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China's rising technology scene threatens brain drain in the United States as "sea turtles" return home



SHENZHEN, China – Between baskets filled with hard drives, USB sticks, LED lamps and countless other pieces of technology, Jason Gui found what he was looking for: a handful of tiny batteries.

His trading partner, Tiantian Zhang, whipped his phone to pay through WeChat, the all-in-one messaging and payment omnipresent application in China, and transferred about 4 yuan, or US $ 0.60 per battery .

The bustling wholesale market with its rows of sellers is part of Huaqiangbei, a sub-district of the Chinese city of Shenzhen that has become known as the "Silicon Valley Hardware".

For Gui, it's better than that.

Silicon Valley was "a little slow for us," Gui said at his workstation in Hax, a start-up incubator in Shenzhen. "If you had to do it in the United States, you would import the same materials from China anyway."

Gui, 28, and Zhang, 30, are known as "haigui," or sea turtles, a term that refers to Chinese educated overseas who have returned to China.

According to the Chinese Ministry of Education, about 80 percent of Chinese graduates abroad now come to about 33 percent in 2007. About 15 percent work in China's burgeoning technology sector.

This has implications for the United States as experts fear that China will become more attractive to talent but the US will lose.

"If there are talented people who would be willing to stay, we have to keep them," said James Lewis of the Center for Strategic and International Studies, a Washington think tank.

Lewis added that uncertainties related to immigration have made the task more difficult, just as China "has made considerable efforts to attract these students."

From Silicon Valley to Shenzhen

After graduating from the University of Pennsylvania in 2013, Gui and Zhang returned to China to create their company. With American co-founder Aaron Rowley, they make smart glasses that track users' activities and connect to their smartphone to play. music and accept calls. The inexpensive and abundant products allow them to iterate quickly, transforming a prototype into a finished product in a few days.

Gui and Zhang first moved to San Francisco after graduation. But they accomplished less in a year than on a three-month trip to Shenzhen.

Gui and Zhang's offices are right at the top of the huge market, and their factory is an hour away. This proximity has saved them time and money, and the pace is faster in Shenzhen, Gui said.

"People work very hard until very late," he said.

More information on MSNBC's "Engaging with Richard Engel" Made in China Sunday at 10 pm ET

The Chinese technology sector has its own shortcut to describe the hours of work of employees in the country: "9-9-6", meaning from 9am to 9pm, six days a week.

"Our factories are still talking to us at 10 pm or 23 hours, sometimes late at night. They work on weekends, so things are done much faster, "said Gui. "When we get back to San Francisco, after 5 pm people will not answer your emails and you will not be able to do anything until the next day. "

"You can not do that in the valley."

The Chinese start-up also offers entrepreneurs the opportunity to do more with their funding, thanks to reduced resources and labor costs.

Wang Meng Qiu, a founder who earned a Ph.D. in computer science from Stanford University, held positions at Facebook and Twitter in Silicon Valley before settling in the suburbs of Shanghai to launch his own drone company, Zero Zero Robotics.

Wang said the salaries of his team of 40 people for two years cost $ 700,000.

"You can not do that in the valley," he said.

The salary gap between Silicon Valley and China has shrunk since its launch in 2014, especially in leading companies. Wang's engineers now achieve between 70% and 80% of what they could get in America.

This helped him to divert other trained US engineers. Ten years ago, if you were a computer ace, "the only place you could win a good dollar was in the United States," Wang said. "But now, Chinese companies are making comparative or even more attractive offers than those in America."

When he wanted to make a career in academia, Wang said he would have stayed in America. But to build products and succeed commercially, China's know-how, its available capital and its massive consumer base have triumphed.

"We are not as fast in basic research or fundamental innovations. But in the area of ​​technology application, I think we're leading the world, "he said, referring to China's advances in e-commerce, messaging and mobile payments.

Market adjustment

A similar reasoning guided Wang Yi, who obtained a Ph.D. in computer science from Princeton University in 2009. After a stint at Google in San Francisco, he had the urge to create his own software: a application for language learners offering personalized education.

Wang said he wanted a "huge market" and a proven demand from users. China agrees with this situation: its middle class is expected to reach 550 million by 2022, according to consulting firm McKinsey. The share of per capita education spending among 20-year-old Chinese is about twice that of the United States.

Yi now lives in Shanghai and manages LingoChamp, or Liulishuo, the application that he launched in 2012 with two other expats from Silicon Valley. It is the largest bank of Chinese speakers in the world, with more than 80 million registered users.

Operating in China did not stop Yi from wanting to establish a presence in America. LingoChamp became public on the New York Stock Exchange last year. The same goes for Wang from Zero Zero Robotics – half of the company's orders come from America.

But Wang said he was in no hurry to back down.

"China just offers more opportunities," he said.


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