A Dragon In R&D

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>INTC), Microsoft (MSFT), and Texas Instruments (TXN). ``You really need to be interacting with the Sony (SNE)s, the Hewlett-Packard (HPQ)s, and the IBMs to make sure your innovation is state-of-the-art,'' Deng says.

China's universities are getting a helping hand from the multinationals, too. Not long ago, professors, strapped for funding, were abandoning school and entering the business world. There was even a popular expression for giving up on the ivory tower: ``jumping into the sea.''

There's little need to bail anymore, says Tao Linmi, an associate professor in the department of computer science and technology at Tsinghua University. Tao's main project is a camera system that follows movements and gestures, automatically keeping an image in camera range. He's working with engineers from the Intel research center in Beijing and is collaborating with nearby R&D centers run by France Télécom (FTE) and NEC (NIPNY). He says he's happy to see others join the crowd. ``Google's research center just opened outside our gate,'' he says with a grin. ``More research institutes mean more funding for us.'' Without foreign money, Tao says, his work wouldn't have advanced nearly as much as it has. ``Five years ago, we usually published in Chinese journals,'' he says. ``Now we are in international journals.''

Western companies are helping Chinese knowledge workers think more creatively. Nokia Corp (NOK)., for instance, relies increasingly on Chinese engineers. The Beijing Product Creation Center is one of just four R&D labs for handsets that the Finnish phone maker operates worldwide. Running the Beijing lab, which opened in 2003, was difficult at first, says chief Steven P. Marcher. The engineers were very bright, he says, but they didn't know how to navigate a corporate culture that emphasized innovation. ``They were always dependent on me telling them what to do,'' he recalls.

So Marcher developed a training program to encourage Nokia's Beijing managers to ``think for themselves.'' The cultural obstacles were daunting. ``It's a completely new way of thinking compared to a Chinese company,'' says Marcher. ``They are coming from a hierarchical setup to one where I am fully empowering my team to take control.'' The yearlong class, involving coaching and mentoring aimed at developing leadership skills, has produced impressive results, Marcher says. Last year, the Beijing center was the driving force behind four new Nokia models, which Marcher's Chinese engineers produced in 12 months -- a very short time by Nokia standards. ``We broke all sorts of records,'' he says. And, he boasts, ``everything was done from Beijing.''

Einhorn covers Asia technology for BusinessWeek from Hong Kong .