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High-Tech Research Moving From US To China 426

Posted by timothy
from the viewing-the-world-as-a-zero-sum-game dept.
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."
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High-Tech Research Moving From US To China

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  • Good job (Score:5, Insightful)

    by sopssa (1498795) * <sopssa@email.com> on Thursday March 18, 2010 @06:00PM (#31529688) Journal

    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.

    • Re:Good job (Score:5, Insightful)

      by dgatwood (11270) on Thursday March 18, 2010 @06:06PM (#31529774) Journal

      Now, all we need is a good CEO outsourcing firm and the transition will be complete.

      • Re:Good job (Score:5, Funny)

        by NFN_NLN (633283) on Thursday March 18, 2010 @07:02PM (#31530412)

        "Deep discount" on research and development from the Chinese government? Big deal!

        Didn't the US just drop $750 Billion into banking. I bet any day now they'll produce some spectacular product that will revitalize the American economy. Wait for it, wait for it...

        • Re: (Score:3, Insightful)

          by TubeSteak (669689)

          Didn't the US just drop $750 Billion into banking. I bet any day now they'll produce some spectacular product that will revitalize the American economy.

          Variable interest rate loans + the bundling of them as derivatives was the spectacular product that revitalized the American economy.

          Clinton had the tech bubble, Bush had the mortgage bubble, and Obama is going to have to do it by building those old fashioned 'market fundamentals' (or be screwed).

        • Re: (Score:3, Informative)

          by butlerm (3112)

          No. The government lent ~$200 billion dollars to U.S. banks, many of which were required to take the money even though they did not want it. Nearly all that money will be paid back, with interest.

          $40 billion to AIG, an insurance company, which is probably worthless. $20 billion to GM / Chrysler, who are probably good for it. ~$200 billion to Fannie Mae, now a de facto government agency, which we might get back.

          The other (mostly) TARP [wikipedia.org] money is authorized but unspent.

    • Re:Good job (Score:5, Insightful)

      by Anonymous Coward on Thursday March 18, 2010 @06:15PM (#31529892)

      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.

      It didnt have to be this way - the primary reason for setting up shop somewhere is access to labor. If we had made it easy for the smart chinese and indians to stay here - then research bases would be here and only manufacturing would move. So until immigration is made simpler for smarter immigrants, companies will need to keep going abroad.

      If I can get a PhD for $60K in china and $120K in US, it makes sense to stay in the US due to transactional costs, transition costs, problems with chinese govt. etc., but if you make the numbers closer to $180K in US + lots of people bad mouthing you for hiring people on H1Bs.. well....take the whole dept. there.

      Saying no to H1Bs etc. does not necessarily get americans hired - it just forces complete departments to be outsourced.Why keep IT here - when you can have the whole thing in Mumbai or Bangalore ?

      • by Anonymous Coward on Thursday March 18, 2010 @06:46PM (#31530244)

        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.

        • Re: (Score:3, Insightful)

          by Anonymous Coward

          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 [wikipedia.org] on our web pages, so we get a competitive advantage from being able to look thing up easier?

        • by topcoder (1662257) on Thursday March 18, 2010 @09:09PM (#31531590)
          Trying to put a little objectivity to this comment i will add this:

          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 [imo-official.org]

          Last results for gold medal on the 2009 IOI (informatics):

          http://www.ioi2009.org/index.jsp?id=414&ln=2 [ioi2009.org]

          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.

        • Re: (Score:3, Insightful)

          Anyone who has worked in advanced R&D is aware that just knowing a huge amount of facts isn't of much use.

          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.

          The education there is very different from that of Western nations. ...they resort to various aptitude tests to try and weed out people.

          Isn't that what we do here as well, though? You have a hard time getting into grad school if you can't get a good score on the (mostly) multiple-choice GRE, you have to pass a lot of classes early in grad school that can be passed solely by memorization....and we somehow expect that filter

          • by Austerity Empowers (669817) on Friday March 19, 2010 @01:16AM (#31533158)

            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.

        • by Anonymous Coward on Thursday March 18, 2010 @09:22PM (#31531660)

          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!

          • by Aceticon (140883) on Friday March 19, 2010 @05:37AM (#31534048)

            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.

          • Re: (Score:3, Interesting)

            by tyrione (134248)

            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!

            Take a small dose of reality between the differing cultures. It's called Peer Pressure. In the United States it is highly frowned upon one becoming the ``professional student'' and best to get your degree then go to work and have the corporation pay for your advanced education. Unfortunately, most corporations have stopped that practice and want you to have that advanced education beforehand. If US Families would encourage their kids to get advanced degrees and cultivate this like we once did, we wouldn't

        • by dbIII (701233) on Thursday March 18, 2010 @09:23PM (#31531664)
          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.
        • by BlueBoxSW.com (745855) on Thursday March 18, 2010 @10:22PM (#31532056) Homepage

          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.

        • Re: (Score:3, Insightful)

          by TapeCutter (624760) *
          So you're saying that the best problem solvers can't solve the problem of getting into tertiary education?
        • Re: (Score:3, Insightful)

          by mochan_s (536939)

          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.

          Aptitude tests are different than memorization tests. Aptitude tests are what is given in the USA (SAT, GRE, GMAT etc) as standardized tests.

          In R&D, the main factor to cons

        • Re: (Score:3, Insightful)

          by Moof123 (1292134)

          I can't disagree with the characterization. However I've very painfully seen and felt what the american educated management structure can do to the most amazing, talented, and hard working engineers. It is not pretty.

          We as a country have dropped the ball, and have rested on our laurels for too long. The jig is largely up. The talented refugees are doomed to a life of migrant labor, wandering from one tech company to the next, eking out a living for a few years before that outfit is either shipped overse

      • Re:Good job (Score:4, Insightful)

        by Totenglocke (1291680) on Thursday March 18, 2010 @07:22PM (#31530606)

        If we had made it easy for the smart chinese and indians to stay here - then research bases would be here and only manufacturing would move.

        Exactly. I'm all for extremely easy immigration for skilled workers. I am however against letting in unskilled people - no, it's not because I think I'm better than them, it's because we already have more than enough poor people that we don't need to be importing any.

        Another way to stop outsourcing and actually have IN-sourcing is to drastically cut (possibly even eliminate) corporate taxes. The US has one of the highest corporate tax rates in the world (15%-39% for Federal taxes and 0%-12% for State taxes, so potentially a 51% corporate tax rate) and it's a known fact among economists that it's harming the US economy. If we cut corporate taxes so that we were lower than average, then it would provide great incentive not only to keep jobs here but also for foreign companies to move their operations to the US. Combine low corporate taxes with easy immigration for skilled workers and you have a perfect recipe for a booming economy.

        • Re:Good job (Score:4, Insightful)

          by PopeRatzo (965947) * on Thursday March 18, 2010 @07:37PM (#31530760) Homepage Journal

          we already have more than enough poor people that we don't need to be importing any.

          For some reason, corporate America seems to disagree. There's nothing better for raising levels of production than keeping everybody so hungry they'd work long hours for little pay and no benefits. This is what's driving our "race to the bottom" and innovations like "the right to work". The working class has gotten a little too well-off and high and mighty and now it's time to take them down a few pegs.

          Here in the US, we call this "The Free-Market System" and it's the ideal system if you own a corporation. If you have to work, it's somewhat less ideal.

          • Re: (Score:3, Insightful)

            by TheSync (5291)

            Here in the US, we call this "The Free-Market System" and it's the ideal system if you own a corporation. If you have to work, it's somewhat less ideal.

            I was the CEO of a corporation. Guess what? I still had to work. And I made less than I do now working for someone else.

      • Re: (Score:3, Interesting)

        by PopeRatzo (965947) *

        If we had made it easy for the smart chinese and indians to stay here

        Let's see what happens when all these smart people doing the research start figuring out that living and working in Mumbai or Shanghai doesn't offer the same "perks" as living in the Bay Area of California.

        You can't do research 24 hours a day, after all.

        Even with the jobs fleeing the US, young people still want to come here.

    • No, this is what happens when you can afford to spend some money up front for long term benefits, something that a lot of the US has forgotten how to do. China has seen that they can lure all these high tech jobs to their country by cutting deals with the companies that are going to operate them. It is just like how Delaware has a HUGE amount of the US Corporate Headquarters located in their state because they give such good tax incentives for the company, and make it up on income/property taxes instead of
      • by clampolo (1159617) on Thursday March 18, 2010 @06:52PM (#31530318)

        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.

        • Re: (Score:3, Funny)

          by PopeRatzo (965947) *

          sure there are exceptions like PARC and Bell Labs.

          Those are some mighty big "exceptions" when measured by their impact on our lives.

          If you're talking about coming up with new brands of anti-perspirant deodorants with "time-capsule release" and "48-hour wetness protection" and "non-staining" then you can't beat big corporate R&D. I use this example because I happened to be in a Target Store today and was impressed with the incredible variety and the number of times I saw the word "IMPROVED" on the label

      • No not exactly... (Score:5, Insightful)

        by BLKMGK (34057) <morejunk4meNO@SPAMhotmail.com> on Thursday March 18, 2010 @08:02PM (#31530984) Homepage 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...

      • Re: (Score:3, Insightful)

        by TapeCutter (624760) *
        Allowing corporations to play governments off against each other in terms of how much corporate welfare and favourable legislation they can squeeze out of them is nothing more than a race to the bottom.
    • by yog (19073) * on Thursday March 18, 2010 @06:34PM (#31530126) Homepage Journal

      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.

  • All those "green jobs" being created are going to be great for unemployment.

  • A legal and public knowledge bribe, but a bribe no less. Even illegal actions are just business decisions at that level.
    But Xi'an is gonna be pissed after they leave in 6 years.
  • Wait... (Score:3, Insightful)

    by Anonymous Coward on Thursday March 18, 2010 @06:06PM (#31529760)

    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.

    • Re:Wait... (Score:4, Funny)

      by spun (1352) <loverevolutionary@@@yahoo...com> on Thursday March 18, 2010 @06:17PM (#31529912) Journal

      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.

      Hello, China? I'd like a reimbursement on these deeply discounted peanuts. They appear to be made of lead, asbestos, and melamine.

    • by magarity (164372)

      Wait until the Chinese steal your tech

      It's not just that they'll help themselves to the tech,

      after the city government sold them a 75-year land lease

      The only people allowed to own land in China are the central government, and there's a clause in every lease that basically says 'lease good until x unless we need it back for any reason we dream up'. So they can just help themselves to a shiny new factory full of the latest gear if they're in a bad mood one day.

      • Re:Wait... (Score:4, Informative)

        by BLKMGK (34057) <morejunk4meNO@SPAMhotmail.com> on Thursday March 18, 2010 @08:22PM (#31531182) Homepage Journal

        Yes but not until you've taught all of their citizens how to run the factory and maintain the gear.

        I know folks who have had things built in China. They tell me that the production line runs 24 hours a day and 12 hours of that is for their parts. The other 12 hours is for the clones that go out the back door! Everything from USB sticks to engine headers. Send a design to China, even if it's just to get a quote for production, and you can kiss your IP goodbye...

  • by javelinco (652113) on Thursday March 18, 2010 @06:07PM (#31529778) Journal
    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!
    • Re: (Score:2, Insightful)

      by Anonymous Coward

      Yes, but will the move goose THIS quarter's results? That's all that most CEOs care about.

    • Re: (Score:3, Insightful)

      by russotto (537200)

      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.

      Yeah, it's insane. China may or may not be as unsubtle as to seize their assets and kick them out, but you can be pretty certain that anything they develop at the Chinese facilities will end u

      • Here's a plan: set up a 'research' center in China, stock it with operatives, and feed the Chinese false leads. Maybe make one or two brilliant 'breakthroughs' that actually place back doors into sensitive components.

    • Seems a lot of people are commenting on the recent troubles Google has had in China. To be honest that was the first thing I thought of as well. But how relevant is this? Google is information technology and these guys are hardware. I find it unlikely the Chinese government will be hacking into solar panels. However the information discovered by R&D could certainly be valuable.
    • by bill_mcgonigle (4333) * on Thursday March 18, 2010 @06:36PM (#31530138) Homepage Journal

      their research & assets seized by the government

      If this is being implemented properly, everything is rigorously documented, stored centrally, backed up and moved to several other countries every night.

      If China or any other government does a hulksmash, then they lose that facility. They start another one elsewhere. Meanwhile, the cost savings are immense due to far lower taxation and regulation. Take that delta from doing the research on 128 and build a contingency fund or simply find an insurance policy to cover the eventuality. The business decision becomes if they can afford the time to re-build the lab or not. If yes, then it's simply a cost issue.

      Government shopping is an inevitable consequence of globalization. If fortune's smiling, that will force governments to compete on costs by decreasing taxation and regulation. Corporate subsidies necessarily increase the cost of doing business through passed-on taxation, though the time-delay component may allow smart corporations to surf the 'most-favorable' wave around the globe in front of it.

      • by timeOday (582209) on Thursday March 18, 2010 @07:18PM (#31530572)

        If this is being implemented properly, everything is rigorously documented, stored centrally, backed up and moved to several other countries every night.

        Seizure of intellectual property doesn't mean you don't have it any more, it means so does your competition, thus greatly reducing its value.

        But then again, it's a two-way street, since the risk of hitting IP roadblocks by others is less, in fact you can profit from their IP.

        I think it will be interesting to see how this plays out - whether vigorous IP enforcement helps or hurts the economy overall.

    • Hah! (Score:5, Insightful)

      by copponex (13876) on Thursday March 18, 2010 @06:38PM (#31530168) Homepage

      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 [nhgazette.com] even got in some trouble for it.) The US and her corporations armed Indonesia [fas.org] in the genocide of the East Timorese, right through the 90s. We are still responsible for 70% of the arms sales in the world [nytimes.com], 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.

  • But (Score:5, Interesting)

    by Dunbal (464142) * on Thursday March 18, 2010 @06:08PM (#31529796)

    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?

    • Re:But (Score:5, Insightful)

      by Z34107 (925136) on Thursday March 18, 2010 @06:26PM (#31530034)

      I guess the last region to be exploited is Africa. Is it already too late to start buying land?

      Yup. China is already buying and developing land in Africa. (Not kidding!)

      However, the development of Africa means the end of the "race to the bottom" and the end of absolute poverty.

      • Re: (Score:3, Interesting)

        by TheSync (5291)

        I guess the last region to be exploited is Africa. Is it already too late to start buying land?

        Land ownership in many African countries is not well respected by the governments. For instance, in Ethiopia most farmers don't own their land, the government does.

        Someone I know was running a surface gold mine in a West African country which was expropriated by the government, so he left.

        A large corporation could probably bribe an African government into purchasing land, and then keep bribing them to keep it.

    • Re:But (Score:4, Interesting)

      by WinterSolstice (223271) on Thursday March 18, 2010 @06:27PM (#31530050)

      Yup - and so ends another empire.

      Anyone who hasn't seen this coming to the US for 20 years is a completely idiot. I keep telling people that globalization leads to a flatter market. The problem is that even distribution of wealth means that the 3rd world improves a little and the 1st world declines a LOT.

      There's plenty of good quotes about it - this is hardly new. It's been going on for at least a hundred years (and 20 or more right here in the US).

    • Re: (Score:2, Troll)

      by QuoteMstr (55051)

      Fortunately instead of a manufacturing based industry, the US will concentrate on enforcing the concept of "intellectual property"

      But fortunately for the rest of the world, they can laugh at our silly statements of what they "owe" us and get on with their lives. Oh, wait? What's that you say? We spend more on our military than every other nation on earth put together? Oh, well, I'm sure they'll pay up then.

      Come on --- what's left for the US other than the formation of a military-enforced trade hegemony?

      • ... what's left for the US other than the formation of a military-enforced trade hegemony?

        Wait!!! I saw that movie! It led to all sorts of awful things! Like Jar Jar! And the next two movies!

        I think I speak for all of us when I say, "NOOOOOOOOO!!!!!"

    • by peragrin (659227)

      truth? the last full region to be exploited will be the USA. The USA has all the materials needed for a high tech society sitting in the ground. American capitalism is doing the smart thing. Using up everyone else's resources first, and then between our landfills, and other large quantities of resources we will literally own the rest of the world.

      PA is still loading with steel even though none of it is mined any more. it is recycled and imported. When push comes to shove the USA has more resources than

  • by Anonymous Coward on Thursday March 18, 2010 @06:09PM (#31529808)

    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.

  • by rennerik (1256370) on Thursday March 18, 2010 @06:10PM (#31529824)
    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.
    • You have to blame the American people as much as the industries. The service retail sector died for the no service but cheaper retail. Well made long lasting products died for the cheaper and shoddier disposable products. In the end though we'll all end up in the same boat. The Chinese (and others) will develop the technologies that bring them up from their current levels (eg, power in all houses, public buildings, etc). Meanwhile Americans will benefit from the advancement of the technologies so that
    • Re: (Score:3, Insightful)

      by Anonymous Coward

      America's GDP is already 80% services, the highest in the world for a medium to large country (>10 million people).

      That being said, just because x company is moving high-tech to y country doesn't mean that America is losing ground. As China gets richer, they'll be importing more high-tech products; the net effect should support so much high-tech here that it makes up for any losses to China.

      To clarify further, yes we import beef from other countries, but that is only because, as people, we enjoy differe

    • I find that terms such as free trade, capitalism, etc., are thrown around a bit too loosely. Most of the strongest proponents of free trade warned long ago that developing nations will overtake the U.S. Milton Friedman said that a foreign worker can learn the job of any American worker. Peter Schiff goes into great detail in his books to explain how the trade deficit is basically the annual amount of American wealth transferred overseas every year. The 'free marketers' you are referring to are likely ne

  • by Renderer of Evil (604742) on Thursday March 18, 2010 @06:11PM (#31529838) Homepage

    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.

    • by Yergle143 (848772)

      Perhaps we're all Italians now?

    • by Jaysyn (203771)

      Well at least there is no way to outsource the designing & building of local communications infrastructure. So my job is safe for a while. Oh sure, they can do the design over there, but the quality is abysmal & there is no way the tools at the DOT will put up with the language barrier while permitting. Also, there is no way the customer (a local telco / cable co) will put up with having to constantly resubmit borked permits @ x amount per pop either. I know for a fact that outsourcing has left

    • Re: (Score:3, Interesting)

      by mukund (163654)

      The parent is the best comment on Slashdot.

      In the 1980s, most of India had just 1 TV channel whereas the metros had 2. We waited for the weekends for a movie, local language on Saturday and national language (Hindi) on Sunday. TV programs actually stopped at night and started in the morning. There were no soap operas in this country which everyone glued their eyes to for 2 hours come 7 PM. There was no public internet. People spent plenty of time time talking with their family and friends, reading, going ou

  • Outsourcing (Score:4, Insightful)

    by symes (835608) on Thursday March 18, 2010 @06:12PM (#31529852) Journal
    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.
    • Re: (Score:3, Insightful)

      by synthparadox (770735)

      This may have been true 20, even 10 years ago, but its 2010 now. Even though the government still suffers from corruption (what government doesn't to some extent, to be honest), believe it or not, the actual economic drivers in the industry are quite safely and well seated in China's global agenda.

      Plus Xi'an subsidized 1/4 of the research lab, that means 3/4 of the cost was out of Applied Materials' pockets, which is still a sizable investment by any means. Unless there is some corruption or loss that costs

    • Re: (Score:3, Insightful)

      by hackingbear (988354)
      No, the biggest trouble nowaday is not the government pulling the rug from under your feet but that you just do real estate flip-flopping instead of R&D in the ultra hot real estate bubble there. don't know about this particular deal, but most of these "high tech" parks are just real estate schemes disguised as high tech industry R&D and enriching high tech companies with no high tech but high-end connections. That's good for us because we probably don't have too much to really worry about. When the
  • Sure sure (Score:2, Interesting)

    by Renraku (518261)

    So when the Chinese inevitably steal their research (that's one of China's strengths) those companies that moved their research to China will be looking to the US government to help them cover their losses.

    • ...looking to the US government to help them cover their losses.

      The joke will be on them. By that time the high paying jobs that could generate the tax revenue necessary for such a bailout will have been eliminated.

      FTA: "We're obviously not giving up on the U.S.," Mr. Pinto said. "China needs more electricity. It's as simple as that."

      What a bizarre statement. All countries are going to need more electricity, how does that justify abandoning the US?

      • Re: (Score:3, Insightful)

        by AshtangiMan (684031)
        Not abandoning though. The US is not a good market right now as very few actually are interested in the product. So take the production to somewhere where the product will sell, you can develop the technology, and it becomes ubiquitous (and cheap). At that point the rest of the world can hop on the bandwagon and very inexpensively just switch over to the new thing, effectively leapfrogging the development stage (with the requisite time penalty). Until the mythical joe sixpack can buy these things at wal
      • Re:Sure sure (Score:5, Insightful)

        by TubeSteak (669689) on Thursday March 18, 2010 @06:47PM (#31530270) Journal

        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.

    • Well hopefully they'll appeal for privliege of “extraterritoriality" and hire out people to run in the shadows to defend their secrets.
  • by Nethemas the Great (909900) on Thursday March 18, 2010 @06:19PM (#31529934)
    Mandarin?
  • by Herkum01 (592704) on Thursday March 18, 2010 @06:21PM (#31529972)

    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.

  • War (Score:3, Interesting)

    by blair1q (305137) on Thursday March 18, 2010 @06:25PM (#31530010) Journal

    China has taken $trillions in activity from the American economy.

    It's as if there was a war, and the U.S. lost, and China won, without one person dying.

    Except it wasn't a war so much as a preemptive capitulation by people with something to gain from committing treason on an epic scale.

    • Hell, they even published a book about it 2 thousand years ago with all the instructions.
       

    • China has waged an environmental and economic war with the US for the last 20 years.

    • Re: (Score:3, Insightful)

      by Phrogman (80473)

      What was Lenin or Stalin's quote: "The Capitalists will sell us the rope with which we hang them"? or something to that effect.

      Looks like its happening in an economic sense. I fully expect that China will eclipse the US as the most influential superpower in the world, sometime in the next decade or two. They seem to have the initiative, the resources and the willingness.

  • Hey Guys (Score:4, Insightful)

    by Alanonfire (1415379) on Thursday March 18, 2010 @06:25PM (#31530016)
    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."
  • by HangingChad (677530) on Thursday March 18, 2010 @06:26PM (#31530026) Homepage

    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.

    I wonder if those companies are still getting tax breaks to move jobs overseas?

  • Not surprising (Score:2, Interesting)

    by Raconteur (1132577)
    that a company whose products require massive amounts of rare earths and whose manufacturing processes produce noxious effluent would locate in China. Good riddance, but the global effects also need to be taken into consideration.
  • by Platinumrat (1166135) on Thursday March 18, 2010 @06:33PM (#31530116) Journal
    'We're obviously not giving up on the US,' says Pinto.

    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.

  • The US is not alone (Score:3, Informative)

    by hrimhari (1241292) on Thursday March 18, 2010 @06:40PM (#31530190) Journal

    If that serves as consolation, the US is not alone. French companies are also moving their R&D to China.

    Let's hope that they won't see their research suddenly finding facsimiles patented by Chinese competitors before theirs.

  • I wish they'd take Viacom with them.
  • You know, a mainstream economist would say that having companies like Applied Materials in the U.S.A doesn't matter because consumer spending is 70% of the economy and Applied Materials does not produce anything that consumers buy directly! That's the problem with Keynesian economics. We think we can get ahead by stimulus and just consuming things and not producing things. People who have read and understood Friedrich Hayek's works know that the producers of goods further back in the chain of productio

  • Exit costs & GFW (Score:3, Interesting)

    by DNS-and-BIND (461968) on Thursday March 18, 2010 @06:49PM (#31530290) Homepage

    China imposes huge exit costs on business. It's easy to get in, but you stand to lose a ton to get out. I think a lot of people make the mistake of thinking China is just another country like France or Burkina Faso. It's not. Foreign ownership of anything is restricted, and even if you're properly registered you will always be audited more carefully than any comparable Chinese company. These guys are going to go in to China, set up these huge research plants, and then be driven out Google-style. I mean, come on, China broke into google.com and left their fingerprints everywhere and "China rules!" spraypainted all over the windows. What kind of contempt do you have to have to even do something like that? To Chinese, foreigners are like women workers during WWII: temporarily useful.

    Oh, and I hope that they enjoy doing their research behind the Great Firewall of China (Golden Shield). I hear someone saying VPN? VPNs were blocked from Xinjiang for several months following the riots, so the technical capability to block VPNs is there, to be activated if it is in China's interest to do so.

  • I've seen this sort of thing up close, and it always results in executives tripping over themselves for trips to Asia to "manage the team", meaning playing golf and bar hopping with local women.
  • It's not just cheaper labor. It's that they are doing what we did over a hundred years ago when we decided to just ignore the rest of the world's rights and patents and do our own thing. So we built and invented and took all of the credit where we could for ourselves. And it worked fine in the early days. Then lawyers and the courts got involved. And now, it's so cumbersome to even invent or create anything here in the U.S. that the only real option if you want rapid change and to stay ahead is to once

  • This is significant. (Score:5, Informative)

    by Animats (122034) on Thursday March 18, 2010 @07:38PM (#31530770) Homepage

    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.

    • Re: (Score:3, Interesting)

      by djcooley (851603)

      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'm a US-born, US-educated chip designer working in China, and you are spot-on. Design and manufacturing (SMIC [smics.com]) are accelerating very quickly. 10 years ago, there was nothing. 5 years ago, there were startups. Today, there are Chinese companies putting out good chips, as well as respected US companies opening design offices here.

  • by GuyFawkes (729054) on Thursday March 18, 2010 @07:41PM (#31530788) Homepage Journal

    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.

    • Re: (Score:3, Interesting)

      by jet_silver (27654)

      Another 50ish ME here.

      I worked for Applied Materials when it was busy outsourcing production of 5000 and Centura systems to Japan, in the early 1990s. At that time Silicon Valley was getting full of Japanese companies doing exactly what we're talking about here: buying, cross-licensing, or otherwise co-opting technology. There was - and still is - an AMAT R&D center in Narita where the biggest, nastiest kludge prototypes were being built by local staff. And they learned, and they got better at it...

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