"We will focus on three research directions, including next-generation multimedia, a next-generation user's interface and new information-processing technologies particular to Chinese processing technologies," said Kai-Fu Lee, managing director of Microsoft Research China, commonly called MSR China.

Kai-Fu Lee's American friends told him he was crazy to consider a move to head up MSR China. Now Lee is managing director of one of the country's premier research efforts and is enjoying real Chinese food, and his colleagues back in the States are eating crow.

Future multimedia technologies will consist of real, interactive, searchable and transferable multimedia content on all kinds of media and terminal. New interfaces will one day be so friendly and reliable, the researchers claim, that smart home appliances will talk with people in their own language, without the need for machine language or keyboards, all of which will make it easier for the Chinese to use computers.

MSR China, Microsoft's second international research facility, has also made breakthroughs in Chinese speech recognition, MPEG-4, object-oriented multimedia and new Internet technologies. During the next few months, an MSR China team will transfer those innovations to prototype product.

The appearance of corporations such as MSR China is changing the technology scene in China. "The difference between the United States and China in computer science was 10 years if you visited here 10 years ago, and it was shortened to three years if you visited five years ago," Lee said. "It's less than one year, or almost on the same level, now."

MSR China joins a growing list of research labs here that includes such other power players as Bell Labs China, IBM China Research and the Intel China R&D Center.

The broad-brush attempt to enhance China's knowledge base is obvious at the Microsoft facility in Beijing. MSR China has hired many workers with degrees in electronics engineering, a trend that may be part of the fallout from the ongoing merger of computer, communications and consumer technologies.

"Almost half of our experts have EE backgrounds; they research the latest software technologies, like multimedia, compression and signal-processing technologies," Lee said. "We need perfect cooperation between EE and CS experts."

Lee noted that "EE experts often are well-versed in information theory and theoretical mathematics, like signal theory and compression, but CS people are good at making something happen and writing algorithms that are efficient, fast and elegant in large software."

Besides technical requirements and the correct arrangement of the EE and CS groups, MSR China fosters a cooperative spirit via its special organizational structure and culture.

"We assign our resources to different projects, and research is in charge of the whole project," Lee said. "We don't have the many levels in MSR China that a business organization has — complex levels that will block the cooperative spirit and innovation."

Drawing talent

Another thing that's helped MSR China's quick takeoff is its success in blending international researchers and local Chinese talent. Lee is both the creator and benefactor of this new research model. He was the first MSR China scientist who decided to come to Beijing, after serving in the United States as president Silicon Graphics Inc.'s multimedia software unit and as vice president of Apple Computer's interactive media group. Lee is a well-known authority in the areas of speech recognition, artificial intelligence, 3-D graphics and Internet multimedia.

"Many people regarded me as crazy when I decided to come here, because they thought that most of the smartest Chinese people had left China," Lee said. "I have proved them wrong in just seven months."

Lee and his staff have invited more than 10 widely known Chinese scientists from the U.S. labs of SGI, Hewlett-Packard, RCA and Digital Equipment Corp. to come back to China. At the same time, the facility works closely with local universities and institutes to identify and recruit ideal candidates. About 50 top Chinese students from local universities and industry have signed on so far.

"The China mainland is similar to Taiwan 10 or 20 years ago. Some international talent went back to Taiwan at that time, and most of them have succeeded and the industry has taken off," Lee said. "It's a fact that the China mainland will exceed Taiwan in the near future, so a lot of people have considered returning to China at the dawn of this change."

Ya-Qin Zhang is among those newly returned scientists and engineers. The youngest IEEE fellow in the organization's history, Zhang joined MSR China in January as a senior researcher and research manager. Before moving to China, he was director of the multimedia technology laboratory at Sarnoff Corp. (formerly the David Sarnoff Research Center; Princeton, N.J.), working on the development and commercialization of digital TV, MPEG, multimedia and Internet technologies. Among the awards Zhang has won is Eta Kappa Nu's "1998 Outstanding Young Electrical Engineer," for which he received a congratulatory note from President Clinton.

Besides their focus on technology and the Chinese market, many MSR China scientists and engineers are interested in issues that go beyond their own careers and daily lives in China. Those include the state of research, of the environment, and of the technical community in this country.

"People are free to pursue research topics they like; they can choose any topic that [might someday capture] the interest of Microsoft's divisions," Lee said. The $80 million that Microsoft has budgeted means that the group does not have to worry constantly about funding.

Microsoft's deep pockets are a big part of its allure for workers. A researcher from MSR China told local TV interviewers that there is essentially no fixed budget for a project; virtually the only precondition is that every research penny be used to its best advantage.

A closely related operation, Microsoft Scholarship, is already renowned among Chinese universities because it not only offers a chance for Chinese students to work at MSR China but also sponsors their attendance at international conferences — again, with virtually no preconditions.

So much freedom with so few financial limitations makes MSR China seem like paradise compared with other businesses in China, but Lee acknowledged that there are still some pressures on his researchers.

Like other Microsoft research facilities, MSR China is doing long-term fundamental research, which differs from applied research on products and is not, in a word, as much fun. "We are doing fundamental research that targets markets [expected to develop] in five years; we look to predict what technology trend will become the mainstream," Lee said.

Lee and his staff nonetheless are a step removed from the time-to-market pressures that confront product developers in today's IT industry. Without such deadlines, MSR China's research engineers and scientists have the luxury of focusing on real innovations.

"We do open research on future technologies; we don't close the door to [limit our findings to] Microsoft product only," Lee said. "We publish our works and share them with other universities and companies to move technology forward. But [other researchers looking to leverage our research] should check whether it involves a patented technology of Microsoft's. It's natural that heavy investment always requires [the opportunity for] a return in the future."

Although MSR China offers a sufficiently attractive compensation package to induce overseas researchers to move to China, the attendant change in lifestyle can be problematic in getting them to stay. Life in China is very different from that in Western countries.

Losses and gains

"People who require that everything be the same as in America or better than in America will not come back to China. You gain something and lose something here; for example, your house probably will be much smaller," Lee said. "Cars are expensive, and you cannot drive in Beijing, but you can hire a driver and his car and [wind up paying] only a little more than the cost of keeping a car in America."

Lee pointed to his own experience in adapting to the lifestyle change. His house in the United States was twice as large as his home in Beijing, and his courtyard in the United States was 10 times larger. But Lee reckons that the authentic Chinese food here is a fair trade-off.

MSR China also has attracted a lot of local talent. Lee pointed out that MSR China has received more than 1,200 applications from Chinese job seekers since its launch eight months ago. Most of the applicants are qualified people, but MSR China hasn't enough openings to accept all of them.

Lee spends almost a quarter of his time interviewing job seekers. He regards it as the most important task for him, and critical to MSR China's success.

"My first requirement is that they must be the best talent in the world." Lee said. "It's easy to find people who are well-known for their papers. But we also try to find the heroes hiding behind the best products — those who may not like to write papers."