China in push to lure overseas tech talent back home

As Chinese companies spend billions of dollars buying overseas rivals and their technology, investors from the country are enticing China-born tech executives and scientists back home to launch start-ups of their own.

Private and state-backed investors in China have set up venture capital funds to target executives and senior researchers at companies such as Google, Apple, Airbnb and Facebook, betting on the rapid development of the domestic tech sector to produce high returns on the investments. Other initiatives include a programme set up by China’s Communist party that focuses on Chinese graduates and academics at foreign universities.

“They recognise that the economy needs to shift to higher-quality production,” said Shan Guangcun, a machine-learning specialist who recently received state funding to return to China from Germany. “So they need talent to come back from overseas, and they are willing to pay for it.”

A decade ago, most Chinese students went abroad to land a job at a well-known US company, and would have been reluctant to trade in that opportunity, said Cheng Yuyuan, an investment manager at K2VC, one of a growing number of prominent funds targeting overseas talent.

However, the rapid expansion of Chinese companies such as Alibaba, Baidu and Tencent has driven corresponding growth in the wider market for internet technology, ecommerce and payments. That trend is encouraging more China-born tech experts residing in the US to return to the mainland.

“We still believe the top talent is there [at US companies and universities] so we are still trying to bring them back,” said Ms Cheng.

Efforts to elevate China to technological superpower have intensified in recent years. President Xi Jinping said last year that the country aimed to lead the world in artificial intelligence by 2030.

Since 2014, Chinese companies have spent about $100bn on technology mergers and acquisitions overseas, according to Dealogic.

The amounts invested by China’s top tech talent funds have been much smaller, but they have had success in bringing back high-profile people.

For example, ZhenFund so far has succeeded in convincing executives and researchers from Amazon, Apple, Oracle, Facebook, Intel, Google and Airbnb, among others, to return to China to launch start-ups with its seed capital.

The Beijing-based fund includes in its investment portfolio Mobvoi, now one of China’s largest wearable technology companies. The company was founded in 2012 by Li Zhifei, a Chinese-born Stanford graduate and a former senior researcher at Google, with the help of $1.6m from ZhenFund.

Chinese funds backed by the state or municipal governments often host events on US university campuses, and offer everything from free housing and office space to start-up capital — without taking equity rights — to those who agree to develop their businesses in the city that provides the funding, said Ayden Ye, a graduate of UC Berkeley and co-founder of VeeR, a Beijing-based virtual reality company set up with K2VC funding.

“Every city in China is trying to become China’s next tech hub so there is really strong competition for talent from overseas,” said Mr Ye.

Mr Shan, the machine-learning specialist, was working for a Max Planck institute in Germany before returning to China. He received Rmb2m to Rmb3m ($318,000 to $476,000) in seed funding as part of a programme supported by the department that controls staffing within the Communist party, and which was launched during the global financial crisis in 2008.

Overall, the efforts appear to be working, said Andy Chun, a professor at City University of Hong Kong and an AI researcher. “I think overseas Chinese students will be more than eager to return due to the tremendous potential for career growth.”

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