Y: Yang Fuqing, Presenter of the CCTV English Program Dialogue

　　Z: Zhang Yaqin, managing director of Microsoft Research Asia<注1>

　　Y: Hello and welcome to "Dialogue". Zhongguancun(中关村)in the northwestern part of Beijing is dubbed China's Silicon Valley<注2>. It is home to more than 10,000 hi-tech companies and the largest hi-tech center in China. But can it live up to its reputation as China's Silicon Valley?<注3>What are the challenges that Zhongguancun is now facing? To discuss these and other issues, we're joined now by Zhang Yaqin, managing director of Microsoft Research Asia.

　　Y: Microsoft Research Asia is one of the only two overseas research centers of Microsoft. So why did Microsoft choose Beijing?

　　Z: You know Microsoft Research Asia is the basic research center of Microsoft in Asia-Pacific region. So we are one of the three global research centers for the company, and one of the two overseas research centers. Three years ago, we were looking atswheresto site<注4> this basic research facility in Asia. We really looked at a number of countries. We looked at Japan, India and Korea. And eventually we chose Beijing. In fact, Bill Gates visited a number of countries and universities. He was quite impressed with the quality and talents of the students, the enthusiasm and passion of people here. Obviously, China is one of the most dynamic places in the world in terms of its economic growth. But it's really the quality and talents that captured the mind of Bill Gates and made sure we had Beijing as the place for R&D<注5>.

　　Y: Does this also show that Microsoft has much confidence in Zhongguancun's development environment?

　　Z: Absolutely. If you look at the talents we have, you'll see about 20% of them come from other countries or were once educated in the US, Japan and Europe, but 80% people are from Beida (北大), Tsinghua(清华)or other top universities of China. That's really the most valuable aspect of this place--the high concentration of smart people. I think that will continue to be the greatest strength of Zhongguancun. It is a place to attract the best and collect the brightest.

　　Y: Is Zhongguancun the right place to start up with for overseas Chinese talents like you?

　　Z: Absolutely. If you want to do business or trade, it might not be the best place. But if you are serious about doing research and technological innovation and want to build a hi-tech start-up6, this is the right place. It has a lot of talents, a large amount of available capital and communication infrastructure<注7>. And also the most important is the entrepreneur spirit<注8> that attracts all kinds of people coming to this place.

　　Y: Zhongguancun is called the Silicon Valley of China--at least that's what Zhongguancun wants to be ?but there is quite a lot of criticism and skepticism<注9>about its role as China's Silicon Valley. Now what's your opinion?

　　Z: Indeed, 20 years ago when we started, things were ... But things have really completely changed over the past ten to five years. If you look at Zhongguancun today, it's really a symbol of hi-tech center for China.<注10> In fact, it also received tremendous recognition from all over the world.11 When I travel to Japan and the US, people talk about Zhongguancun, talk about the Zhongguancun phenomenon. The key development over the past few years is the further concentration of talents. It is not only a place to produce a large number of top-notch<注12> students and IT professionals, it is also a place that attracts a lot of people from all over the world.

　　Y: But is there a brain drain<注13> happening in Zhongguancun? A lot of talents tend to leave small and medium-sized companies and work for big companies like Microsoft.

　　Z: Well, if you look at the overall flow of talents, it has to be both ways. On the one hand, you see a lot of people going to the US and joining international companies but on the other hand, you see a lot of people coming back from other countries--those who once worked for international companies are now starting their own companies here. I think this is the very essence of technology center. It's a placeswheresyou see a tremendous flow of people.

　　Y: So Zhongguancun needs this flow of talents and we needn't be afraid of this?

　　Z: Right. I think we should encourage this kind of flow and change. And I believe over years you'll see the benefits and strength coming from this kind of flow.

　　Y: Should Zhongguancun copy the model of the US Silicon Valley?

　　Z: Silicon Valley is obviously a fascinating story of success, not only in terms of the technological innovation but also in terms of the move from technology to marketplace. But there are also a number of problems, like the dot-com crash, the traffic jams, and the greed for short-term success.<注14> But overall, Silicon Valley has been extremely successful and Zhongguancun should learn from its experience and also take lessons.

　　Y: What kind of lessons?

　　Z: I am very much against the kind of model that works to stimulate high growth but at the expense of people's quality of life.

　　Y: For Zhongguancun, if it wants to be really successful, there are still a lot of challenges. So what are the challenges Zhongguancun is facing now?

　　Z: If we look at the whole infrastructure, the people, the whole environment and the capital, I think Zhongguancun has a long way to go. For example, the capital flow. It's important for the venture capital to get the accesssintosZhongguancun.<注15>I serve in board of directors for a number of VC companies and I have seen a lot of interesting dilemmas.<注16> On the one hand, the VC company has a lot of money and doesn't knowswheresto invest, on the other hand, small companies in Zhongguancun have difficulties in finding capitals. There is no clear communication between two parties.

　　Y: You mean Zhongguancun lacks some kind of mechanism<注17>to attract venture capital?

　　Z: That's right. I think the environment here needs to be improved. I received over one hundred business plans last year. And only two or three of them were reasonable. Most of the plans were very dispersed, talking about things even not relevant.<注18>But I am sure these plans are all very good technologies. But the way to present them is not good. And the other thing is that the companies we have, especially small companies, lack a transparent system for accounting, capital flow and revenue planning<注19>. So if you want to receive venture capital, you need a system that is consistent with the international standard in every aspect. The last reason is there is not a very clear strategy. If I am a venture capitalist, I want to see a clear path for my capital to be cashed out.<注20>

　　Y: But the problem of many of the small and medium-sized companies is that they don't have money to do research.

　　Z: That's right. You start with probably 100 small companies. In two or three years, most of them will disappear, probably ten of them will merge. And after another five years, you probably have only one or two companies which are really powerful. Those two or three companies will have enough resources to invest. You need those hundred of companies to be able to generate those two or three companies.<注21>So that's the filtering process<注22> we have to pay attention to.

　　Y: There are not many big names in Zhongguancun. We have several like Legend (联想)，Founder(方正)and Stone(四通). But can they play the leading role that Zhongguancun needs?

　　Z: Companies with global competitiveness are critical to the whole economy in Zhongguancun. But we need to create the environment that is conducive to the success of smaller companies,<注23> because these large companies were merged from smaller companies. I am always fascinated by the story of Legend.

　　Y: It's really legendary<注24>.

　　Z: I am very happy to see Legend is becoming a global power. And I hope there are more and more companies which can repeat the success of Legend.

　　Y: From the success story of Legend, we can see that good managerial talents, like Liu Chuanzhi(柳传志), are very important for the growth of the company. How can Zhongguancun solve the problem of lacking these kind of managers?

　　Z: There are two types of managerial talents. The first type are those people who really manage the process, take care of logistics, optimize the process.<注25> This type is relatively easy. We know how to train those people--like MBA school. The second type are the leadership talents--people who are able to define the vision for the future of the industry. These people are those China needs most. But you cannot train them. Companies like Legend, Founder and Stone play a critical role in leading China's IT industry to getsintosother parts of the world.