2010-06-07 08:15

SAN FRANCISCO - While hiring in Silicon Valley is projected to surge for the remainder of the year, companies are finding competition for talent from across the Pacific in China. As the Chinese tech industry continues to grow in areas such as Internet communications and content sharing, increasing numbers of industry professionals are considering a move east.

During a recent visit to San Francisco, Dr Kai Fu Lee, the former head of Google China, urged venture capitalists and financiers to make increased investments in China's entrepreneurial technology sector.

"The amazing opportunity in China is its people... engineers who are amazing developers, winners of any world programming championships. Yet these great people and talent who want to start their own companies need a lot of help... It's very hard to get early stage funding," said Lee, speaking specifically to the venture capital community who were essential to building the start-up technology ecosystem in Silicon Valley. Lee left Google China late last year to start Innovation Works, an incubator aimed at nurturing the next generation of Chinese entrepreneurs.

Because of the large pool of engineers who command average market salaries that are one tenth those of Silicon Valley's, companies are often able to hire skilled technical workers at a fraction of the cost. However, the greatest demand that still remains in the talent market is for experienced product managers who can take ideas and products to market.

"In China, there tend to be many of technically strong people but not necessarily the type of people with both a strong technical and market sense," said Larry Wang, who runs Wang & Li Asia Resources, a China-recruitment firm.

According to Wang's estimates, 45 percent of recent openings are in the technology sector, with a heavy focus on IT services. While the current growth is driven in large part by China-focused companies such as Youku and Ganji that emulate existing services developed primarily in Silicon Valley, industry watchers such as Wang predict that future trends will show more Chinese companies expanding into overseas markets.

Silicon Valley engineers such as Yifan Cao have also taken note of this shift, drawn by both the country's opportunities and changing environment. When the mechanical engineer began looking for a job again last year, he decided to look beyond the San Francisco Bay Area and flew to China in search of new opportunities.

"For me, it wasn't that I couldn't find a job in the US. It was more the result of a combination of 'I really wanted to try something new' and the mentality that even if it doesn't work out, it would be an experience that most people don't have," said Cao. Today, Cao heads the US market expansion efforts for a Chinese-based solar company out of South San Francisco.

"China is the new Silicon Valley. It used to be that one year in Internet time was two to three years at another company. Now the saying is that one year in China is worth two or three years in US time," said Wang.

While most are optimistic about the long-term potential of the Chinese technology sector, many also warn of the challenges, particularly in the short term. "The biggest challenge (for entrepreneurs) is that the government has a lot of regulations that you have to learn and make sure that your company is subject to," said Season Xu, a co-founder at 5minutes, the second China-based social gaming developer to secure venture capital-backed funding.

"For example, there were no regulations for the social gaming sector when we first started. Today, one of the requirements is that you have to have 10 million yuan in registered capital. It raises the barriers to entry for everyone," said Xu.

Regulatory challenges, especially in currency, are also among the biggest concerns for venture capitalists. Lee hopes that Innovation Works will help bridge that gap, providing early-stage entrepreneurs with the guidance and resources to take their ideas to market, and venture capitalists with a steady pipeline of startups.