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High-Tech Research Moving From US To China

timothy posted more than 4 years ago | from the viewing-the-world-as-a-zero-sum-game dept.

Power 426

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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426 comments

Good job (5, Insightful)

sopssa (1498795) | more than 4 years ago | (#31529688)

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 (5, Insightful)

dgatwood (11270) | more than 4 years ago | (#31529774)

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

Re:Good job (4, Funny)

NFN_NLN (633283) | more than 4 years ago | (#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...

It already paid off since we dodged a Depression. (0)

FatSean (18753) | more than 4 years ago | (#31530564)

Not only that, but the loans are almost paid off too.

I think Bush was an ass for his responses to 9/11, but TARP seems to all good.

Re:Good job (5, Insightful)

Anonymous Coward | more than 4 years ago | (#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 ?

Re:Good job (0, Troll)

clampolo (1159617) | more than 4 years ago | (#31530198)

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 ?

I much prefer offshoring to bringing them here. 1)They have terrifyingly bad social skills. 2) Without them coming over here and getting trained in American schools and by American engineers, they barely have the skills to find the men's room.

The Chinese engineers I've worked with have been top notch, however. Any company dumb enough to move R&D to India deserves what they get.

Re:Good job (-1, Troll)

Anonymous Coward | more than 4 years ago | (#31530422)

I've had similar experiences with Indians. Speaking of the men's room, this reminds me of some incidents I witnessed involving some programmers who'd come straight from India.

One of the incidents involved a fellow during his first week of work. It turns out he had never used a western-style toilet before. Not knowing how to use them, he had been defecating into the tank. This was getting the janitor really pissed off, having to scoop shit out of the toilet tank each day. The janitor thought somebody was trying to get revenge on him. Finally, one of the managers walked in on the Indian fellow and caught him in the act.

The other incidents involved an Indian fellow whose name was "Poopinshunduhmar" or something like that. He would sign all of his emails with the name "Poop", apparently not understanding that "poop" is an English word for shit. He ended up sending some emails to an external customer who was not impressed. There were threats of important contracts being lost.

Western and Eastern educations are not equivalent. (5, Insightful)

Anonymous Coward | more than 4 years ago | (#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:Western and Eastern educations are not equivale (0)

Anonymous Coward | more than 4 years ago | (#31530438)

Mod this guy way up. Very insightful.

Re:Western and Eastern educations are not equivale (3, Insightful)

Anonymous Coward | more than 4 years ago | (#31530470)

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?

Re:Good job (3, Insightful)

Totenglocke (1291680) | more than 4 years ago | (#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: Buying your future (2, Interesting)

Fallen Kell (165468) | more than 4 years ago | (#31530104)

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 corporate earnings.

But to do this, you have to be looking at the long term numbers. China obviously did the math and looked at the projections out 100+ years on some of these moves (75year lease is in this example).

Re:Good job: Buying your future (3, Interesting)

clampolo (1159617) | more than 4 years ago | (#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.

NO??? (0)

Anonymous Coward | more than 4 years ago | (#31530650)

Delaware has a HUGE amount of the US Corporate Headquarters because it's business laws are VERY favorable to corporations.
But what is your point Governments should pay corporations for jobs. Who pays taxes?

Should the U.S. Government has businesses to make money like China?

Paying to get businesses is one thing, what happens if every one does it?

Applied Materials has always looked to Asia (5, Interesting)

yog (19073) | more than 4 years ago | (#31530126)

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.

Re:Applied Materials has always looked to Asia (1, Informative)

Anonymous Coward | more than 4 years ago | (#31530506)

push more math and science education down to the high school level. Christians will fight tooth and nail to make sure that doesn't happen. Unless "science" is changed to reflect the fact that the Earth is 6000 years old. Or anything else that conflicts with the bible.

Seriously.

Re:Good job (1)

K. S. Kyosuke (729550) | more than 4 years ago | (#31530634)

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.

Don't worry, music production, movie production, microcode development, and high-speed pizza delivery are going to stay here, so you will be still able to find a job!

thanks, oboingo (-1, Troll)

Anonymous Coward | more than 4 years ago | (#31529716)

you fucked our country over good.

Research? (-1, Troll)

Anonymous Coward | more than 4 years ago | (#31529734)

Are you sure what your outsourcing is really research?

Call me jaded, but I have a feeling this "research" is going to produce nothing but substandard digital video recorders.

You know what I'm taking about - an interface so ugly it must have been outsouced. Controls so laggy, you have to wonder how indifferent the developers could have been about their product..

China produces lead tainted toothpaste, and fail tainted DVRs.

Well sure, they were bribed. (1)

HeckRuler (1369601) | more than 4 years ago | (#31529748)

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... (3, Insightful)

Anonymous Coward | more than 4 years ago | (#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... (3, Funny)

spun (1352) | more than 4 years ago | (#31529912)

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.

Re:Wait... (1)

magarity (164372) | more than 4 years ago | (#31530246)

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.

Hot New Trend... until... (4, Insightful)

javelinco (652113) | more than 4 years ago | (#31529778)

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:Hot New Trend... until... (2, Insightful)

Anonymous Coward | more than 4 years ago | (#31529840)

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

Re:Hot New Trend... until... (2, Insightful)

russotto (537200) | more than 4 years ago | (#31529850)

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 up right in the hands of Chinese competitors. And if after that goes on for a while, they do decide to leave on their own, they'll certainly lose all their fixed assets.

Or a clever intel operation? (1)

spun (1352) | more than 4 years ago | (#31529966)

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.

Re:Or a clever intel operation? (1, Funny)

Anonymous Coward | more than 4 years ago | (#31530396)

been there, done that, all I got was this leaky router.

Re:Hot New Trend... until... (1, Insightful)

Anonymous Coward | more than 4 years ago | (#31530042)

That, or a random chinese company will start production as soon as the bugs are ironed out, competing with the developers.

Google comparison relevant? (1)

beakerMeep (716990) | more than 4 years ago | (#31530120)

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.

Re:Hot New Trend... until... (4, Insightful)

bill_mcgonigle (4333) | more than 4 years ago | (#31530138)

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.

Re:Hot New Trend... until... (3, Insightful)

timeOday (582209) | more than 4 years ago | (#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! (5, Insightful)

copponex (13876) | more than 4 years ago | (#31530168)

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 (4, Interesting)

Dunbal (464142) | more than 4 years ago | (#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 (5, Insightful)

Z34107 (925136) | more than 4 years ago | (#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:But (3, Interesting)

WinterSolstice (223271) | more than 4 years ago | (#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:But (0)

Anonymous Coward | more than 4 years ago | (#31530620)

That's why the US should be investing in 3rd world countries instead of bailouts and subsidies to domestic businesses.

A rising tide lifts all ships. There is a trend to a flatter market where costs and expenses are similar. By raising the standard of living, you raise your own.

Re:But (1, Insightful)

Beardo the Bearded (321478) | more than 4 years ago | (#31530100)

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

No, Africa was the first to be exploited. It's where we dragged ourselves out of the ditch and down from the trees. Somalia was once home to the biggest superpower in the world. That doesn't mean we're looking at the decline of the Americans. What you're seeing is the emergence of evil sociopaths. The only acceptable measure is how much of a bonus you are making right now, the plebians be damned. That's not enough to end your country. America's strength was always the "fuck it, let's do it anyway" attitude.

Revolt from England? Impossible. American response? "Fuck it, let's do it anyway."

HTA flight? Impossible. American response? "Fuck it, let's do it anyway."

Atomics? Impossible. American response? "Fuck it, let's do it anyway."

The moon? Impossible. American response? "Fuck it, let's do it anyway."

Remain as the intellectual development centre of the world? Impossible. American response? "Fuck it, let's do it anyway."

Re:But (1)

Nethemas the Great (909900) | more than 4 years ago | (#31530366)

That only works if you have the ability "NOT" to be [op|re|sup]pressed. If we allow our strong position to erode too far it will be us that has someone's thumb pressing us into the dirt in the same manner we have done since WWII. Presently we prefer to be social butterflies instead of diligent, laser focused, innovative competitors as are the Asian tigers. It won't be long now...

Re:But (4, Insightful)

shutdown -p now (807394) | more than 4 years ago | (#31530614)

HTA flight? Impossible. American response? "Fuck it, let's do it anyway."

Atomics? Impossible. American response? "Fuck it, let's do it anyway."

The moon? Impossible. American response? "Fuck it, let's do it anyway."

On all those points, you're wrong. While there have definitely been skeptics saying "this is impossible" on every one of them, those people were of all nationalities, including Americans. At the same time, visionaries - also of all nationalities - were working on solutions to those problems. Sometimes American ones happened to be the first at something, sometimes it was someone else - but for practically any invention, by the time someone claimed a "first", a few more people elsewhere in the world were in final stages of developing the same thing as well.

Specifically, Americans were first to build nukes because they've gathered most and brightest scientists from all over the world to work on this problem. Americans were the first on the moon because the USSR got overstrained by the Space Race, and pretty much dropped out. Americans were even not the first [wikipedia.org] to perform a powered, heavier-than-air flight.

Of course, one could just as easily assemble a similarly meaningless list with a few points that would demonstrate how the USSR was an "intellectual development centre of the world". I shall leave drawing far-fetched conclusions from that as an exercise to the reader.

Re:But (1, Troll)

QuoteMstr (55051) | more than 4 years ago | (#31530192)

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?

Re:But (1)

frank_adrian314159 (469671) | more than 4 years ago | (#31530484)

... 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!!!!!"

Re:But (0)

Anonymous Coward | more than 4 years ago | (#31530262)

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?

And yet today, despite America running away from Jolly Old England, England still has commerce, industry, and status as a First World nation. With all the similarities, why would anyone expect that a transition to Chinese dominance in technology to change America's situation any differently than England's was changed?

Re:But (1)

dan828 (753380) | more than 4 years ago | (#31530644)

Great analogy. The British empire went from being the most powerful nation on earth to being a deeply in debt and barely able to militarily confront 3rd world nations. And that transition took place in just a few decades.

Re:But (1)

peragrin (659227) | more than 4 years ago | (#31530432)

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 it needs for the next couple of centuries.

America the new 3rd World (5, Insightful)

Anonymous Coward | more than 4 years ago | (#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.

I wonder what will happen in the long run? (4, Insightful)

rennerik (1256370) | more than 4 years ago | (#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.

Re:I wonder what will happen in the long run? (1)

AshtangiMan (684031) | more than 4 years ago | (#31530114)

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 it becomes cheaper to go off the grid as it were, but also realize that they have to reduce the overall usage. We waste far too much here, and are quite unsustainable. What we will learn, perhaps the hard way, is that we must change the way we do things in order to become more sustainable. If you are worried, start investing in the Pacific Rim and China funds.

Re:I wonder what will happen in the long run? (3, Insightful)

Anonymous Coward | more than 4 years ago | (#31530140)

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 differentiation. We are also exporting a lot of beef to other countries. Those 100 million cattle we have roaming around (http://en.wikipedia.org/wiki/Agriculture_in_the_United_States) are going to someone's dinner table.

Civil engineering. (0)

Anonymous Coward | more than 4 years ago | (#31530146)

You can't ship a bridge overseas for repair. Not that you can't ship prefab parts here.

Re:I wonder what will happen in the long run? (2, Insightful)

TheGratefulNet (143330) | more than 4 years ago | (#31530324)

you have that right, the US will lose on 'thinking arts' and be forced to return to physical things; stuff that *cannot* be done remotely.

if I had kids going to college, I would NOT have them be training for 'thinking jobs' like software engineering, electrical engineering, mech (etc). people who work with their hands will *never* be out of work if they're any good.

but 'thinkers': that is being shifted to india (english speaking country, mostly, really helps this) and then when that has run its course, to other countries. no one 'owns' their position for too long, its how nature is, afterall.

I would advise kids today not to bank on the 'thinking arts' to keep them in work and paying the rent. I say this sadly but I've seen things change too much over the past half century or so.. the world truly has shifted and the US is no longer what it once was ;(

prepare yourselves and study a real physical occupation and not one that is 'virtualizeable'. you will lose that fight, guaranteed (we in the west simply cannot compete on the world scale in terms of our cost of living vs theirs).

"free traders" (2, Interesting)

MyFirstNameIsPaul (1552283) | more than 4 years ago | (#31530446)

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 neocons who spew all kinds of drivel to gain popular support of conservatives.

America already is in the service industry. A Chinese factory I do sales and marketing for purchased another factory that made a similar product, but a much newer technology that is used in common electronic devices (the old products were for automobiles). When I began selling these newer products I discovered that there are pretty much zero consumer electronics companies that use this component that even do their engineering in the U.S. This was a huge wake up call when I realized that most of the companies in the U.S. only do sales, marketing, and distribution - that's a very scary position for a nation to be in.

The cause of the employment problem is that we have too many federal regulations on employment and not enough legal immigrants [reason.org] [pdf]. Forcing employers to pay their workers at higher rates than employers in other countries just makes the employer uncompetitive in the marketplace, thus sending the production overseas, and in many cases the rest of the company goes with it. Charging a high tax rate to pay for entitlements such as Social Security and high income taxes makes the employees even more expensive. On top of that, there are federal requirements on unemployment insurance and worker's compensation insurance, plus a tax code labyrinth of epic proportions. The reality is that when we put these requirements onto the employers, we lose the employers, thus in an effort to guarantee worker safety, the worker loses the job.

America will likely continue its transition into a 3rd world nation with very serious inflation and very high unemployment rates unless something changes dramatically, but it is not the fault of the corporations. Blaming a corporation makes as much sense as blaming a building. The issue is not with the corporations, but rather with the control that Washington D.C. exercises over our economy. If we eliminate the central control, then we would recover from this death roll and return to prosperity.

Also, I should point out that the statement "corporations have essentially dismantled US tech and manufacturing, which, for most of America's history, have been the backbone of this country" makes no sense because that backbone was corporations, so you are claiming that they are the backbone of our success and the cause of our failure, which makes no sense and is not true.

America has something better (5, Funny)

Renderer of Evil (604742) | more than 4 years ago | (#31529838)

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.

Re:America has something better (1)

Jaysyn (203771) | more than 4 years ago | (#31530238)

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 such a bad taste in at least one major CATV company that they won't even take bids from Indian contractors anymore.

Re:America has something better (2, Interesting)

mukund (163654) | more than 4 years ago | (#31530280)

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 out on walks, playing cricket outside with others in the colony and worked normal hours without tension.

Today, you wake up and even before the toothpaste has dissolved in your mouth, you have logged into Facebook. Every person is on an island most of the time. Pretty much all of the stuff above has changed for the worse.

Outsourcing (3, Insightful)

symes (835608) | more than 4 years ago | (#31529852)

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:Outsourcing (2, Insightful)

synthparadox (770735) | more than 4 years ago | (#31530158)

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 more than that investment, there is no reason for them to pull out of there any time soon. And a 75-year land lease to add on to that? Sounds long-term to me.

Sure sure (1, Interesting)

Renraku (518261) | more than 4 years ago | (#31529854)

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.

Re:Sure sure (1)

Sponge Bath (413667) | more than 4 years ago | (#31529960)

...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:Sure sure (2, Insightful)

AshtangiMan (684031) | more than 4 years ago | (#31530160)

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 wall-mart or home depot it makes little sense to try to sell here. Sadly.

Re:Sure sure (4, Insightful)

TubeSteak (669689) | more than 4 years ago | (#31530270)

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.

Re:Sure sure (1)

HeckRuler (1369601) | more than 4 years ago | (#31529970)

Well hopefully they'll appeal for privliege of “extraterritoriality" and hire out people to run in the shadows to defend their secrets.

Soggy engineers (1, Funny)

Anonymous Coward | more than 4 years ago | (#31529918)

China's huge reservoirs of cheap, highly skilled engineers

Okay, so we didn't manage to clear them all out of the three gorges area before flooding it. Everyone makes mistakes.

happened to one of my friends too (1)

cyfer2000 (548592) | more than 4 years ago | (#31529920)

One of my firends company moved their hard drive business group to China, the reason was simple. All their customers (REAL manufacturers of hard drives) are either in China or around China.

Do I still have time to learn... (2, Insightful)

Nethemas the Great (909900) | more than 4 years ago | (#31529934)

Mandarin?

Re:Do I still have time to learn... (0)

Anonymous Coward | more than 4 years ago | (#31530038)

Pro Tip:

Re:Do I still have time to learn... (1, Informative)

Anonymous Coward | more than 4 years ago | (#31530642)

Nope. It'll take you about 8 years to become proficient. Most non-native Chinese majors that graduate with a Bachelor's in Chinese would not be considered fluent.

The Difference Between China and the US (3, Interesting)

Herkum01 (592704) | more than 4 years ago | (#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 (2, Interesting)

blair1q (305137) | more than 4 years ago | (#31530010)

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.

Sun Tsu - The epitome of skill (1)

Colin Smith (2679) | more than 4 years ago | (#31530266)

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

Re:War (0)

Anonymous Coward | more than 4 years ago | (#31530332)

Don't forget the assistance of legions of flag-waving teabaggers who buy rafts of cheap Chinese shit at Wal-Mart before heading off to ask Jeebus to make America great.

Hey Guys (4, Insightful)

Alanonfire (1415379) | more than 4 years ago | (#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."

Good news if it results in less regulation (-1, Troll)

Anonymous Coward | more than 4 years ago | (#31530020)

The fact of the matter is that US based engineers are simply overpaid and receive too many benefits. I myself am an engineering manager at a small startup and we are looking to move work to China simply because the people there are willing to do the same job as our US employees for a fraction of the cost in both pay and regulatory overhead. If the USA wants to compete in the free market then we need to start lowering our expectations of what kind of pay and benefits we should expect from our employers. In addition, we need to fight for lower government regulation of private enterprise. We need to remove environmental and labor restrictions, rules about the number of hours people can work, and the endless safety regulations they work under, etc. If the government sees jobs moving overseas, it will need to adapt to prevent it, and in the end the FREE MARKET wins, which I think everyone here will agree is a great thing.

Re:Good news if it results in less regulation (0)

Anonymous Coward | more than 4 years ago | (#31530106)

The fact of the matter is that US based managers are simply overpaid and receive too many benefits.

Fixed that for you.

Re:Good news if it results in less regulation (1, Interesting)

Anonymous Coward | more than 4 years ago | (#31530222)

Your lame attempt at humor does not change the fact that every environmental "review" my company has to do before building a new factory pushes us closer to simply moving that factory overseas. Same thing goes with being forced to provide health care, vacations, limiting hours worked, providing paid sick leave days and statutory holidays, etc. Americans need to decide between shunning the free market (aka, the status quo) and feeding their families.

Re:Good news if it results in less regulation (0)

Anonymous Coward | more than 4 years ago | (#31530418)

Yes well I agree with you to a point, however I would not bet on any of that changing. If I owned a engineering firm I would have already shipped everyones job to china. The US is not business friendly in any way shape or form. The only sort of manufacturing, engineering, software company etc I would start in the US would be simply a shell, relatively few to no US workers just a name and a sales team.

Re:Good news if it results in less regulation (4, Insightful)

spun (1352) | more than 4 years ago | (#31530184)

Wait, wait, wait. How is the free market winning a great thing in and of itself? The only way that is a great thing is if people benefit. You are asking people to give up all benefit, and calling that a win. Your self interest is pretty damn obvious here.

Your post in a nutshell: "You lazy, greedy bums, do more for me for less or I'm moving to China!" Sounds like YOU are the one who needs some competition. I can't wait until we start outsourcing managers and CEOs and people like you get shown that you are not, in fact, special and unique snowflakes. There's a million guys in China who can do a manager's job ten times better than you, for a tenth the pay.

As for me, I'm going to use whatever tools I have at hand, including political and social tools, to promote my own self interests. If the free market won't help me, fuck the free market. I'm in it for me, not the Free Market. All the parasites who want to make a buck off of me can go hang, you aren't as special, you aren't as smart, and you aren't as talented as you think you are.

Re:Good news if it results in less regulation (4, Interesting)

antifoidulus (807088) | more than 4 years ago | (#31530352)

The American government will step in to prevent CEOs from having to deal with the consequences of their actions. Remember the uproar in the 80s over Japan on the issue of trade? Guess what, throughout the 50s,60s, and 70s lots of work was being sent to Japan, but it was the American companies sending the work over there and there was very little uproar on the political stage.

Then starting in the mid-to-late 70s the Japanese started selling things in the US directly under their own brands and thus cutting the American CEOs out of the loop. It was only then that the politicians started really crying "they took our jobs!" and the supposedly "free-trade" Reagan(one of our worst presidents ever, I have no idea why people lionize the B-actor) made Japan make some major trade concessions and forced them to strengthen their currency.

So far China hasn't really made a big push in the west with their own brands, but its really only a matter of time. Then and only then, when the rich, who own the politicians lock stock and barrel, suffer will the politicians even attempt to do anything about Chinese trade practices.

Re:Good news if it results in less regulation (1)

pavera (320634) | more than 4 years ago | (#31530248)

How much are you paid mr "engineering manager"? If you make more than the engineers who are ACTUALLY DOING THE WORK, then you are overpaid.

Making short sighted investment decisions like this is why our country is in such a shambles. If businesses actually looked out 5-10 years once in a while, instead of 3 months from now, then we wouldn't have all this outsourcing.

Great so you hire some chinese engineers who you can barely communicate with, and BTW, who hate you and are your sworn enemies (Yes the Chinese HATE America, with a passion!). But they make nice, and get the job cause they'll do it for 1/10th the price (per hour). Of course once you factor in all the communication errors you're going to have, it takes them 3 times as long to do anything, so that eats up some of the savings. Now, the issue is, they own your company. The engineers OWN your company. So you better be happy having the ownership of your company controlled by people who may at any minute be detained for "subversive" behavior.

But say all that works out, great wonderful. It's 5 years from now and you need another 50 engineers to support your systems and customers. You decide "we have enough money now, lets hire some americans". So you start to try to do that, but the Chinese won't share info with your new American employees. Then suddenly, a new competitor pops up in China, they have all your info, all your code, and wow, their CEO is your old head engineer. Suddenly they stop talking to you all together. You have no one in america that understands your code, you have no one that can even get the latest versions of your code (its all in China), and wow... your business is over. And good luck appealing to the Chinese government for help! The american government won't be able to do anything to help you either.

Re:Good news if it results in less regulation (3, Informative)

modmans2ndcoming (929661) | more than 4 years ago | (#31530526)

perhaps universities should charge less for an education then?

You expect someone to get a degree that cost them 30-50K or more and work for 25K a year?

you are nuts if you think that is fair.

Re:Good news if it results in less regulation (2, Insightful)

pandrijeczko (588093) | more than 4 years ago | (#31530628)

And you are *PRECISELY* what is completely wrong with 21st century management!

Firstly, you and your ilk created precisely the situation you are now running away from - you offered us the high salaries and benefits (which of course we took) to get us working for your company in the first place. You built huge industrial parks and that got new housing built around them so that we could live close to our places of work. You pocketed the profits in the good times, but now times are hard and your workers are taking home less money, you have decided to use it as an excuse to take more money by sacking us, employing cheaper workers overseas and pocketing the difference... plus you leave areas full of high unemployment because you all desert like rats leaving a sinking ship and those industrial parks you helped build.

Secondly, your corporations hold our governments in your pockets & therefore you need *MORE* regulation of private enterprise to force you to adopt the morals you are incapable of introducing on your own. The best way of doing this is very simple - if you employ people in a country then the total of their salaries and costs is money you put into the country; the stuff or services you sell in the country is money you take out from it. Therefore, subtract the former from the latter and tax the remainder *HEAVILY*, thus making it extremely expensive for you to outsource.

Thirdly, and finally, you and your CEO "Boys' Club" do not get bonuses for 5 years. That will encourage you to be more longer-term in your thinking and not just chase quick bucks - likewise you are forced to stay working in a company, and to manage it properly, rather than disappearing somewhere else when one of your golf buddies gets a new CEO post and brings in all his old friends to work with him.

I don't know if you're trolling or genuine but then it doesn't matter because there are too many people already behaving exactly in the way you describe above - and those same people need to be brought into line so they do not have the opportunity of running away as quickly as possible with huge bonuses in their pockets while leaving utter decimation behind them.

I wonder if they still get a tax break? (2, Interesting)

HangingChad (677530) | more than 4 years ago | (#31530026)

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 (2, Interesting)

Raconteur (1132577) | more than 4 years ago | (#31530076)

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.

Not giving up... my fat @ (3, Insightful)

Platinumrat (1166135) | more than 4 years ago | (#31530116)

'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 (2, Informative)

hrimhari (1241292) | more than 4 years ago | (#31530190)

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.

American economy is too consumption based. (1, Troll)

TheNarrator (200498) | more than 4 years ago | (#31530226)

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 production are out competed for resources of all kinds by the consumption sectors when consumer credit is stimulated through cheap consumer credit as it has been in the USA over the previous 30 years. These firms that produce goods further from direct consumption by the consumer have to move to a less consumer oriented economy, like China to have better access to land, labor and capital.

Exit costs & GFW (2, Interesting)

DNS-and-BIND (461968) | more than 4 years ago | (#31530290)

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.

No business, all pleasure (2, Insightful)

Drunkulus (920976) | more than 4 years ago | (#31530430)

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.

Blame the Lawyers (1, Troll)

Plekto (1018050) | more than 4 years ago | (#31530504)

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 again go to where there is no such idiocy.

And just like there was a giant brain-drain from Europe to the U.S. in the last century or so, there also will be once from elsewhere to China.

I know that if I wanted to start a new company, for instance, California would be the last place I'd want to start it. Or well, pretty much anyplace in the U.S., as just fighting and dealing with legal issues alone would take years and enormous amounts of money before even one item hit the shelves.

Another Job bites the dust (0)

Anonymous Coward | more than 4 years ago | (#31530612)

I have been on the receiving end (aka Pink Slip) of off shoring twice. The first time I worked for GENRAD "One of the first FM/AM Radio Manufactures in America" sold off to Taiwan, and again at GE Consumer Industrial moved IT to India, as effect I have had to move to obtain another job. The off shore effect may save the American Companies money but the effect will be the same as the Electronics, and Textile industries. NO LONGER a US industry! We complain about a bad economy and taxes but we are selling off tax payers jobs to China, India, Pakistan, Taiwan, and Vietnam. Companies can put what ever spin on off shoring, but in the end they will loose control and America will become a welfare state.

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