Toloken

There’s the ugly face, the sweatshops that get a lot of attention, like the plastics recycling plant in Shenzhen where in February fire broke out and killed 15 workers who were illegally housed over the factory floor. Or the more than 3,700 people a year who die in coal mining accidents.

But if that’s all you see, you’re missing something important. There’s another face emerging: the face of more sophisticated companies that rely on technology and want to be global players, not sweatshop operators. A recent trip to the boomtown of Shenzhen, next door to Hong Kong, reminded me of that.

I went to a media day in May for Huawei Technologies Co. Ltd., which makes mobile phones and telecom networking equipment both under its own name and for 35 of the 50 world’s biggest telecom operators. The sleek buildings and automated warehouses at its Shenzhen headquarters looked like a slice of Silicon Valley.

Here’s the fact that struck me from the day: Last year, Huawei ranked No. 4 in the world among companies filing patents under the World Intellectual Property Organization (WIPO). It jumped from 13th the year before.

Huawei ranked behind No. 1, Japan’s Matsushita Electric; No. 2, Dutch firm Philips Electronics; and No. 3, Germany’s Siemens. Those are impressive neighbors. You can see details at http://www.wipo.int/pressroom/en/articles/2008/article_0006.html.

Huawei’s ranking and its focus on research is a contrast to the public (mis)perceptions that can surround China.

Huawei has 12 research and development centers in China and around the world, including in the U.S., Sweden, India and Russia, and it has jointly established research and product development centers with Vodafone, British Telecom, Spanish Telecom, Motorola and others.

Huawei officials told me they see potential in combining that research orientation with China’s lower costs. They said an engineer in China costs one-sixth that in the West, giving them advantages.

“Some of the other Western vendors have had to pick and choose what they were going to put their money in, whereas Huawei, we have the flexibility to invest across the board,” Ross Gan, Huawei’s global head of corporate communications, told Plastics News in an interview at the media day.

“That allows us a lot of flexibility in terms of being able to develop technologies according to a variety of standards.”

To put this in broader perspective, American firms still dominate the overall rankings, accounting for 33 percent of all filings. And Huawei is the only Chinese company in the top 50.

But, importantly, WIPO officials noted that China ranked seventh overall, with the fastest growth of any of the top 15. Its Asian neighbor, South Korea, was the only other top 15 country to see double digit growth in filings, and ranked fourth overall.

WIPO said it’s a sign of growing innovation in Asia: “The growth in patent filings by a number of countries in northeast Asia and their share of overall patenting activity is impressive and confirms shifting patterns of innovation around the world.”

Innovation happens everywhere, and the traditional economic powerhouses remain creative places. After all, American firms filed 10 times as many WIPO patents as Chinese firms last year.

China still has problems with intellectual property protection, and it still depends largely on low-cost labor, sometimes in dangerous conditions, as its chief advantage in the international economy.

But as my day at Huawei reminded me, it would be a mistake to think that it’s always going to be that way.

Steve Toloken is Plastics News’ Guangzhou-based Asia bureau chief.