainland has caused many Taiwanese students to go back to work on the island after they graduate from mainland universities," Zhao Shi-Cong, president of Taiwan Students Union, said.

Zhao said generally, a monthly salary of NT$20,000 to 30,000 (US$619-929) is available for graduates with bachelor degrees in Taiwan, while they would only receive 2,000 to 3,000 yuan (US$250-374) on the mainland.

According to him, about 9,000 to 10,000 Taiwanese students are studying at mainland universities.

Taiwanese professionals who are working in Xiamen can also enjoy a number of favourable tax regulations issued by local government, said officials with Xiamen Local Taxation Bureau.

For instance, the threshold for individual income tax for Taiwanese people working on the mainland is 4,800 yuan (US$600) starting from this year, which is 3,200 yuan (US$400) higher than that of their mainland peers.

Statistics from the bureau indicate more than 3,000 Taiwanese people are working in the city.