How China's universities fuel tech growth

China's universities churn out millions of graduates but integration with the tech economy isn't straightforward, Dan Ilett finds.

Ten years ago Cheng Peng arrived in Beijing to start an engineering degree at Tsinghua University - one of China's best technology academies.

At the end of this year he will receive his PhD. But his prospects did not always look so good.

He says: "My home town mines one-third of China's coal. Twenty years ago I remember my parents talking about how to get enough money for food and clothing. When I was young their salary together was around [Chinese yuan renminbi]150 (just over £10) a month.

"My family got their first telephone 13 years ago. At that time not many people had them but the quality of life is getting better now - even my grandfather has a cell phone. And my brother and sister can afford to pay for my parents to travel or visit us in Beijing."

Tsinghua University PhD student Cheng Peng

Cheng himself is now part of the technology industry that is changing so much of China. His research is in software automation and he loves it. But it's not all been easy.

"It takes longer to get a PhD in China," he continues, in his good English. "I've spent 6.5 years trying to get mine. For us engineering students there are a lot of problems because innovation is so poor here. I don't think we can get to Microsoft's or Intel's level within 20 years - they are so far away.

"We can earn a lot of money from doing things like coding and having our own businesses but fundamentally the IT economy is something we can't get yet because we're not innovating."

He says that is being partly addressed at universities but adds: "I think that Chinese people are not used to the rapid transformation of society. Most thinking people, including academics, are thinking of how to get rich. But there's a lack of real thinking. Everyone's trying to break into a market - they just can't do it without innovating."

Chinese universities are at the heart of the IT world in China, some would argue. Many of China's IT executives are alumni of prestigious universities and a good proportion of companies are based close to college campuses to simplify HR and R&D requirements. It is common for CEOs to have PhDs, just as it's common for lecturers to have their own companies.

Tsinghua University is one of many in China with its own technology and science park. The likes of Sina.com, Sohu.com and foreign companies such as Google are just a few of the big names with bases there.

The park itself contains a number of large, high-rise buildings - one of which is called 'the incubator'. It is 'growing' 170 start-up companies. The Chinese Ministry of Science and Technology provides up to $100,000 in funding for research and development for these companies. They are given tax breaks, free office space and business grants of up to around $12,000 per year. One condition: getting a place is dependent on entrepreneurs having studied abroad.

Jichang Guang, an ex-academic and now Tsinghua's director of outsourcing, is also CEO of software outsourcing company Startech, which hires people from the start-up companies for outsourcing projects.

He told silicon.com: "With Tsinghua we have a really prestigious university so we can do some high-end outsourcing projects. We do things such as computer motherboard designs, manufacturing, thermo-analysis and software design. We already have one or two companies here about to IPO.

"All companies in the incubator are our human resource pool."

Jichang is one of many in the technology field who has worked in academia, teaching at MIT in the US and back at Tsinghua. These days his Beijing office is in the science park so he is well-positioned to recruit some of the best-trained and most eager young IT people in China.

His son, who is also his business partner, is based in California and is focused on pulling in new customers. In the meantime Jichang senior helps to form a company for each project, handpicking development teams from the huge resource pool he works next to.

He says: "IBM in China uses this model. They go to a company and say: 'I need 10 of your engineers on a one-year contract. Whatever you pay, I don't care'.

"But here at the incubator we have an advantage - there are about 3,000 people working here. The companies based in the incubator like this model. They don't have responsibility for the project and they earn money from [leasing out] their staff. Some people call this place 'the body shop'."

The notion of working as an academic and a businessman is not unique to China. Years ago Jichang worked for his professor at MIT. But Tsinghua is starting to clamp down on the number of academics who are allowed to run their own companies and teach in the university.

Cheng says: "You're now seeing a very different trend between the universities. Tsinghua, for example, does not encourage professors to establish their own company anymore. That's because two years ago professors founded their own companies and were living life with dual identities. They'd teach in the morning, be a CEO for a lunch and CTO in the evening in the labs.

"Some of them would earn more than RMB10,000 [about £650] a month. That's more than a teaching salary. Tsinghua thought that was not a good thing so they said: 'You can start your own company but you must resign'. But at Zhejiang University [a big university in Hangzhou province] they still encourage people to run their own business but it's much bigger than Tsinghua."

Zhejiang University has 44,151 full-time students. In the information science faculty there are 13 post-doctors, 329 PhD students, 956 masters students and 2,887 full-time undergraduates.

One of those PhD students is Li Na, who has been working as an intern at Microsoft's Research Centre since 2004. "I'm a research assistant here," she says. "There's an agreement between Microsoft and universities so we can extend the holidays and work longer."

Since it was founded five years ago, Microsoft has seen 2,000 interns work in its office from some of the best universities in Asia, mostly China. Internships are popular in China as they work as another way for universities to strengthen their ties with industry.

Because of her efforts Li Na was invited to visit Bill Gates' house for an annual Microsoft BBQ. But she believes she wouldn't have had the same opportunities 10 years ago.

She says: "There are many experts here from overseas. I can learn a lot from working with them or attending seminars. I entered university in 1997 - at that time there was no computer in our dormitory. We didn't know about the internet. After one year we had a computer and had a dial-up connection, now we have broadband. But at that time I couldn't imagine the current situation in China."