The science park for China’s leading technological university feels like a fantasyland of entrepreneurship: gilded lounges, grand banquet rooms, a museum and movie theater on site—all packed into a set of matching skyscrapers around a central plaza that resembles New York City’s Rockefeller Center.
Mei Meng, the founder and director of Tsinghua Science Park, or TusPark, jokingly apologized for the luxury of the place as we sat down for an interview here last week.
“People ask, should a science park be this beautiful?” he said, through a translator. It would have been more appropriate to build a series of garages, he noted, because that is more representative of the kind of innovative company he wants to see built here—a small start-up that could become the next Apple or Microsoft. “But because we are so close to Tsinghua University and the land cost is very high, we actually can’t afford to build garages,” he said with a smile. “That’s why we can only afford to build nice tall buildings like this.”
China’s leaders are demanding more home-grown innovation these days. The country’s 15-year plan for science and technology, issued in 2007, calls for reducing reliance on foreign technology. Mr. Mei believes the entrepreneurial oasis he’s helped build here, along with the 30 offshoots of TusPark around the country, is the way to make that happen.
But experts outside China see plenty of challenges for a country that has struggled to move scholars’ research to the marketplace. Despite recent laws that better protect intellectual-property rights, companies in this country famous for its “gray market” of smuggled and copied electronics continue to worry about intellectual-property theft. And some foreign corporations have criticized the park’s model as offering an unfair level of government support.
Like so many aspects of China’s emerging economy, TusPark is a work in progress, but it is no longer itself a start-up. After 16 years it boasts some successes and is home to 200 companies.
It also illustrates the way in which economic development is often done in China: borrow the best elements from the West, then add Chinese characteristics. Here that includes a lot of top-down direction and strong government support.
When Mr. Mei and other leaders set out to design the park, they toured the world’s most fertile grounds for start-ups: California’s Silicon Valley, Boston’s tech corridor, North Carolina’s research triangle, and parks closer to home in Singapore and Taiwan. Now officials from around the world are coming here to learn more about how this Chinese park works. Most recently Purdue University pledged to work with TusPark as part of the American university’s new partnership with Tsinghua University.
Developing Spinoffs
Exactly how the bright idea of a professor or student grows into a global company is a complicated process. Despite plenty of how-to business books promising answers, the phenomenon remains rare and hard to replicate.
Mr. Mei’s creation tries an approach different from what is typically found in university science parks in the United States. Instead of providing space and support only for companies spun off from the university’s research, it invites large and medium multinational companies to the party.
And it literally is a party. The park organizes breakfast socials and other networking events meant to encourage Tsinghua-affiliated start-ups to get to know staffers from established giants like Microsoft, Sun, and Google, all of which have offices here.
In some ways this fits the Chinese context of how business is done. Informal connections are critical to business dealings here, encapsulated in the Chinese word guanxi—essentially, relationships in which one person is obligated to do some favor for another.
The park is essentially trying to create a business culture in one centrally managed enclave—with hearty financial support from the government. As Mr. Mei put it, the goal is to create an atmosphere that replicates the cultural conditions of areas like Silicon Valley, where the business culture helps entrepreneurs informally connect with researchers and with people who bet on new businesses. “In the States, it’s a lot easier for your market to take the recent results from universities than in China,” he said.
To check out an example of one of the park’s university spinoffs, I made the short walk to the offices of Nuctech and sat down with its president, Chen Zhiqiang. The company makes large-scale X-ray machines to detect smuggled goods at ports or provide security at events. (Nuctech supplied devices for the 2008 Olympics.)
When the company started back in 1997, it was not the dream of any entrepreneurial professor or student. Instead the university’s president and vice president decided that some professors’ research findings regarding large-scale X-rays should be commercialized, and so they pushed for a company to be built that brought the idea to market (the company’s first leader was the son of China’s president).
“They realized that this is a good product,” is how Mr. Chen summed it up.
The company still works closely with professors. In fact, the company and university operate a joint research center with 120 researchers to work on building new and more portable security equipment, such as one new product that can detect traces of explosives.
That level of R&D support has raised criticism from the company’s competitors. A British corporation, Smiths Detection, filed a complaint against Nuctech—which is now global—with the European Union this year arguing, among other things, that the company was competing unfairly because its research costs were so heavily subsidized by the Chinese government.
“I think it’s protectionism,” said Mr. Chen in response to questions about the E.U. inquiry. “We think the uprising of the Chinese economy has become a target for the West or the world looking for excuses for protectionism.”
Mr. Chen said that his company paid 80 percent of the research center’s costs, with the remaining 20 percent paid by the university and government. And he argued that no favorable policies from the government are unfairly lowering Nuctech’s prices. “We think that the price of our products are reasonable, and it’s just brought great pressure on the old monopoly price.”
He argued that China’s government is for now essentially the main form of venture capital in the country, whereas in the West private venture-capital firms play that role. Even officials in the science park seem to want that to change, though, and in the last two years the park has created its own venture-capital firm on site.
Looking for Protection
The biggest obstacle to TusPark’s goal of converting university research to commercial products is a lack of protection for intellectual property, or IP, according to Jim McGregor, author of the book One Billion Customers: Lessons From the Front Lines of Doing Business in China.
“The people working at the universities just don’t believe their intellectual property will be protected, so it really slows down the development,” he said in a recent telephone interview.
Last week I asked an official in China’s Ministry of Education what he thought of that characterization, and he agreed that more needed to be done to clamp down on intellectual-property theft.
“We are perfecting our system,” said the official, Zhang Yao Xue, director general of the Office of Academic Degrees Committee of the State Council. “We realize that if you don’t have a perfect IP-protection system, then the development won’t be there.”
While Mr. McGregor argues that China is not moving fast enough to change its ways, Mr. Zhang said the necessary laws are in place, but that policies have outpaced the public’s views on the issue. “People’s thinking changes slowly,” he added.
By way of example, he told the story of a Chinese company that was recently found guilty in court of violating a patent, but then refused to pay the fine and has evaded enforcement.
“It’s not a system problem, it’s an execution problem,” he said. “We already have the law, we already have the system, it’s just hard to fulfill it.” Not much consolation for the company whose invention was copied, of course.
All the officials I spoke with here seemed eager to adopt Western practices, at least when it comes to the creation of more private venture capital and stronger intellectual-property protection. For now, TusPark may be the closest thing in China to that kind of market environment.
At the end of the interview, Mr. Mei revealed a surprising dream for TusPark: to dismantle it. That is, to reach a point in the Chinese market system where such a protective environment is no longer necessary.
“I’ve always had this thinking that our final goal is to annihilate TusPark,” he said. “I may not see that in my lifetime, but the goal is to encourage innovation. If the whole society can take that idea, then there won’t be science park needed.”
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