June 21, 2006 11:34 AM PDT

How China's universities fuel tech growth

Ten years ago, Cheng Peng arrived in Beijing to start an engineering degree at Tsinghua University, one of China's best technology academies.

At the end of this year, he will receive his doctorate. But his prospects did not always look so good.

"My home town mines one-third of China's coal," he said. "Twenty years ago, I remember my parents talking about how to get enough money for food and clothing. When I was young, their salary together was around 150 (yuan, or about $18) a month."

"My family got their first telephone 13 years ago," he added. "At that time, not many people had them. But the quality of life is getting better now--even my grandfather has a cell phone. And my brother and sister can afford to pay for my parents to travel or visit us in Beijing."

Cheng Peng
Credit: Dan Ilett
Tsinghua University Ph.D. student
Cheng Peng

Cheng himself is now part of the technology industry that is changing so much of China. His research is in software automation, and he loves it. But it's not all been easy.

"It takes longer to get a Ph.D. in China," he continued, in smooth-spoken English. "I've spent 6.5 years trying to get mine. For us engineering students, there are a lot of problems, because innovation is so poor here. I don't think we can get to Microsoft's or Intel's level within 20 years--they are so far away."

"We can earn a lot of money from doing things like coding and having our own businesses. But fundamentally, the IT economy is something we can't get yet, because we're not innovating," he said.

He said that is being partly addressed at universities, but added: "I think that Chinese people are not used to the rapid transformation of society. Most thinking people, including academics, are thinking of how to get rich. But there's a lack of real thinking. Everyone's trying to break into a market--they just can't do it without innovating."

Incubating IT
Universities are at the heart of the IT world in China, some would argue. Many of China's IT executives are alumni of prestigious universities, and a good proportion of companies are based close to college campuses to simplify human resources and research and development requirements. It is common for CEOs to have Ph.D.s, just as it's common for lecturers to have their own companies.

Tsinghua University is one of many in China with its own technology and science park. The likes of Sina.com, Sohu.com and foreign companies such as Google are just a few of the big names with bases there.

The park itself contains a number of large high-rise buildings, one of which is called the "incubator." The Chinese Ministry of Science and Technology provides up to $100,000 in funding for research and development for the 170 start-up companies housed there. They are given tax breaks, free office space and business grants of up to $12,000 per year. One condition: Getting a place is dependent on the entrepreneurs having studied abroad.

Jichang (James) Guang, an ex-academic who is Tsinghua's director of outsourcing, is also CEO of software outsourcing company Startech, which hires people from the start-up companies.

"With Tsinghua, we have a really prestigious university, so we can do some high-end outsourcing projects," he said. "We do things such as computer motherboard designs, manufacturing, thermoanalysis and software design. We already have one or two companies here about to IPO."

"All companies in the incubator are our human resource pool," he added.

School for business
Guang is one of many in the technology field who has worked in academia, at the Massachusetts Institute of Technology in the U.S. and back at Tsinghua. These days, his Beijing office is in the science park, so he is well-positioned to recruit some of the best-trained and most eager young IT people in China.

His son, who is also his business partner, is based in California and is focused on pulling in new customers. Guang senior has helped to form a company for each project, handpicking development teams from the huge resource pool he works next to.

"IBM in China uses this model," he said. "They go to a company and say: 'I need 10 of your engineers on a one-year contract. Whatever you pay, I don't care.'"

"But here at the incubator, we have an advantage--there are about 3,000 people working here. The companies based in the incubator like this model. They don't have responsibility for the project, and they earn money from (leasing out) their staff. Some people call this place 'the body shop,'" he said.

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