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High-Tech Research Moving From US To China
Hugh Pickens writes "The NY Times reports that American companies like Applied Materials are moving their research facilities and engineers to China as the country develops a high-tech economy that increasingly competes directly with the United States. Applied Materials set up its latest solar research labs in China after estimating that China would be producing two-thirds of the world's solar panels by the end of this year and their chief technology officer, Mark R. Pinto, is the first CTO of a major American tech company to move to China. 'We're obviously not giving up on the US,' says Pinto. 'China needs more electricity. It's as simple as that.' Western companies are also attracted to China's huge reservoirs of cheap, highly skilled engineers and the subsidies offered by many Chinese cities and regions, particularly for green energy companies. Applied Materials decided to build their new $250 million research facility in Xi'an after the city government sold them a 75-year land lease at a deep discount and is reimbursing the company for roughly a quarter of the lab complex's operating costs for five years."
This is what happens when you try to be smart ass and move all of your work load to other countries because it's supposedly cheaper. Good job.
Wait until the Chinese steal your tech and the government keeps quiet about it. You'll soon discover that reimbursements and deep discounts are peanuts.
This will be a great, hot new trend until companies start running into what Google already has - their research & assets seized by the government, the company kicked out of the country, and no compensation or help forthcoming. It may not be in China's best interest to do so, but they have the track record already. If a company breaks whatever new, ultra-restrictive law that China decides to put in place, they'll lose everything. Businesses will either get out on their own (assets intact), or will be put out of business, with all their hard work going to enrich the government of China. Good luck!
Fortunately instead of a manufacturing based industry, the US will concentrate on enforcing the concept of "intellectual property" with tough new laws to keep that nation ahead of everyone else in the technology race, while outsourcing the manufacturing to cheaper offshore locations. It's a perfect system.
Er, hang on, guys - where are you going?
History repeats itself. Why the hell should American raw materials be shipped all the way to Jolly Old England to be taxed and manufactured into finished goods that are shipped all the way back to the US, for a huge mark up (and more taxes)? Not so fun when you're on the other end, is it?
I guess the last region to be exploited is Africa. Is it already too late to start buying land?
Seven puppies were harmed during the making of this post.
The decline of the US has already happened. But we're too arrogant or perhaps more ignorant on whats going on. Within the next 10 years, China will surpass the US in everything. The only thing the US still maintains a hold on is the Media/Entertainment industry. Wake up America otherwise we will go gently into that good night.
A lot of production and manufacturing were moved to China over the past couple of decades, and that's only been increasing. Free traders promised that high tech jobs would stay in the US, and now they're moving out too.
I wonder what the ultimate result of this will be. I know that the US will always need mechanics, plumbers, electricians, retail clerks, warehouse people, office workers, etc, but none of these jobs pay very well (though I have noticed a trend that the price of service jobs such as electricians and plumbers has increased significantly, at least here in Los Angeles, over the past decade). Heck, they've even outsourced customer service at call centers overseas. Will this mean that in the next fifty years, America will just be in the service industry and nothing else? And the kind of service industry, by the way, that's menial and requires little knowledge and effort (like being an office clerk). Will most of the highly-prized work go overseas? Does that mean that people who want to work in those fields will have to go overseas to get work? And if they do, will they be making pennies on the dollar? Would China even allow that? I'd imagine they'd want their own people to be employed, rather than incoming foreigners.
I don't know what will happen in the next few decades, but trends like this scare me. It makes me think about how, in an effort to make more profit, corporations have essentially dismantled US tech and manufacturing, which, for most of America's history, have been the backbone of this country. Heck, you can't even call farmers and ranchers that anymore; we import even our beef from other countries.
While China is busy developing technology from the last decade, America is has leapfrogged everyone with the social media revolution. We've got things like Twitter, Facebook, Gowalla, 4Square and hundreds of other innovative services which connect people so they can share their stories and do social media stuff like upload their photos and blog right from their email clients! Location-aware twitter cloud blogging! ...ok, we're fucked.
Maybe, but the trouble with China is that you can't bet on the long-term. They are quite happy to pull the rug from under your feet, take your property off your hands and smother you in unintelligible paperwork at the drop of a hat. That's why China will probably not represent much of a threat, at least for the forseeable future.
the city government sold them a 75-year land lease at a deep discount and is reimbursing the company for roughly a quarter of the lab complex's operating costs for five years
When this happens in the US, it is the companies that will make out with the best deal because the US government honors their commitments to legal contracts even when they screw over their citizens. I imagine that these businesses think the same thing will happen in China.
When they are settled in China, it will be like working with Darth Vader, "Pray that I don't alter the deal any further..." and those companies will have no recourse. Once all the equipment is over there it is not like they can just pick up their toys and leave. More than likely they will steal the technology, add tariffs, change the lease agreements and in general screw them over until they come to the same conclusion as Google, it just ain't worth it.
Idiot in Suit #1 - "No one has any money in the US to buy our stuff! What should we do?"
Idiot in Suit #2 - "Uhh, lets move our production to China cuz its cheaper and get rid of all our American employees further hurting the crumby state of the economy instead of keeping them and keeping money circulating in our country."
Idiot in Suit #1 - "Dude,you're such a genius."
Yes they are. This is just the s$#T they spin to the shareholders, polititions and the sheeple so the CEOs can get their big bonuses without that much flack.
Back in the late 80s, Applied Materials thought of Japan as the new technology epicenter, and their chairman ordered hiring managers to bring in as many Japanese speakers as possible. They even moved their HQ to Japan. I learned all this from a job fair presentation and subsequent articles about them in the tech press at the time. Clearly, Applied Materials now considers China the new epicenter.
However, AMAT is just one company and does not necessarily represent a trend; they are just a company that is particularly focused on Asia. Significant technology R&D still happens in the U.S., notably around MIT and the Research Triangle in the east, Silicon Valley in the west, and various pockets elsewhere around the country (Seattle, Atlanta--anywhere there are clusters of universities and tech companies).
Obviously, China is going to either buy or grow the talent it needs to expand technology domestically. There is a trend for top Chinese scientists trained in the U.S. to relocate back to China to help their own country develop, or at least to land a more prestigious position more quickly than in the West. It's only a matter of time before China, like Japan before it, becomes self-sufficient in technology and starts to really contribute its own inventions rather than simply copying or building on others.
The way for America (and other countries) to compete is simply to make our country as competitive an environment as possible. Make small business loans as available as possible, and otherwise stay out of the way and let businesses incubate. We Americans tend to take business for granted, but like the flowers and grass in the yard, you have to pay attention or the plants you need and want will be overrun by weeds, or die from lack of water or fertilization.
Like the other Asian players, the Chinese get this. Ever since Deng Xiaoping and the 4 Modernizations movement, business has been seen as the engine of growth and prosperity. We Americans would do well to learn from their example and get back to basics. We have a goose that lays golden eggs; let's feed it, not kill it. I would begin by upping civilian research, allowing more tax incentives for corporate R&D, and maybe push more math and science education down to the high school level.
it's = "it is"; its = possessive. E.g., it's flapping its wings.
So you think Google is the rule, and not the exception? Most modern corporations have the will to skirt US law to sell to countries like Iran, Cuba, North Korea, and so forth, despite trade embargoes. US companies helped themselves and Hitler make a killing during WWII. (A guy named Prescott Bush even got in some trouble for it.) The US and her corporations armed Indonesia in the genocide of the East Timorese, right through the 90s. We are still responsible for 70% of the arms sales in the world, all manufactured by US corporations.
So, no. As long as the Chinese government is paying cash, corporations will ignore everything else. Just like they always do.
Hell, US investment in China skyrocketed after Tiananmen Square, because China proved they were willing to kill their own citizens to maintain order while they opened China up to "investment" in the Special Economic Zones. Meanwhile, Cuba is under an embargo because it's a communist state? I think we can all see the true value system of the American corporation. Just be glad you're on this side of the equation -- for now.
Wait, wait, wait. How is the free market winning a great thing in and of itself? The only way that is a great thing is if people benefit. You are asking people to give up all benefit, and calling that a win. Your self interest is pretty damn obvious here.
Your post in a nutshell: "You lazy, greedy bums, do more for me for less or I'm moving to China!" Sounds like YOU are the one who needs some competition. I can't wait until we start outsourcing managers and CEOs and people like you get shown that you are not, in fact, special and unique snowflakes. There's a million guys in China who can do a manager's job ten times better than you, for a tenth the pay.
As for me, I'm going to use whatever tools I have at hand, including political and social tools, to promote my own self interests. If the free market won't help me, fuck the free market. I'm in it for me, not the Free Market. All the parasites who want to make a buck off of me can go hang, you aren't as special, you aren't as smart, and you aren't as talented as you think you are.
- None can love freedom heartily, but good men; the rest love not freedom, but license. -- John Milton
I hear this a lot, about how the Chinese and Indians are supposedly so much smarter than Americans, Europeans, Australians and the Japanese. Having worked in industry and academia with them, I can tell you that it's a load of bunk.
The education there is very different from that of Western nations. Since they have so many people competing for comparatively few spots, they resort to various aptitude tests to try and weed out people. The people who succeed here are the ones who can memorize huge amounts of otherwise useless information, and regurgitate it at will.
Anyone who has worked in advanced R&D is aware that just knowing a huge amount of facts isn't of much use. With the Internet and computers making information retrieval trivial, memorizing huge amounts of information really isn't as beneficial as it may have been.
In R&D, the main factor to consider is how inventive and innovative a researcher is. That doesn't come from being "book smart". It comes from being able to think flexibly and creatively. This is a trait that is encouraged in the academia of the West, but denounced and suppressed in the East.
Take software development. Sure, Indians can rattle off all sorts of near-useless data about class hierarchies and method signatures and algorithm runtime complexities (you know, the sort of stuff the rest of us would just search for online or in a book). However, ask them to perform a task that requires some innovation, trial-and-error or critical thinking, and they're totally lost. That's why so many software projects developed in India by Indian-trained developers fail so horribly.
What a bizarre statement. All countries are going to need more electricity, how does that justify abandoning the US?
China is investing heroic amounts of money in infrastructure and power generation because they want to keep their economy growing.
They are the second largest energy consumer (behind the USA) and are projected to double their energy requirements over the next twenty years.
Considering that India (which is right next to China) is the other country that has explosive growth projected, why wouldn't you move your company to Asia? I mean, there is literally no metric in which China and India will not be outbuying the USA when it comes to power.
[Fuck Beta]
o0t!
I hear what you are saying but I don't think it works. The REALLY big innovations rarely ever get done at some big behemoth company (sure there are exceptions like PARC and Bell Labs.) Most of the time the next huge thing comes from some guy starting his OWN company. Let's not forget that Europe saw the US dominance in computers and tried their own big government subsidies and it did very little to stop Intel, Microsoft, etc.
If you really want to look long term, then you have the best universities (the US is still far and away at the top here) and provide basic funding for university research.
The American government will step in to prevent CEOs from having to deal with the consequences of their actions. Remember the uproar in the 80s over Japan on the issue of trade? Guess what, throughout the 50s,60s, and 70s lots of work was being sent to Japan, but it was the American companies sending the work over there and there was very little uproar on the political stage.
Then starting in the mid-to-late 70s the Japanese started selling things in the US directly under their own brands and thus cutting the American CEOs out of the loop. It was only then that the politicians started really crying "they took our jobs!" and the supposedly "free-trade" Reagan(one of our worst presidents ever, I have no idea why people lionize the B-actor) made Japan make some major trade concessions and forced them to strengthen their currency.
So far China hasn't really made a big push in the west with their own brands, but its really only a matter of time. Then and only then, when the rich, who own the politicians lock stock and barrel, suffer will the politicians even attempt to do anything about Chinese trade practices.
Monstar L
With the Internet and computers making information retrieval trivial, memorizing huge amounts of information really isn't as beneficial as it may have been.
So you're saying we should all put links to Tiananmin on our web pages, so we get a competitive advantage from being able to look thing up easier?
perhaps universities should charge less for an education then?
You expect someone to get a degree that cost them 30-50K or more and work for 25K a year?
you are nuts if you think that is fair.
Why not just let you own slaves? Or some nice child labor?
More likely we need to stop allowing the import of goods made using these tactics. That would level the playing field by bring them up to our level rather than us stooping to theirs.
Understand what Applied Materials does. They're a leading manufacturer of semiconductor manufacturing equipment. Your CPU was probably made in a fab equipped with Applied Materials equipment. Applied Materials itself does not make ICs or solar panels.
Until recently, most high-end ICs were designed in the US or Japan and manufactured with US or Japanese equipment. That's changing; more consumer electronics parts are being designed in China. There are some good Chinese chip design houses. Although they're not yet up to doing a state of the art superscalar CPU, they can do most smaller parts.
I've met the head of Applied Materials's solar division, who is one of the more sensible people in the solar energy field. For him, it's all about installed cost per KWh per year. He shows charts of where the cost has to be to compete with other energy sources without subsidies. (This changes with latitude; as you get closer to the equator, it gets better. Spain is competitive now.) Most of the people in "alternative energy" are asking for subsidies, but Applied Materials recognizes that to really make a success of solar, it has to compete without subsidies. So, unlike the firms making noise about getting costs down (Nanosolar, etc.) but not actually shipping much, Applied Materials is really doing it.
A point made by the Applied Materials guy is that the cost of installation needs to come way down. Right now, installation costs are about half the cost of a solar installation on a building. It's "a guy with a pickup truck", he says. That needs to come way down. Solar panels shouldn't be placed on roofs; they should be the roof. This requires roof designs where a section can be either a solar panel or a plain roof, and all the seams are weathertight. There's a big payoff for getting this right. The cost of installation goes way down, the panels are less likely to be pulled off in wind storms, and the wiring is under the roof, which simplifies connecting the panels.
By Engineer I mean mechanical, probably one of the last to have had (survived / endured) the old style apprenticeship, which is another point that won't mean anything to those younger than me, but is in fact vastly relevant to overall ability and knowledge.
For every technology that I have seen, the following is true.
1,000 guys actually manufacturing a product commercially using "x" technology push the field more in one year than 1,000 guys working in R&D do in 10 years.
Yeah, there is a bit of chicken and egg there, but the fact is that it is only when you start to make the product commercially, not prototypes, that you really learn about and master the technology.
The old engineering adage is "you have to build one, to build one".
A classic example for the US audience is the Saturn V, that was the pinnacle of 20 years of PRODUCTION effort from a team that arguably started with Von Braun's flying prototype bombs.
Even with CAD / CAM / CAE / CNC / etc, none of which we had back then, I sincerely doubt the US could build one today that actually flew to spec.
The Japanese basically fucked the British bike industry by starting out on PRODUCTION for a generation, before they were capable of designing anything even equal to what we had, not because they were stupid of rubbish engineers, but because it takes production experience to master anything.
Then the Japanese basically fucked the British car industry, exactly the same way.
Television sets? Ditto.
And the beat goes on.
You all have it 180 degrees out, worrying about R&D and IP and all that crap being outsourced, when you outsource production you are eating your own seed grain, doom is inevitable.
The next generation is based on the apprentice of today, and by far the best apprenticeship is one served in a production environment.
Mod me down as much as you like, I've got karma to burn.
http://slashdot.org/~GuyFawkes/journal
First of all China is robbing the West blind intellectually. They are breaking into computer systems left and right, stealing anything not nailed down, and bringing all that IP back home. Popsci or Popmechanics had an excellent article about how the Chinese are doing this for anything ranging from helicopter engines to night vision chips. Secondly China is drawing as much big industry to their country as possible. They want us to setup factories, show them how to do the work, and in the end they know all of the ins and outs of how we became such a production powerhouse and they will have a trained workforce. They will have the facilities on their soil, they will have the workers, and that 75year lease is worth exactly jack shit if they decide one day they would politely like you to leave NOW. Third China is buying up our debt like crazy and it won't be long before they can begin to exert all sorts of "pressure" on our country - we're mortgaging our future in more ways than one! Fourth China is undercutting big industries like telecom and networking in order to get their eqioment sown all over the place - and often managed by their employees. Lets hope they never flip the switch! Last but not least China is taking the lead in manufacturing "green" power like solar and wind. This is in many ways the future and while it's true they need power badly by taking the lead in this and drawing companies to setup shop there on their soil they effectively OWN it all should they decide to take it. China is the last place I'd want to place any sort of advanced chip fab that's for sure!
Whether we realize it or not we're mortgaging our future. CEO are worried about the next quarter's profits and not worried about building a strong company for the long term. They see short term gains by moving their IP overseas and that bumps stock prices - and in turn their bonuses. Even if they totally screw up they have ensured golden parachutes that provide them with plenty of money - scre everyone else.
Yes, this sounds awful paranoid but I do not see the Chinese as benign by any stretch. They police their citizens with draconian laws, the censure their press and internet, and they have a history of taking the long view - something we sure as hell aren't doing right now! We're building a house of cards...
Build it, Drive it, Improve it! Hybridz.org
I was with you until you put all the blame on government.
Blar.
Consider the science contests from high school called science olympiads, where big scientists like Grigori Perelman and Terence Tao have competed, contests where things like the ones you mentioned (innovation, creativity, etc.) play a huge part for the results, let's say the two most relevant subjects for computer science (informatics and mathematics):
Historic results for all countries on the IMO (mathematics):
http://imo-official.org/results.aspx
Last results for gold medal on the 2009 IOI (informatics):
http://www.ioi2009.org/index.jsp?id=414&ln=2
As you can see, at least in these competitions, China DOES seem to be better than USA (than all countries in fact), while India seems a more mediocre country like you comment.
Unfortunately, we are not talking of Indian and US education. We are talking of US educated PhDs in India. They cant get Green cards or H1Bs easily in such a climate - so they go back.
Lets see - the average number of caucasians in any science or technology PhD program is low - most are asians. So I guess they have the critical skills to ace the US education system without their 'critical skills'.
So lets see some of the key things you point out:
1. Software development fails due to lack of critical thinking amongst Indians - so lets see MSFT projects routinely used to fail when indians were almost rare on msft campus. Cant blame that on Indians. Software projects in general fail quite a bit not because of programming but due to lack of project management skills.
You cant compare the average programmer who comes here to do crappy ERP consulting or Java programming with 'innovative researchers' here in the US.
2. Anyways lets see - what does the average Slashdot reader do ? programming for businesses to process orders ? sell stuff on the web ? How many are actually doing anything innovative ?
Will your CIO miss you if the HTML/JS/java stuff you are doing is done by some other dork in another part of the world ? I dont think so - esp. if it is done at 1/3rd the price and with limited benefits and 6 day work weeks.
For those of you who are truly 'innovative' - there is nothing to fear.
3. 40% of NASA/MSFT/GOOG etc. are asians (chinese + indians + koreans etc.) - now remember these are from the small population of the students who happen to be chinese and indians. So I guess these chinese and indians are not 'critical thinking' challenged.
4. Superiority complex is unfortunately akin to shooting yourself in the foot. You may think you are the critical thinkers and the innovators - but remember, indians/chinese and most 3rd world people are much hungrier for success. This is the windows vs Apple model. Apple may have been cooler - but Windows takes over by sheer numbers.
2 billion to 350 million. You would need to be 3-4 times as innovative as the rest of the world to survive :) - that is assuming like 800 million of the Chindia population is a complete waste. The reason India and China did not have much to show in patents was cos they cost $3-$4k even in small countries. Now the patents from Indian research labs are piling up!
Bye bye average American programmer!
I suspect the above poster is only seeing the tip of the iceberg. The sort of developers that people are exposed to via outsourcing are usually of very poor quality.
Outsourcing to a highly profit driven company works a lot like the way the USSR rocket program used it's German staff.
Here's how it worked. The experienced German staff were put in a team with a few Russians that knew nothing but the basics. After a while the Russians in the team would be competant, and then they would suddenly be posted elsewhere and there would be new people in the team that knew nothing but the basics. After a while there was a very large pool of Russian staff that knew everything the German staff knew and it was no longer considered worthwhile to continue to feed the German staff.
I suspect the only outsourced developers the above poster met were the ones that he was training while being told that they were working for him. The answer is not to look at the bottom of the pile but instead at published papers and products. The two countries the above poster implies are full of dumb heathens of inferior race have civilian nuclear power programs twenty or thirty years ahead of what Westinghouse etc in the USA can do, and they did it with less cash.
He's forgetting that outsourcing is often about milking the client as much as possible while spending as little as possible and not about a successful software project.
Interesting. I never thought of it that way.
I managed a group that was heavily indian years back, mostly here on visas, whle the client did a more formal search for a CTO. I wasn't all that impressed with their skills. The two lead programmers, one indian and one russian, did 90% of the work, while the rest had a hard time finishing simple development tasks.
What struck me was the inability to understand a problem unless it had been broken down into formal requirements. They didn't understand anything about business needs, users needs, interface considerations, or work flow. They just knew how translate what was essentially pseudo-code into actual code.
I didn't ask them about this directly, but in talking about what education they did have, the colleges they went to only gave them classes in their main topic of study. They didn't balance things out with other mandatory classes in other areas.
It kind of gave me more of an appreciation for the liberals arts side of my degrees.
I've heard many researchers say they get plenty of students (from here and overseas) that are good at knowing lots of facts/techniques/methods/etc., but fall on their face when you try to move them into original research.
Thus the definition of intelligence re-emerges. In fact very intelligent people are rare both in the West and China. This shouldn't surprise us.
The first step is to realize we have a problem. We keep living in this denial dreamland where the Western world is somehow smarter and we're just giving off our "low end" jobs that are mere rote, and keeping the "smart stuff" for ourselves. We're not any smarter, and those low end jobs are what built us.
The problem is not the Indians, it's the Indian education system and the IT bubble in India.
I've worked with plenty of Indians in the UK and they're as good as everybody else: there's plenty of true hackers types (in the good sense of the word) out there that happen to be Indian.
However, my experience with our in-house teams based in India and with developers from Indian consultancies placed at the client in the UK is that they have a very high number of mediocre developers (and even some exceptionally bad ones). Note that what's common with these two is that hiring decisions are taken by Indian companies/divisions in India.
I've recently read in The Economist (the January 31st one, I believe - paper magazine, no link, sry) that a company in India has examined the ouput of Indian universities and concluded that only 12% (not fully sure about the number, around this value though) of the engineers trained every year by Indian Universities is actually competent enough to work in technology with a Western Corporation.
I've also had discussions with a friend of mine about this (who happens to be Indian) and our conclusion is that in India too many people go into IT because it pays well (not because they're any good at it) and that most of the better ones have emigrated from India.