China VP highlights tech trade in Silicon Valley visit

By Brian Bergstein, The Associated Press
Saturday May 04, 2002

SAN JOSE, Calif. — Chinese Vice President Hu Jintao wrapped up his week-long U.S. tour Friday with a meeting at Intel Corp., highlighting the deepening connection between China and the American high-tech industry. 

It is no secret that companies such as Intel, the world’s largest maker of computer chips, are hungrily eyeing China’s burgeoning market, especially with U.S. technology spending still in a slump. 

Intel has invested $500 million in research and testing facilities in China. EBay Inc. has made initial steps toward bringing Internet auctions to China’s 1.3 billion people. 

But, quietly, China’s high-tech future also is being forged by lesser-known players — thousands of immigrants from Taiwan, Hong Kong and mainland China who have come to Silicon Valley over the past few decades to work as programmers and engineers. 

Many have since formed a sort of entrepreneurial class in waiting, honing skills and generating capital here, developing business relationships with people back home and waiting until infrastructure and market conditions in China become more hospitable to technology startups. 

“There is a large population of Chinese-Americans here that have a natural interest in what is going on in China and see it as an opportunity,” said George Koo, director of the Chinese services group for Deloitte & Touche. 

In fact, 73 percent of the Chinese immigrants in Silicon Valley would consider returning home to start their own businesses, according to a recent study by the Public Policy Institute of California. Chinese entrepreneurs here commonly have subsidiaries or partnerships in Taiwan, but many have established business ties in mainland China, especially in the exploding urban centers of Beijing, Shanghai and Guangzhou. 

AnnaLee Saxenian, a University of California professor who wrote the report, said the conventional notion of a “brain drain” from Asia to the United States is off base. The better description would be “brain circulation,” she said. 

Chinese immigrants here are not the only ones taking part. China’s opening-up — enhanced by its entry into the World Trade Organization — has encouraged capital and talent to return from Taiwan, Malaysia, Singapore and Hong Kong, said Franck Wiebe, chief economist for the Asia Foundation in San Francisco. 

There are some rough spots in China’s high-tech growth. Restrictions on transferring money out the country make it difficult for overseas financiers to cash out on investments in new enterprises there, said Kenneth Fong, who came to America from Hong Kong in 1966 and ran a Silicon Valley biotechnology company for 15 years. He now heads Kenson Ventures, a venture capital firm not directly involved in China. 

“American capitalism works because we have a very, very supportive system for investing capital,” Fong said. “You can’t just build that overnight in China.” 

Indeed, 58 percent of the Chinese entrepreneurs in Silicon Valley surveyed by Saxenian said regulations and bureaucracy in China would deter them from starting a company there. The other most commonly cited problems involve the legal system and political or economic uncertainty. 

However, Chinese officials say they are working to remove obstacles to technology investment. 

“The economy is so dynamic,” said Koo of Deloitte & Touche, who was in San Jose to chair a conference of the Committee of 100, an organization devoted to China-U.S. relations. “What you knew about the Chinese market last year is already outdated.” 

Hu’s meeting at Intel — with founder and chairman Andrew Grove, CEO Craig Barrett and other executives — was requested by the Chinese government, Intel spokesman Chuck Mulloy said. 

The Intel brass showed Hu a blazing fast 3-gigahertz Pentium 4 chip, a new pen with Intel software that recognizes Chinese characters and can enter them in a computer, and a handheld computer for Chinese officials to use at the 2008 Olympics in Beijing. 

“It was a relationship-building visit,” Mulloy said. “He stressed the import of the technology sector for that marketplace and he expressed gratitude for the investments we’ve made.” 

Hu headed back to China after his swing through San Francisco and Silicon Valley. That concluded a trip in which he also met with President Bush, Vice President Dick Cheney, Cabinet members, congressional leaders and U.N. Secretary-General Kofi Annan.