China's tech parks fertile ground for IP

In the second installment of our two-part Innovation in China series, EE Times examines China's efforts to promote domestic IP creation by strengthening its network of science parks and technology clusters, including Beijing's Zhongguancun Technology Zone, the "Silicon Valley of China."

Think globally, act locally. That might be China's mantra as it overhauls its technology infrastructure to embrace innovation over imitation.

Setting its sights on a global-market presence in high-value-intellectual-property industries such as nanotechnology, China is strengthening and expanding its support network of "technology clusters," or development and investment zones with ties to engineering universities across the country.

Sometime before the year is out, the country's Ministry of Information Industry — in conjunction with the Beijing municipal government's Bureau of Industry Development and the Zhongguancun Science Park — will sponsor the 2005 China Electronic Information Industry Park Development Forum. MII also is expected to announce the ZGC Industrial Development Alliance, a formal coalition among the 31 Chinese tech clusters that China has deemed critical to its technology-coordination efforts. The ministry has further cited six national electronics information bases as vital to the strategy.

The goal is cross-discipline technology development and commercialization through access to private-sector capitalization and market development, according to local observers.

That summit will follow one being held this week: the China International Creative Industry Forum, sponsored by municipal and federal agencies to focus on building bridges between China's growing digital-content industries and the outside world (see Aug. 29, page 1).

The meetings make clear that at all levels of government, China recognizes the importance of establishing a solid industrial base in semiconductors, electronics manufacturing and design engineering, with an emphasis on intellectual-property-intensive markets. That vision includes a robust PC and IT sector and what Beijing has termed the "informatization" of the country's commercial, industrial and governmental base. And it pushes China's development activities up the value chain to digital content and other "creative industries."

Some analysts suggest that the centralized industrial-development activity in China paves the way for formulation of what would be the nation's eleventh Five Year Plan. That road map is expected to be laser-focused on the "internationalization" of the industrial value chain, experts inside China say.

Just a few years ago, Westerners might have dismissed such bold plans as untenable ambition on China's part. But today, analysts are mindful that "the world is flat," as author and New York Times columnist Thomas L. Friedman put it in the title of his bestseller on globalization.

"There was a time when you could ignore technology development in almost every part of the world except the United States and Japan, but not anymore," said Etan J. Ayalon, managing director of technology tracker GlobalTech Research LLC (New York). Technology development is proliferating and decentralizing, Ayalon said, as companies, regions and nations all try to move up the value chain. China's ambitions in such burgeoning areas as nanotechnology thus warrant scrutiny.

"China understands the importance of leadership in nanotech research," Ayalon said. "Remember, the U.S. government invested in semiconductors for two decades, beginning in the mid- to late 1940s, before it started to see a return. But those decades of fundamental research spawned whole industries. Nanotech will do the same [for China]."

China is also mindful of the looming energy crisis, and it's "not only consuming energy — it is actively seeking to develop alternative energy and clean technologies," Ayalon said. "The government realizes that while its energy needs are great, it will not be able to meet those, or meet them with adequate quality of life, without serious advances in fuel cells and other alternative-energy and clean-technology solutions."

Advancing these ambitions is a network of well-financed, well-organized and increasingly coordinated initiatives by entities across China. With government support at the federal and municipal levels, such tech centers as the Zhongguancun Science Park, Shanghai Zhangjiang Science Park and Tianjin Economic Development Area are focused on a laundry list of strategic core technologies in optics, wireless communications, telecommunications, media technology and medical electronics and biotechnology, in addition to nanotech.

According to GlobalTech, China added nanotechnology to a list of priority technologies at the end of the 1990s. State funding for nanotech development has been available since that time through the National 863 Hi-Tech R&D Plan. The goal is to put the nanotechnology industry on a par with China's microelectronics, telecom and other high-tech sectors by 2010.

The Center for Nanotechnologies at the Chinese Academy of Sciences (CAS) opened in Beijing in 2000. Uniting more than a dozen CAS institutes and several university laboratories, the center's charter is to upgrade scientific cooperation while accelerating nano-

tech industrial development. Just one year later, in December 2001, Beijing's Tsinghua University announced a new approach to the production of carbon nanotubes that raised production rates to 15 kilograms per hour, or 60 times the original production rate.

In 2001, according to the Chinese Ministry of Science and Technology, China's total applications for nanotechnology patents numbered less than 1,000. The figure soared in the past two years, and China now has more than 2,400 such patents, amounting to 12 percent of the world's total.

China's top universities are playing a critical role in advancing the country's tech initiatives, with Tsinghua University, located in Beijing's Zhongguancun Science and Technology Zone, leading the charge. Two years ago, China's government set up Tsinghua Science Park as a national "innovation model." The park's objective, in the mode of Silicon Valley, is to integrate industry, education and research and to establish a sustainable capacity for innovation. By all indications, those efforts are both succeeding and accelerating, analysts said.

"Though funding levels for basic and applied research are still modest" in China, Ayalon said, "investors can derive value from Chinese research facilities because of the lower costs of labor, equipment and inputs."

Bustling hub
Zhongguancun — a vast district that runs west to east along Beijing's northern Ring Road — is China's information-technology hub. Many of the country's most important IT vendors, including Lenovo, the Founder Group, Sohu.com Inc. and Sina Corp., are headquartered there, as are a number of IT trade groups. IT multinationals like Microsoft, Intel, IBM and Qualcomm have also established R&D centers or regional offices in the area. More than 60 universities and research clusters affiliated with the China Academy of Science are likewise situated in Zhongguancun. And in a reflection of China's new emphasis on what it calls the creative industries, leading cultural organizations and companies, including the Beijing Film Studio, Beijing Film Institute, China Central TV and Beijing TV, are located in the Zhongguancun corridor.

China's concerted effort to coordinate R&D stands in sharp contrast to the situation in the United States, where basic research in materials science, semiconductors and communications is in decline, according to many experts. In 2001, China graduated 220,000 engineers, against about 60,000 for the United States, the National Science Foundation reported. Predictions are that academic institutions in China will produce more engineering PhDs and science PhDs overall than the United States by 2010.

But for China's global competition, the breadth of that country's technology ambitions pose opportunities up and down the food chain. The decline of the vertical-integration model and the rise of the global knowledge economy, have, as author Friedman observed, flattened the world. For China, that means not only lower barriers to market entry, but also the need to collaborate with market leaders worldwide in its targeted industries.

Going forward, China's market success, both domestically and globally, will increasingly depend on its ability to attract foreign capital and to create partnerships that leverage new ideas, a diverse knowledge base and — the most critical ingredient — a solid intellectual-property foundation.