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Research follows factories to China

Engineers and scientists are returning as the country's economy diversifies beyond manufacturing.

January 14, 2007|Don Lee | Times Staff Writer

SHANGHAI — En Li left China in 1986, convinced that was the best way to become a world-class biologist.

The alternative was getting trained at poorly equipped Chinese labs or universities hollowed by the Cultural Revolution.

So the graduate of Peking University went to Boston and obtained a doctorate in biology from MIT. He joined the faculty at Harvard Medical School, teaching and doing cutting-edge research in genetics. Three years ago, Li was recruited by drug maker Novartis for its global lab in Cambridge, Mass.

But this spring, Li will move back here to head Novartis' newest research venture -- a $100-million center that will eventually employ 400 scientists to pursue cures for infectious diseases and other ailments common among the Chinese.

"I want to do something significant for the people in China," said Li, 45, a soft-spoken man with streaks of gray through his hair. "It's exciting."

Li and other Chinese-born scientists working overseas are at the forefront of a new wave of foreign investment in China. After two decades of pouring billions of dollars into factories, a growing number of multinational companies like Novartis are establishing research beachheads in the Asian nation.

Eager to develop products for China's vast market and tap the nation's growing pool of engineers and scientists, dozens of corporations, including Hewlett-Packard Co., Siemens, Google Inc. and Johnson & Johnson, announced in recent months the opening of Chinese research and development facilities, mostly here and in Beijing.

By the time China's Ministry of Commerce compiles the statistics for 2006, it expects to see well over 800 research centers with foreign investors in the country, up from an estimated 100 six years earlier.

The ramp-up signals a new stage of economic development for the rising power, as it moves beyond its role as the global leader in the production of cheap toys, textiles and fur. Increasingly, Chinese exports are electronics, appliances and ships.

"The time that any foreign company can build factories and easily enjoy tax breaks is gone," said Mei Xinyu, a research analyst at the Ministry of Commerce. "Now China is making a choice among all these foreign investments, and those blood-and-sweat factories will not be welcomed anymore."

China's overall spending on research in 2006 has been estimated at $136 billion, up 20% from the previous year, according to the Organization for Economic Cooperation and Development. About 16% of that is foreign-affiliated research spending, says Mario Cervantes, a senior economist at the Paris-based group.

The organization estimates R&D spending in the United States last year at $307 billion. But America's research expenditures, as a percentage of the nation's economic activity, slipped from 2.74% in 2000 to 2.68% in 2004, the latest figures available; China's increased from 0.9% to 1.23% during the same period.

The contrast in trends has heightened concerns about Washington's support for basic research and about American schools' competitiveness in math and science. It has also raised the specter of higher-paying jobs leaving for China, India and other emerging nations with cheaper costs.

Chinese engineers at multinational companies in China make about a third less than those working in the U.S. China is pumping out about 600,000 engineering graduates a year -- nearly double India's and eight times the number in the U.S.

"Students are worried, oh, yes," said Belle Wei, dean of the College of Engineering at San Jose State University, which has an enrollment of 5,000.

About 1,200 of the graduate students are Indian and Chinese nationals. "They compare notes with Chinese students. They know how hardworking they are and how they literally go the extra mile to get the job done."

In past years, Chinese graduates overseas sought to extend their stay for postgraduate training or work. But nowadays many more are returning home, adding to the rapidly expanding talent pool.

"There's definitely a competition between manpower resources in China and the U.S.," said Wei Liu, research program director at HP Labs in Beijing, which announced its opening in November 2005.

Liu, 43, returned to China four years ago after a decade in Palo Alto and Colorado Springs, Colo., as an HP research engineer and project manager.

Like Novartis' Li, Liu graduated from a leading Chinese school -- Zhou Enlai's alma mater, Nankai University in Tianjin -- but afterward saw few options. Liu remembers the shortage of mentors. University professors generally were very old or very young, a legacy of the Cultural Revolution, the 1966-76 period characterized by purges of intellectuals and criticism of so-called bourgeois values.

But over the last decade, Liu said, "China's been able to build up that middle layer" of professors thanks largely to its booming economic growth and aggressive recruitment of overseasbased Chinese with grants and programs like the Hundred Talents Fellowship.

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