Agilent: Old Dog Learns New Tricks in Chengdu

Travelling the Silicon RoadCHENGDU, China – Being in the right place at the right time — a cliché, except perhaps in business, where timing and geography can often mean the difference between success and failure.

Especially for a U.S. technology company looking to take advantage of the booming market here.

So when Palo Alto, Calif.-based Agilent Technologies Inc. announced a joint venture (JV) 10 months ago with a fellow test and measurement instrument maker based here, Chengdu Qianfeng Electronics Ltd. Corp., it raised a few eyebrows in the West. Why form this JV now? After all, Agilent, and before that its progenitor company Hewlett-Packard Co., have a long history in China.

HP was one of the first U.S. tech companies courted by China; in 1977 Dave Packard was one of a select group of non-governmental Americans invited to visit China. He returned in 1979 when joint venture talks began. The Hewlett-Packard Representative Office in China began selling HP products in the country in 1981; then China Hewlett-Packard came along in 1985, becoming the first Sino/U.S. high tech JV.

And why choose land-locked Chengdu, in the Sichuan province of central China? Why not a more obvious place, say Shanghai or Beijing?

The decision to form a JV with an indigenous test and measurement company all came down to speed and access to the local Chinese market, according to Agilent and HP veteran Max Yang. Yang is VP and GM of the JV, dubbed, Agilent-Qianfeng Electronic Technologies (Chengdu) Co.; he’s been with Agilent/HP since 1981. Born in mainland China and raised in Taiwan, he lived and worked in the United States for more than 20 years before returning to Asia to work for China Hewlett-Packard.

While the nearly $2.5 billion Chinese electronics industry and consequently the whole supply chain is booming, the primary value that China brings to the global industry is low cost manufacturing. Thus one of the principal demands of the Chinese electronics manufacturer – as well as those in other parts of Asia – and consequently one of the principal drivers of the test and measurement market here, has been cost effectiveness.

“Low-cost solutions are critical to the Chinese market; that is what they [are] needed locally,” Yang observed. “The areas we’re focused on here are things like inspection and maintenance, education and bench repair.” But Agilent historically has concentrated more on lucrative high-end markets in test and measurement, such as high-speed oscilloscopes.

Yang is quick to note that low cost doesn’t mean low quality, an issue that Agilent is obviously sensitive too, setting up manufacturing in China. “In my mind, the quality has to be of Agilent standard or even better,” he said. Low quality means a high failure rate, and that means rising manufacturing costs – “the customer has to see our Chinese product as good or better.”

So all these things indicate the necessity to establish a local Chinese production facility, one that could serve the needs of the local Chinese market, but other parts of Asia as well, such as South Korean and Taiwan.

But building from scratch would take two to three years, and Agilent, once it decided it needed local production capacity, wanted to act quickly. Indeed, in terms of the rapidly developing electronics market here – the forecast annual growth rate for China’s electronics industry is around 16 percent for the next three years — two or three years is an epochal period of time.

So going the JV route was an obvious choice. “The whole purpose was speed,” Yang said. As for its choice of partner and location, one of the principal drivers in the Chinese domestic electronics market is telecoms and RF applications, and that’s not likely to change soon. This is a country where half of the 1.3 billion population doesn’t have access to a phone, either land-line or mobile, and the central government plans to continue rapidly expanding the country’s communications infrastructure.

Qianfeng, a privately owned Chinese test and measurement company that has been around for nearly as long as Agilent/HP, happens to make communications test equipment. After researching the market players in China, there were two or three good candidates for a JV partner, but Qianfeng was an obvious choice, Yang said.

The fact that it is not a state-owned company was an important aspect. “Our experience is, it’s very hard to cooperate with state-owned companies,” he explained. There is a level of bureaucracy involved in state-owned corporations that one doesn’t find in privately owned companies, which can get things done more quickly and efficiently.

Chengdu: A Well-Kept High-Tech Secret

As for Chengdu, why put your electronics manufacturing business in a land-locked city in central China? This capital of Sichuan province is more likely to evoke thoughts of wonderfully spice cuisine in the Western visitor’s mind, rather than the high-tech lust inspired by the gleaming new towers of Shanghai, or the blossoming special economic zone of Shenzhen.

For one thing, it is one of many other growing technology/manufacturing centers outside of Shanghai, like Xiamen or Xi’an. Much like Portland, Ore., or Austin have become alternatives in the United States to Silicon Valley, places like Chengdu offer many of the benefits without some of the problems of Shanghai.

In the past the Chinese central government, with a nod to national defense, put key technology areas well inland, where they could not be easily attacked; Chengdu was home at one time to China’s national aerospace efforts; much of the electronics industry here today can be traced to those roots.

As for the Agilent JV, Qianfeng has substantial facilities in Chengdu, as well as a pretty good RF team, Yang explained.

“As a side benefit, it’s a very cost effective location,” Yang said, noting that housing costs are about 30 percent of what they are in Beijing and Shanghai. And because there are fewer large multinational firms here, it is easier to retain talent.

A lot of that talent comes out of the University of Electronic Science and Technology of China (UESTC), which traces its roots back to the creation of the Chengdu Institute of Radio Engineering in 1956, the first electrical engineering college in China. Today a multidisciplinary university and still one of the top electrical engineering schools in China, it graduates several thousand EE undergrads a year, a thousand or more graduate students, and a few hundred PhDs.

In the past, graduates of UESTC often had to go elsewhere in China to find jobs. “Our experience in the last few months has been that we’ve attracted a lot of good engineers, experienced engineers, because they want to come home,” Yang noted. “I don’t think we have a concern … about sourcing the talent locally.”

Employee retention isn’t a big issue either, as there aren’t many multinational companies competing for engineering talent here. As Agilent-Qianfeng closes in on its first year of operation it currently employs nearly 170 employees – some 60 dedicated to R&D – and the attrition rate has been near zero for the company, Yang said.

But there are other high-tech concerns to be found in Chengdu though; Qianfeng is hardly isolated. There is a lot of semiconductor packaging business in Chengdu. In fact Intel Corp. recently built a huge packaging factory here, and Chinese foundry Semiconductor Manufacturing International Co. plans to build a packaging foundry here, as well. Another U.S. tech company with an early presence in China, Motorola Inc., has facilities in the city.

There are drawbacks to being located in this inland city of some 4.1 million people. Far from a major port, the city does have a river running through it, but it doesn’t serve as an artery for shipping traffic.

For an electronics company that sells a lot of low-cost consumer electronics that depends on high-volume sales, the transportation infrastructure would be an issue, Yang conceded. But for an instrument maker like Agilent-Qianfeng, it’s not a significant issue. In fact, being a smaller, inland city, the English language skills of the workforce are not what one would find in Shanghai or Beijing, he noted, and being a multinational in China, having a multilingual workforce is essential.

Like many Chinese cities, the government here is working hard to court high-tech industry. Yang came back to Asia in 1985 to serve as HP’s controller and administration manager, responsible for the negotiation and formation of China Hewlett-Packard.

Electronic News Travels to China“The difference between now and then is unbelievable,” Yang said. “The difference in attitude is day and night.” Twenty years ago, getting a business license meant jumping through a series of bureaucratic government hoops, a process that took more than a year and half, he recalled. Agilent and Qianfeng inked their agreement in November of last year; they had their business license by the end of January, when they officially launched the joint venture.

By the time the company will be celebrating its year anniversary at the end of next January, it should be readying the launch of its first test and measurement instrument specifically geared for the Chinese market.

Editor’s Note: As explained at length elsewhere on this site, this is a news story written by me that originally appeared on the now-defunct Electronic News’ website, which is long gone. It’s former sister pub Electronic Design News (EDN) currently holds the copyright to all Electronic News copy (to the best of my knowledge). You can still see a copy of this story at EDN.

Startup Vies for Opto Market with Homegrown IP

Travelling the Silicon RoadXIAMEN, China – Startups and entrepreneurs are popping up all over China and this southern coastal city, which is also a center of the optoelectronics industry in China, is no exception.

Chinese optoelectronics has a bit of a head start over its silicon semiconductor device industry; one of Xiamen’s opto device companies was founded more than two decades ago. But then it also plays host to Xiamen UX High-Speed IC Co. Ltd.

UX was founded less than three years ago by a handful of engineers, including Chinese — one of them local — as well as a couple of natives form the United States and Canada. They put in some time at familiar names: Cypress, ON Semi, Epson and Texas Instruments.

It is somewhat familiar story by now in China: UX’s founders felt they had learned all they could learn abroad in business, so they returned to China to start the company because the time seemed ripe, according to company president and Chinese native Xu Ping, who put in six years in Silicon Valley himself before returning to China.

He espoused the same logic many do here: China’s chip market is booming, in part because of domestic demand and in part because of the government’s encouragement to develop a semiconductor manufacturing base. Even if China’s domestic chip production capacity grows exponentially, it will be decades before that capacity comes anywhere close to fulfilling the domestic consumption.

“It does need a lot of technology and people,” Xu remarked of his native country. “Right now, most Chinese companies can only do simple chip designs,” he continued. “We feel like we have more growing room in China. After two-and-a-half years, we feel we can continue to do well.”

Xu estimates that to start UX, which now has a team of 18 people, most of whom are dedicated to R&D, the start up cost in China was about one-fifth to one-tenth of what it would have been in the United States.

The company right now is looking for second-round funding; like many startups here, it is looking to foreign venture capital (VC), namely that in the United States, to find it. While UX enjoys support from the local Xiamen government, and just closed the terms on a low-rate loan, the domestic Chinese VC scene is still nascent, that’s why so many companies like UX seek out foreign VC firms.

As for products, UX right now concentrates on high-end mixed-signal/RF IC chips, transceiver chips for front-tend fiber optic network communications applications, such as transimpedance amplifier, limiting amplifier and laser diode driver chips. Like many startups in China, the company is concentrating on high-end applications, where it has a chance of capturing some market share, rather than the crowded market for high-volume, low-end applications, such as consumer — a particularly crowded domestic market in China right now.

While the company originally set out to develop 10gigabit per second (Gbps) chips, it decided to focus in the short-term on the mainstream market for fiber communications, meaning 155megabit per second (Mbps) chips. It already is in production with IBM/Chartered Semi as its foundry partner with two 155Mbps chips, which it has begun selling, garnering interest outside of China as well, Xu said. The market for 1.5Gbps and 2Gbps is also developing rapidly, he noted.

Xu suggested that his company has an advantage over its competitors, in that while many of them are moving their fiber module manufacturing to China, most of their chips are still being exported out of China. As a domestic fabless company whose foundry partner is in nearby Singapore, and whose chips are packaged by a backend company here in China, UX is poised to grab market share in China, and in the future go head to head with its competitors beyond the country’s borders.

He noted that one of the chips that it has in production right now, a 155Mbps laser driver, can attain speeds up to 311Mbps, and is manufactured with standard low-cost CMOS, rather than BiCMOS or bi-polar technology, more commonly found in optoelectronic apps.

But the company is nevertheless still pursuing advanced technology and its own intellectual property (IP), according to Xu. It has developed and produced chips with 0.13-micron designs, as well as silicon germanium (SiGe) BiCMOS technology, in addition to standard CMOS.

“We’re one of the first companies to use SiGe in a BiCMOS process,” Xu noted. UX has also garnered two patents concerning indium phosphide technology, and has two other patents in the final stages of examination, while it has applied for three additional ones.

He agreed that developing domestic IP is an important issue for China right now. With so many engineers coming back to China, and so many other positive factors in place to foster startups, there is no real reason why China can’t foster its own IP, Xu suggested.

Electronic News Travels to China“I think in China, at least some of these [new] companies should have their own IP,” he said. “I think it’s important to come up with a good product.” Up until recently, China has relied mostly on modifying designs from foreign companies for the domestic market, meaning much of the profit leaves China; this has been one of the significant barriers to IP development in China, he acknowledged.

“First you have to have the people, and then you have to have the technology. If you don’t have these, you won’t get money,” he continued, either in the form of profit or investment capital. “Right now, the engineers are the most important things.”

Editor’s Note: As explained at length elsewhere on this site, this is a news story written by me that originally appeared on the now-defunct Electronic News’ website, which is long gone. It’s former sister pub Electronic Design News (EDN) currently holds the copyright to all Electronic News copy (to the best of my knowledge). You can still see a copy of this story at EDN.

Xiamen: A Bright Light in China’s Tech Industry

Travelling the Silicon RoadXIAMEN, China – If you’ve bought a set-top box recently or perhaps a new appliance – or if you’ve used a remote control in the past decade – there’s a reasonable chance you were utilizing one or components that came from Xiamen Hualian Electronics Co. Ltd.

Or if you’re a Wall Street analyst or venture capital firm trying to finger the few start-ups among the multitudes in China that will be successful, or if you compete in the optoelectronics device market, you’ve probably at least heard of a few of the companies, old and new, here in this sub-tropical southern coastal city. While Chengdu in the east may have its backend manufacturing, Shanghai the front-end fabs, and Beijing may play host to much of the R&D taking place in China right now, Xiamen is a Chinese center for optical technology.

It’s not the only city in China to place an emphasis on optical device manufacturing, and other cities have their share of domestic opto players. But Xiamen embraces the technology wholeheartedly here, as has the central government. In fact Xiamen, located in the Fujian province, has even adopted the moniker of “Light Valley.”

Actively seeking high-growth industries, Xiamen has actively recruited companies like Hualian, said Fan Yu Bo, the company’s president and CEO. The city provides a lot of support, in the form of yuan and specific policies for companies in the optoelectronics industry, among others.

“At the same time, Xiamen is a nice place for hiring … so a lot of high-tech companies would like to reside here,” Fan said. In addition to a nice climate, the city has two other key ingredients, according to Fan: infrastructure and human resources.

Thanks to local and central government support, optical chip technology is one area of high-tech that China actually has a head start on, relative to the rest of its domestic semiconductor industry – although its development is still behind that of other parts of the world. It began developing its optoelectronic manufacturing capability two decades ago, and is already one of the world’s largest producers of light-emitting devices.

Now it is trying to head the rest of the world off at the pass, so to speak, much like Taiwan did with its semiconductor foundries, becoming a center for global silicon chip manufacturing in the previous decade. On the one hand, China’s dedication to its optoelectronics industry is thus economic; on the other hand it is driven by environmental and social necessity: the country is a power-hungry place.

In 2003 the total amount of China’s electricity generation capacity was about 1.91 trillion kilowatt hours, about 12 percent short of actual demand, according to figures from China’s National Solid-State Lighting Engineering Program Office. It estimates the shortfall currently between domestic production and demand from its 1.3 billion citizens and various industries to be as high as 28 percent to 43 percent. By 2020, China’s electricity consumption, based on current demands and current economic growth predictions, could range anywhere from 8 trillion kilowatt hours to 9.5 trillion kilowatt hours.

But the government estimates that it could reduce its electricity demands by as much as 30 percent if the bulk of lighting applications in the country switch to solid state light emitting device technology. It also reckons that the switch could measurably reduce its airborne pollution emissions, given that 80 percent of its electricity comes from coal and oil.

It’s these ideas that drove the creation of the Solid-State Lighting Engineering Program in 2003, a coalition of central government ministries, research and development organizations and local governments.

Xiamen Hosts Old and New

Today China has more than 10 optoelectronic chipmakers, and some 200 light-emitting diode (LED) packaging companies.

Xiamen, specifically, is home to one of the veterans of China’s optoelectronics industry, as well as some of the newest players.

It is host to Xiamen San’an Electronics Co. Ltd., for example, created in late 2000. A partially state-owned concern – its Chinese parent company is involved in steel, iron and electricity production; its other investor is a state-owned capital investment firm – Xiamen San’an is now one of the largest manufacturers of LEDs in China, and it has an optoelectronics R&D program established here as well; the R&D center one of the central government’s goals for establishing the company in the first place.

Xiamen is also home to the aforementioned Hualian Electronics, a company first established in 1984. Today it has two main product lines: optoelectronic semiconductor devices, such as infrared modules for remote control systems, opto-couplers, LEDs and sensors; and optoelectronic-based control and remote control devices, such as infrared remote control emitters and receivers for appliances like air conditioners, refrigerators, microwave ovens and TV set-top boxes.

Unlike many players in China’s semiconductor industry, much of Hualian’s revenue comes from exports, around 40 percent, according to CEO Fan. Many of its international customers include brands recognizable to Western consumers: Panasonic, Yamaha, Emerson and Electrolux among them.

But like many high-tech companies in China today that were around before the turn of the last century, Hualian is a mixture of state-owned and private owned as well. Half of it is owned by a state capital company; the rest of Hualian is owned by a parent company that is itself publicly owned and traded.

Fan naturally sees China’s Solid-State Lighting Engineering Program as a good opportunity for Hualian; the company is currently investing some $16 million (150 million yuan) more into R&D on low-power LED devices.

Over the years, a company like Hualian has seen a lot of changes, from the time it was founded when China was just beginning to open up, to today when it is aggressively pursuing economic growth and a conversion to a free-market driven economy. Both central and local governments naturally tend to lend more support to companies that prove successful in the market place, said Fan, and this, along with China’s economic growth, has lead to chances for the company’s growth.

Electronic News Travels to ChinaAbout the time it began exporting products in the 1990s, it began to realize the importance of developing its own intellectual property, as did the Chinese government. In the past, the government didn’t stress the importance of companies like Hualian developing their own IP, but that changed when China began to actively seek international trade, Fan acknowledged.

Today, for companies like Hualian to compete globally, not only does it have to create its own IP going forward, but respect those of the companies it competes with on the global stage, Fan said. That’s why in recent years, the company has put a lot of funding into R&D programs, and begun applying for patents.

Editor’s Note: As explained at length elsewhere on this site, this is a news story written by me that originally appeared on the now-defunct Electronic News’ website, which is long gone. It’s former sister pub Electronic Design News (EDN) currently holds the copyright to all Electronic News copy (to the best of my knowledge). You can still see a copy of this story at EDN.

TI China Engineers Straddle Two Different Cultures (part 2)

Travelling the Silicon RoadSHANGHAI – Editor’s Note: Electronic News Senior Editor Jeff Chappell continues to discuss how working for a U.S.-based international chip company means more than straddling geography and time differences with China-based Texas Instruments engineers Tan Hui, a member of the technical staff and an application manger in the industrial and home appliance semiconductor group; Michael Wang, system engineering manager in the portable power management semiconductor group; Eric Braddom, director of DLP products for TI’s Asia semiconductor group; and Yu Zhen Yu, a senior member of the tech staff and director of the industrial and home appliance group and China application and development center in TI’s semiconductor group. What follows are excerpts of that conversation.

Chappell: How does China’s nascent design and IP business affect a company like TI coming into China to do business?

Braddom: What’s different in China from an IC design perspective is that they are much more welcoming to a complete system solution. Their advantage here is in low-cost manufacturing, so bringing in a whole system solution works here. This is very different in many other places. The converse is also true, here. Because design is not so strong, you may not be able to sell an individual chip here.

Yu: But you have to be careful who you sell that system to. Companies here haven’t learned, as those in the West already have, that you have to concentrate on your core competency. People here haven’t learned that lesson yet. People don’t realize how difficult it is to bring a new product to market from scratch. If you do all the work designing and creating that system, and then the customer’s product isn’t successful, you don’t get any return on your investment.

Wang: There are a lot of small companies here, and they don’t always know what they’re doing – we don’t know who will win. It really is like Taiwan was four or five years ago; the market really hasn’t stabilized yet. Just to give you an example: A year ago there were 400 makers of MP3 players in China, and now there are 200. I’m pretty sure in six months, it will be 100. As a systems provider, how do we deal with this? It’s a very fragmented market here, and everybody wants to do what’s hot.

Yu: Yes, look at automotive electronics. There are more than a thousand automotive electronics company in China, because a few years ago the government decreed that China has to get into auto electronics. We just have to watch and see who emerges, and then do business with the winners.

Chappell: So for you two, Mr. Wang and Mr. Yu, what were the biggest changes that occurred in China while you were in the United States?

Yu: Well for one thing, like I said before, there is guan xi. In business in the U.S., when I know both sides bring value, I know we will have a strong relationship, even without a prior history together. Here, it is different. After having been in the U.S. 14 years, I have a tendency to be too straightforward and blunt. It took me about two and a half years to really understand the internal relationship dynamics with customers.

Wang: I’m not engaged with a lot of local customers here, so I can’t address that. But Shanghai has changed so much, I didn’t recognize it. There are so many skyscrapers here now. A skyscraper is defined as any buildings that extend above an 18th floor; by that definition I read somewhere that there are more here than in New York. It’s really changed. I’m from a town a couple of hours from here by train, Hongzhou. You can put me in the middle of my hometown and tell me it’s a different city, and I wouldn’t know otherwise. It’s so different from when I was growing up, I don’t like going back there now, in a way. Also, having lived and worked in the United States, I found that I didn’t have much in common anymore with friends that I knew when I went to college here.

Yu: I lived in Beijing for 11 years prior to 1989 when I went to live in the United States. … I’m really shocked at how big a change has taken place in the city there. I’m glad that it’s growing, but I one thing I feel strongly about – the environment, the weather and the air, has all deteriorated so much, there is so much dust and smoke and smog. I was just there for a tradeshow, and I had all sorts of problems, I had to take nasal decongestants, and carry a bottle of water with me wherever I went. It was awful. And this season, autumn, is traditionally supposed to be its best season.

Braddom: There is a city in central China – I’m not going to say its name – but it is a very beautiful, historical city. But the air quality there is so bad, the people there say that the dogs start barking when they see blue sky, it’s so rare.

Wang: It’s the big cost for the speed of China’s economic growth.

Yu: It is a very high price.

Chappell: China has come a long way in the past five years in moving toward a market-based economy, and generally opening up. The central government just announced its next five year plan; where do you see China in five years?

Yu: There are certainly a lot of big issues the country is facing right now. At the same time, you can tell the government is trying to fix these things, the gap in economic development between eastern and western China, between urban and rural, and the gap in the standards of living. It’s actually bigger than Westerners tend to believe. Five years from now I hope they will be able to make some progress.

Braddom: In terms of business and the market, you can’t afford not be here. Just look at the size and the growth of the domestic market. There are 300 million people in China right now with cell phones – that’s more than every man, woman and child in the United States. China is already the second largest big screen TV market. Business is exciting here. Yes, there are economic gaps, and there will be fluctuations in growth; things could go awry. But from a business perspective, can you afford not be here?

Yu: In dealing with [Chinese] customers on a day by day basis, and seeing them finish a design and bring it to market … one of the good things I see is that a lot of companies in China are growing up. … They are starting to be able to design products on their own. And in other industries, things are changing. In many markets, foreign companies that have traditionally had a solid lock on a domestic market, a lot of traditional manufacturers are being supplanted by local Chinese companies. It is happening fast.

Braddom: TI China’s managing director, Gerald Kuo, has kind of a famous quote about doing business in China, that I think sums it up nicely: There are three rules to doing business in China: 1) Anything is possible. 2) Everything is difficult. And 3) If someone says it’s no problem, that means it’s a big problem. It’s a great climate for starting a business, I think. But personally, I still have problems mailing a letter or getting money out of a bank.

Yu: Yes, many travelers to China, who are here only for a short time, only see the skyscrapers and fancy airports, and they don’t see all the problems here. What they see is, “Ooh, China is developing rapidly, it’s a threat.”

Braddom: There is another famous quote by a Western ambassador to China, about how it appears very Westernized on the surface, but when you peel back the sheets for a closer look, the truth emerges. There is a big city façade here, that’s true. It’s when you get into the details, this is when you realize things are very different.

Chappell: Are there any other observations about China that you’d care to offer? Anything that Westerners planning to come to China to do live or do business should know?

Braddom: One of the things we did during TI’s cultural training class before coming to China was spending half a day as if we were in a Chinese classroom, as elementary school students. We were treated just like regular students; there was no speaking English. It was very tough; I don’t think I could have hacked it as a student. Heck, I’m not sure I could now. The school system is very different here, and I think it’s important to understand that. A lot of the cultural behavior of engineering students coming out of school here originates within that system. It’s a big part of life here, the education system. The teamwork issue that we face is only one aspect of that.

Yu: There was a study done in the past by U.S. and Chinese educators comparing the U.S. and Chinese schools systems. After studying each other’s educational systems, the Chinese concluded that the U.S. educational system was in complete failure; students didn’t pay attention and there was seemingly no discipline. The U.S. educators, meanwhile, thought that the Chinese had a good system. That was 30 or 40 years ago, I think. Look at what the U.S. education system has generated since then, more Nobel prize winners than any other country.

Electronic News Travels to ChinaIn the Chinese education system, there is a tremendous importance placed on individual high scores and class rankings. It is such that Chinese students tend not to listen to what other students are saying, because only what the teacher says and thinks is important to them; it is the teacher that has the impact on scores and rankings. I believe that in the future if the government does the right things, they can fix the problems that face China. But the school system, that is an issue they don’t know how to fix. There are just so many people here, how do you educate them all?

This article is Part Two of a Q&A session run by Electronic News Senior Editor Jeff Chappell as he traveled the Silicon Road through Shanghai. Click here for part one of his roundtable discussion with Texas Instruments engineers in China.

Editor’s Note: As explained at length elsewhere on this site, this is a news story written by me that originally appeared on the now-defunct Electronic News’ website, which is long gone. It’s former sister pub Electronic Design News (EDN) currently holds the copyright to all Electronic News copy (to the best of my knowledge). You can still see a copy of this story at EDN.

TI China Engineers Straddle Two Different Cultures (part 1)

Travelling the Silicon RoadSHANGHAI – Editor’s Note: At the behest of Texas Instruments Corp.’s Jeff Smith, deputy director of Asia Semiconductor Communications, as well as worldwide manager for analog media/analyst relations, four TI China engineers sat down with Electronic News Senior Editor Jeff Chappell to talk for an afternoon, but not about TI or its latest products. Rather, they discussed the experience of being an engineer and working for a U.S.-based, global company doing business in China.

The four engineers — three of them Chinese — are a microcosm of what you find in a large foreign tech company doing business here. One, Tan Hui, has only been out of graduate school six years, and has worked for TI in China since graduation. He is currently a member of the technical staff and an application manager in the industrial and home appliance semiconductor group here.

Another, Michael Wang, grew up in a city not far from Shanghai, and is currently a system engineering manager in the portable power management semiconductor group here. While he has worked for TI for several years, he came back to China a year ago after spending two years at TI headquarters in Dallas.

Eric Braddom is director of DLP products for TI’s Asia semiconductor group. A U.S native, he has spent the last two years in Beijing with TI; prior to that he was with the company and also stationed in Dallas.

The fourth member of the group was Yu Zhen Yu, a senior member of the tech staff and director of the industrial and home appliance group and China application and development center in TI’s semiconductor group here in Shanghai. He came back to China two and a half years ago after living some 14 years in the United States; prior that he was based in Houston, Texas.

During the afternoon, the four provided insights that can only come from living and working in China, and in some cases only having been a native who has lived abroad and come back. The following are excerpts from the conversation.

Chappell: First off, tell me what is it like working for a large American chip company here in Shanghai?

Tan: I have no experience working with a domestic company, but one big difference I’ve noticed, since I started with the company in technical support … I think working for a large international company enhances our ability with teamwork. If you want to be successful, you have to have technical expertise, but it’s not the only thing. You need a team, a system to support you. TI has done a good job along these lines. I’ve talked with friends I went to school with who work for domestic companies, and they say it’s not like that. Domestic engineers concentrate on their own work. It’s a big difference.

Braddom: It’s definitely a challenge working with and managing Chinese employees also. They have many strengths and are very strong technically, but cooperation is often a weakness. In the U.S. we’re taught early, we’re forced to do things as a team. That is a management challenge. Chinese students just haven’t had that [teamwork] experience.

Wang: China produces more engineering graduates than the United States or Germany, but the pool accessible to a large international company like TI is relatively very small. They are often not qualified because of one, language, and two, teamwork. Language is a big thing, I think. Just look at the way I work in TI — we have almost daily contact with the mother team back in the United States, and knowing English is essential.

Chappell: What’s the converse? What’s it like for the large American company to come here?

Braddom: One thing about the Chinese workforce, is it produces a real good chance to have diversity. China is a very diverse country, and it’s really nice to have engineers that can converse with customers in their own local dialects. Furthermore, in China I get a lot of strong resumes from women. I’d say about half of our staff are women; in the U.S. it would be a much lower number. There are many opportunities to achieve diversity in China, from a management perspective. I’m not sure it’s valued by everyone, but it’s a good opportunity for us.

Yu: One big problem, however, for Western companies doing business here is motivation of local, native employees. There is often a historical and cultural gap between them and management, who tend to be expatriates, or from Hong Kong and Taiwan. Often employees come to work here or at other large international companies to get exposure, but after a couple of years they get fed up and leave. They don’t have the same feeling the U.S. and European employees have with regard to how they feel about the company.

Braddom: I’ve found that some Chinese employees though do respond to Western style management — it’s an opportunity to achieve that closeness on the staff.

Yu: I think the problem is that companies fall into the same cycle; there are so many managers that are not local — they miss the opportunity to groom local employees for management and leadership positions.

Braddom: Teamwork is not taught in schools here, but there is a strong focus on family and relationships. Even on my team, some of the employees use the [familiar Chinese titles] of older sister or younger brother. Then there is the concept of face. It’s kind of like a bank account. I’ve seen it both demonstrated and used in business here, and it can be quite effective. It really does exist and it’s important to understand. Companies here are just now learning the concepts behind intellectual property laws and merger laws. They recognize that it is important if China is going to do business globally. But it’s more important to have the relationships in place when dealing with Chinese people in business, not just the signed legal documents. You have to know the concept of guan xi.

Yu: That’s very true. After 14 years in the U.S., it is something I had to adjust to again. In the U.S., if you dealt with a colleague and had met each other’s business needs, you were done. But here in China, it’s much more than that. Sometimes, even though you both realize that it’s not a personal relationship, you have to make it feel like a personal relationship.

Braddom: It’s really nothing more different than realizing that people have personal and professional objectives, and can use your help to achieve them. It’s not just going out do dinner together or having drinks together, it’s actually helping one another.

Wang: In my mind, though, I would like to emphasize that compared to other Asian countries, China and the U.S. are not all that dissimilar. Taiwan and China are much more open to Western culture.

Yu: That’s very true. We’re much more open to Western ways of doing business and Western ways of thinking.

Tan: You have to remember, when an Eastern businessman looks at a business deal or opportunity, he sees that there are always reasons for and against it. That’s why the relationship beyond the deal is so important.

Electronic News Travels to ChinaYu: People do emphasize relationships a lot. Let’s say you are trying to gain 10 different customers, in the end, it’s the ones that really benefit from what you have to offer that become successful. And that’s when, in turn, the relationship becomes stronger. But fundamentally, you do have to bring value to the table. It’s not just guan xi.

Wang: I think this idea that relationships are so important originates from dealing with the government. I don’t always see it at my level.

Braddom: For my part, I’ve have seen it used it myself.

Return to Traveling the Silicon Road tomorrow for the second part of this article.

Editor’s Note: As explained at length elsewhere on this site, this is a news story written by me that originally appeared on the now-defunct Electronic News’ website, which is long gone. It’s former sister pub Electronic Design News (EDN) currently holds the copyright to all Electronic News copy (to the best of my knowledge). You can still see a copy of this story at EDN.