In Silicon Valley, China’s Brightest Draw Suspicion
Check the employee rolls of Silicon Valley companies and you will find countless graduates of Tsinghua University, a sort of Cal Tech-Harvard equivalent.
They are among the best and brightest of China who have streamed to the U.S. by the thousands in search of the engineering breakthrough, the Internet play or the technology start-up that translates into millionaire in any language.
“When I was still in China, my dream company was Fairchild or National Semiconductor,” says Jay Deng, president of Advanced Communication Devices Corp., a San Jose-based producer of high-speed chips. Six of Deng’s 28 employees, himself included, are Tsinghua graduates.
Indeed, ethnic Chinese are at the helm of an impressive 2,008 Silicon Valley companies--nearly one in five--and a growing proportion are from mainland China.
Some of Silicon Valley’s Chinesehigh-tech pioneers are motivated by intellectual curiosity, personal ambition or greed. Others by national pride. Some, according to jmainland China’s critics, must be spies.
It is here in Gui Gu, as the Chinese call this technology-rich region, that the rhetorical rubber meets the road in the debate over the threat mainland China poses to U.S. national security.
Silicon Valley’s ability to lure the world’s premier technological talent--a reflection of an increasingly global industry and the world’s most welcoming educational systems--is a decidedly mixed blessing to those who fear that it has put America’s technological secrets at risk.
In the wake of allegations that the Chinese may have stolen nuclear secrets from U.S. labs, China’s critics in Washington have called for stepped-up scrutiny of the ethnic Chinese business and scientific community and tougher controls on U.S. high-tech exports.
The trigger for these efforts was a report on Chinese espionage earlier this year by Rep. Christopher Cox (R-Newport Beach), alleging that as many as 3,000 Chinese state-owned firms operating in the U.S. might be engaging in covert activities.
The report claims that Chinese government-owned firms have purchased surplus military equipment containing restricted technology and, in at least three cases, invested in U.S. high-tech companies or export facilities that gave them access to sensitive information.
But even Cox concedes that the vast majority of Chinese living and working here are not stealing secrets. They are creating them, in hopes of enriching the firms they work for as well as themselves.
“We have a transparent economy, we have an open economy, and we benefit hugely from that fact,” Cox says. “At the same time, it is not without a cost. We should not give short shrift to security.”
(An FBI spokesman in the agency’s San Francisco office, which oversees a high-tech task force based in Silicon Valley, refused to discuss the agency’s activities.)
Pulling the noose too tightly would not only choke off a promising market for U.S. computers, chips and satellites in China. It would also threaten the vitality of a local community of mainland Chinese who are poised to become a powerful force in America’s technological evolution and an entre for U.S. firms into China’s vast markets.
Alienating talented Chinese scientists and engineers has backfired before. After being labeled a Communist and deported in 1955 on unproven charges that he was a spy, Tsien Hsue-Shen, then director of Caltech’s Jet Propulsion Center, the precursor to the Jet Propulsion Laboratory, returned to China, where he became the “father of the Chinese missile program,” directing development of the Dong Feng “East Wind” and Silkworm missiles.
The stakes are different, but arguably greater, four decades later, thanks to China’s growing influence and the extensive network of commercial and personal ties between that nation and the United States.
Chinese here privately voice anger over suggestions of disloyalty, and worry that their careers could be hurt if U.S. companies get skittish about putting a Chinese name on a sensitive technology project or doing business with a Chinese company. Other Asian Americans say they also are tainted by the sweeping allegations.
“People are very conscious about it,” says Wei Qun E, a well-known attorney in the Chinese business community here. “It’s not a very good environment for Chinese companies nowadays, especially in Silicon Valley.”
The decades-old case of the deported JPC director is a reminder that Chinese excellence has long played an important role in the U.S. scientific research community. But today in Silicon Valley, it has gone deeply into the realm of commercialization.
Chinese expatriates are already building commercial bridges back to China through their export of U.S. ideas and technology, such as financial software and Internet services.
Chinese entrepreneurs also bring their most valuable ideas here to commercialize, knowing they have the protection of intellectual property laws and access to the world’s richest pool of venture capital.
Last month, GRIC Communications Inc., an Internet firm started by immigrant Hong Chen, announced its plans to go public. GRIC will apparently be the first Silicon Valley firm founded by a mainland Chinese to do so, according to AnnaLee Saxenian, a UC Berkeley researcher writing a book on Silicon Valley’s immigrant entrepreneurs.
Saxenian says the mainlanders, and the Taiwan-born scientists who preceded them, are among Silicon Valley’s most successful entrepreneurs. Of the 11,443 high-tech firms started since 1980, 17% are run by ethnic Chinese, and a growing proportion of these entrepreneurs hail from the mainland.
Saxenian says a “brain circulation” has taken place as successful immigrant entrepreneurs return home to build partnerships with local firms, establish factories and seek out customers for their U.S.-designed products.
Silicon Valley’s ethnic Chinese pioneers were instrumental in developing Taiwan’s powerhouse chip-making and computer industries, vital suppliers to U.S. firms like Apple Computer.
“As the experience of the Taiwanese shows, these immigrant groups can build a mutually beneficial relationship,” she says.
The same U.S. firms being asked to curtail the sales of their cutting-edge technology to China also employ thousands of mainland Chinese scientists.
An example is Gerald Yin, now a vice president at Applied Materials, Santa Clara-based producer of wafer fabrication systems for the semiconductor industry.
Fewer than 50 Chinese nationals worked in Silicon Valley when Yin joined Intel in the early 1980s after getting his doctorate in chemistry at UCLA. In those days, Silicon Valley’s Chinese community was dominated by immigrants from Taiwan.
But that began changing as U.S. relations with mainland China warmed, allowing more mainlanders to come here to study or work. And the flow from Taiwan slowed because of improved opportunities back home.
At Berkeley, the number of graduate degrees in science and engineering granted to mainland Chinese students jumped more than fivefold from 1980 to 1997, while those granted to students from Hong Kong and Taiwan dropped by nearly half.
When Yin and a handful of mainland Chinese engineers established the Chinese Engineers Assn. of Silicon Valley a decade ago, there were still fewer than 500 mainland Chinese in the valley. Now, there are thousands of daluren, as they are called, and at least 40 mainland-Chinese organizations in the area.
During his career at Intel, Lam Research and eventually Applied Materials, Yin worked on the plasma etching process used to produce microelectronic circuits. He received 56 patents and oversaw the creation of several popular manufacturing products using poly-silicon etchers.
“The mainland Chinese are moving up so much faster with so many bright people coming. . . . They are working hard, are outspoken and showing leadership qualities,” says Yin, who estimates there are at least 500 mainland Chinese among the 13,000 employees at Applied Materials.
At many companies, ethnic Chinese from both sides of the Taiwan Strait work side by side on projects, according to Yin.
This Chinese-speaking talent pool is a major attraction for Chinese firms with an eye on the global market. They include Konka, China’s leading television maker, and Galanz, the world’s largest microwave oven manufacturer, which have established research labs here in the last two years. Another growing presence is Legend, China’s leading computer maker.
By hiring talented young Chinese who are graduating from America’s top schools, these firms hope to minimize the culture and language gap and accelerate their technological competitiveness.
Legend, the Beijing-based computer firm that holds 18% of China’s personal computer market, is already a major producer of the motherboards used by U.S. computer makers. Now the firm might develop a low-cost personal computer to sell in the U.S.
From his office in Fremont, Brooks Feng, Legend’s deputy general manager in the U.S., is trying to gain a better understanding of the fickle nature of American consumers.
“We have to have some special product that is different from the local brand name,” he says.
Low-Priced, High-Definition TV
In San Jose, Konka’s engineers have been designing a low-priced, high-definition television that will be built in China and go on sale in the U.S. in November.
By setting up shop here, Konka can work closely with the producers of the high-end memory chips that are the brains of its most sophisticated products, according to Zhao Shankun, general manager of Konka USA.
At a time when the U.S. faces a record trade deficit with China of close to $70 billion a year, many of these Chinese firms are boosting the flow of goods in the other direction.
SingLee, a Chinese firm specializing in computer services for the banking industry, sees huge opportunities for U.S. manufacturers of financial services products given China’s troubled and antiquated banking system. “U.S. technology today is Chinese technology tomorrow,” says Ken Chen, a manager at Santa Clara-based SingLee USA Development Inc.
So far, SingLee has helped U.S. makers of point-of-sale technology and bank statement printing systems find Chinese customers.
China’s leaders and private entrepreneurs are also trying to generate venture capital to jump-start its high-tech industry.
Beijing Enterprise Holdings, a Hong Kong-listed Chinese firm, has established a $50-million venture fund focused on Silicon Valley in partnership with several wealthy Chinese families and San Francisco-based Walden International Harper Group.
So far, the fund has invested $3 million in SiRF Technology Inc., a Santa Clara developer of a global locating system, and $5 million in E-Machines, the cut-rate computer company--neither of which has mainland China origins.
But the firm is still seeking out ways to nurture the entrepreneurial bent of China’s transplanted whiz kids.
“The idea is to invest in Silicon Valley, focus on some of the Chinese scientists trained under Western management and then mobilize them to go back to China,” says Peter Liu, chairman of Walden International.
Hainan Island-based Vantone International Group has invested more than $500,000 in three technology firms with mainland Chinese founders: Santa Clara-based AsiaInfo Holdings, Sunnyvale’s netFRONT Communications and JJ Mountain of Mountain View.
Stella Jin, Vantone’s U.S. representative, says she is looking for Chinese entrepreneurs who have a plan for growing their business.
“Typically, Chinese are . . . good at making money but don’t necessarily have the vision or the heart to have a bigger goal,” she says.
Then again, wooing China’s brightest back to the mainland isn’t necessarily easy. James Zhuge planned to return home after college in Utah. Instead, he worked for several small U.S. firms before founding Dactron Inc. in Milpitas, Calif., to produce sophisticated testing and vibration control equipment used in aerospace and auto production.
He now employs 18 and has annual sales of several million dollars. Clients include Boeing and General Motors.
In his early years in America, Zhuge dreamed about returning to China. But after several trips back, he realized that he has grown too comfortable with life on this side of the Pacific.
“I had no place to go back to,” he says.
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* CHINA’S WEB
Entrepreneurs move ahead with Net projects in China despite regulatory uncertainty. C1
