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R&D Development in China

Golfen Guo (guo_golfen@emc.com)ATV, CTO Office, EMCMar. 9, 2009

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Agenda

Digital Universe

EMC & EMC China COE

Why China?

China R&D Development Research Result

Global Economic Recession

Discussion

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Digital Information Around Us

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How To Measure Digital Data

A byte (pronounced IPA: /baɪt/) is a basic unit of measurement of information storage in computer science.

– by wikipedia

There is no standard but a byte most often consists of eight bits.

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How To Measure Digital Data (cont.)

KB – Kilobyte

1000 byte

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How To Measure Digital Data (cont.)

MB – Megabyte

1000,000 byte

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How To Measure Digital Data (Cont.)

GB – Gigabyte

1000,000,000 byte

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How To Measure Digital Data (Cont.)

TB – Terabyte

1000,000,000,000 byte

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How To Measure Digital Data (Cont.)

PB – Petabyte

1000,000,000,000,000 byte

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How To Measure Digital Data (Cont.)

EB – Exabyte

1000,000,000,000,000,000 byte

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Digital Universe

The digital universe in 2006 was 180 exabytes

The digital universe in 2007 was 281 exabytes or 281 billion gigabytes. The number is 10% bigger than previous estimation.

In 2011, the amount of digital information produced in the year should equal nearly 1,800 exabytes, or 10 times that produced in 2006.

The compound annual growth rate between now and 2011 is expected to be almost 60%.

Source: IDC 2008

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What EMC Is

The world leader in storage systems, software, services, and solutions

Focused on building and managing secure and flexible information infrastructures

Mission: To help organizations of all sizes get the most value possible from their information

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EMC has Evolved as the Market has Evolved

InformationInfrastructure

2005+

InformationInfrastructure

2005+

Storage andInformation

Management

2003–2005

Storage andInformation

Management

2003–2005

StorageCompany

1991–2002

StorageCompany

1991–2002

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EMC’s Evolution

Revenue Mix 2000

Software and Services Are Now 54% of Revenues

Software16%

Services10%

Systems74%

Revenue Mix 2005

Systems46%

$4.487B

Services17%

$1.569B

Software37%

$3.575B

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EMC’s Acquisition Approach:• To strengthen and extend its core• To extend marketplace into brand-new areas

Real-time NetworkSystems Management

Protection/ RecoveryIntelligent Data Movement

Server Virtualization

Unstructured Data Content Management

Backup/Recoveryfor SMB

Extends Virtualizationto NAS Environments

EMC Strategic Software Acquisitions

Information Capture,Digitization, Categorization

Acxiom’s InformationGrid Software

IT Services for Microsoft Environments

Legato SmartsVMware InternosisCaptiva

AcxiomRainfinityDantzDocumentum

Invested

>$7 billion 2003–present

Expert in online security

RSA

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EMC’s Strategy

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EMC’s Long-term Results

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External Storage Market Share

EMC ranked #1 with a 23.3% share

EMC/Dell* revenue accounted more of the external storage market in 2006

2008 Revenue Market Share

* Includes EMC revenue and revenue generated through the sale of CLARiiON systems by Dell, which IDC attributes to Dell market share

Source: IDC, March 2009

EMC23%

HP13%

IBM16%

Dell9%

Hitachi8%

NetApp7%

Sun5%

Other19%

Worldwide External Storage

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Storage Software Market Share

EMC ranked #1 with a 26% share

2008 Revenue Market Share

Source: IDC, March 2009

EMC26%

HP4%

IBM13%

NetApp7%

CA4%

Other28%

Symantec18%

Worldwide Storage Software

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EMC’s Best-of-Breed Partnership Ecosystem

Sun

IBMHP

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China R&D Journey Start…

Jun 23, 2006 EMC unveiled plan to open a software R&D center in Shanghai.

Plan to invest $500 million in China over the next five years, underscoring EMC’s deepened commitment to the rapidly growing China marketplace.

Nov 2, 2006 China R&D center opening

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Evolved into an EMC Center of Excellent

EMC COEs are units that work on core EMC technologies, collaborating and leveraging global talent for engineering excellence.

Jan 2007, China R&D center evolved into an EMC Center of Excellent.

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Second R&D Center in China

Nov 1, 2007 EMC officially opened its new R&D center in Beijing.

Open the first EMC Research Lab outside of the United States.

Committed to double its planned investments to US$ 1 billion in China over the next five years.

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Made in China -- StorageCredenza

Apr 3, 2008 EMC unveiled StorageCredenza in China.

EMC StorageCredenza: The first EMC-branded product released in a country first with the country not being U.S.

It is also the first EMC China R&D Center owned product.

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China Advanced Technical Support Center Opening

Aug 8, 2008 EMC Advanced Technical Support Center Opened in China

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Rapid Growth

2006 – < 100

2007 – 250+

2008 – 500+

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China COE Conclusion

To establish a world-class software development center that will foster innovation for EMC's global offering

Activities scope:– Advanced, new feature and sustaining software development– Technical research– Hardware development– QA– Localization– Technical support

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From 1993 to 2002, MNC oversea R&D spending rose from $30 billion to 67 billon

During 2004-2005, over half of leading MNCs have set up R&D organizations in China or India

By different accounts, MNC R&D Centers in China:– 2001 <= 200; 2005 = 750; 2007 > 980

Some leading companies have begun to consolidate its R&D organizations in China and established its China R&D system, such as IBM, Microsoft and etc

Not Only EMC…

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Why did They Chose China?

•Surge of MNC R&D labs in China since the late 1990s“Within five years, China could overtake UK, Germany and Japan as a

base for corporate research, leaving it second only to the US.”(NYTimes, 2004; von Zedtwitz)

•Top locations for offshore R&D:• China, US, India, UK (The Economist Intelligence Unit, 2004)• China, US, India, Japan, UK (UNCTAD, 2004)

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Factors Attracting FDI

Stable increase of Chinese economy

Huge market

Rich and excellent

manpower

Favorable foreign investment policy

Convenient infrastructure

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Factors Attracting Foreign Investment

Huge Market

Rapid Economy Growth

Favorable foreign investment policy

China Talent Pool

Convenient Infrastructure

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Factors Attracting Foreign Investment

Huge Market

Rapid Economy Growth

Favorable foreign investment policy

China Talent Pool

Convenient Infrastructure

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Dreaming with BRICs: The Path to 2050

Over the next 50 years, Brazil, Russia, India and China—the BRICs economies—could become a much larger force in the world economy.

The results are startling. If things go right, in less than 40 years, the BRICs economies together could be larger than the G6 in US dollar terms. 

Source: Goldman Sachs

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BRICs’ GDP Growth

Real GDP growth (Annual %Change) in 2007 by country

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China’s GDP Growth

GDP growth statistics 9% in 2008 2008 Quarters

•10.6% (Q1)•10.1% (Q2)•9.0% (Q3)•6.8% (Q4)

2009 target: 8%China's GDP growth (2000-2009)

0%

3%

6%

9%

12%

15%

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Factors Attracting Foreign Investment

Huge Market

Rapid Economy Growth

Favorable foreign investment policy

China Talent Pool

Convenient Infrastructure

Deng Xiaoping 1904-1997

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The Development History of MNC in China

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Factors Attracting Foreign Investment

Huge Market

Rapid Economy Growth

Favorable foreign investment policy

China Talent Pool

Convenient Infrastructure

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Overview of The Chinese Talent Pool

Population: 1.3 billion

19 million students in 1,500+ universities and colleges

5 million fresh graduates in 2009*

* Data Source: National Bureau of Statistics of China 2007

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Factors Attracting Foreign Investment

Huge Market

Rapid Economy Growth

Favorable foreign investment policy

China Talent Pool

Convenient Infrastructure

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China Transport Infrastructure 

By the end of 2007

– China's total length of expressways has reached 53,600 kilometers– the national passenger throughput of all airports across China

totalled 387.59 million person-trips–  the national cargo throughput of all ports above designated size

reached 5.28 billion tons

* Data Source: Research and Market 2008

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China R&D Center Development Research Result

Industrial Distribution

Investor County Distribution

Location Choice

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Industrial Distribution

The industrial distribution of autonomous R&D settled by BusinessWeek 1000 MNCs in China

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Investor County Distribution

The country distribution of autonomous R&D settled by BusinessWeek 1000 MNCs in China

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Location Choice

The regional distribution of autonomous R&D settled by BusinessWeek 1000 MNCs in China

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Barriers for MNC R&D in China

Barriers from policy environment– Strong and bureaucratic government– Import limitation– Imperfect IPR protect system– Difficulty for traveling to Taiwan

Barriers from local market– Increasing operation cost– Imperfect infrastructure

Barriers with Human Resource Management – Lack of innovative and experienced labors – High employee mobility – Difficulty in managing the diversified staff

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Global Economic Recession

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China Under Global Economic Slowdown

Export/import decline

Factories close

Unemployment increaseRegistered unemployed labor in citiesRaised 2009 target to 4.6%, the highest since 1980

Foreign direct investment declineFDI flows weakened, with a 5.7% decline in Dec.

2008

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Employment Crisis in China

According to a survey by FESCO, a Beijing-based recruitment services provider for multinational companies, by polling 356 of its clients spread across the country and engaged a wide range of industries for the survey.

– nearly 70 percent of the firms it polled have said they would trim their recruitment requirements for 2009

–  27 percent said they had already started laying off employees.

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China’s Stimulus Package

• 4 trillion RMB ($586 billion USD) stimulus package for government investment in infrastructure, tax deductions and subsidies, to stimulate domestic spending

• Announced Nov. 9, 2008, projects and spending already started in 2008

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Prediction

China – First to Recover?Premier Wen Jiabao said he saw some signs of

recovery in Dec. 2008China aims to be the first to recoverStart to recover in the 2nd half of 2009, and gain full

steam in 2011

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Discussion

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^innovation