Bay Area, China Bond Growing Stronger

By Colleen Taylor -- 11/16/2006

San Francisco Bay Area's ties with Asian countries are nothing new, but according to one trade group, its bond with China is now going stronger than ever.

Citing trade and investment activities, including sectors such as financial services, internet services, architecture and engineering, electronics manufacturing, semiconductors, venture capital and advertising, a recent report by the Bay Area Economic Forum (BAEF) claims that the San Francisco Bay Area's relationship with China is playing an increasingly central role in both regions' economies.

China's participation in the worldwide tech industry has been emerging from a deep freeze of sorts recently, as the United States and others have gradually relaxed their investment regulations into the country, which has been under communist rule for more than 50 years. This week, reports emerged that Taiwan, which has been at political odds with mainland China in the past, is set to finalize a plan by the end of 2006 that would allow its chipmakers to use 0.18-micron manufacturing technology in the mainland. In a controversial move last year, Silicon Valley-based search engine superstar Google Inc. opened its Google China R&D center.

That is not to say there is not still a hefty amount of cynicism and distrust for the country, which is notorious for being a black hole for intellectual property rights. According to a report released this past summer by the United States Department of Commerce, of all the fake and counterfeit goods seized by the U.S. Customs Department, 72 percent originated in China. Many tech companies continue to avoid setting up branches in China for fear that trade secrets would be stolen, reproduced, and then sold competitively against the company that created the IP. Indeed, Xilinx CEO Wim Roelandts said at Electronica this week that IP issues had keep the company from setting up an R&D center there, a move Xilinx is now pursuing.

Despite the lingering stigma of associating with the Communist republic, the BAEF continues to look on the bright side and touts the strengthening bond between Silicon Valley and China as a good thing. "If you leave aside capital market activity in New York and container counts through the Ports of Los Angeles and Long Beach, the Bay Area is the leading portal in the United States for U.S.-China exchange," Sean Randolph, the BAEF's president and CEO, said in a statement. "This is a result of our assets in technology and venture capital, our history, and the depth of market intelligence on China that can be found here."

According to the BAEF, Bay Area companies are playing a central role in the development of China's fast growing internet; are designing signature urban development projects, including China's tallest building and the master plan for Shanghai's waterfront; are setting the standard for historic preservation in Chinese cities; are pioneering investment in China's internet sector; are forging ties with Chinese entrepreneurs; and are investing heavily in IT manufacturing.

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