The Relationship between University and Industry: General Issues and a Case Study on University-Run...

The Relationship between University and Industry: General Issues and a Case Study on University-Run Venture Business

es (URVBs) in China

Xie Kehai

Peking University Founder Group

Key points

History of cooperation between university and i

ndustry in China

The reasons to set up URVBs in China

URVBs’ successes and challenges

Case study: Peking University Founder Group

Conclusions

Before 1980’s:

– University-attached factory for training students in practical skills

– University with narrow disciplines mainly for one industry, eg metallurgical industry, agriculture, textile industry

1980’s and 1990’s:– Bursting of university-run enterprises in real business word

2000 onward– Further development of the enterprises

– Clarify relation between university and industry: from university-run to university-own, ownership reform

History of cooperation between university and industry in China

Key points


ndustry in China




Conclusions

Background of setting up URVBs

Social environment: China adapts open-door policy

Plan-oriented

Market-oriented

Transform academic results into commercialized products

Open door policy

Public debate

“open mind”

…….

To-do-list!

Intellectual’s low - income

University: Insufficient fund

‘Jumping to the sea’Lack of

Innovative product Deng: ‘Science and

technology is the first productive force’

Raise fund to supplement educational finance

University /professors want to let the process to commercialize their academic outcomes under control

Technology: industry engine for industry further development

Some company did not have the ability to make the transformation

Why URVBs are needed and set up

URVBs characters

Initial capital and intellectual property injected by

universities

Sharing the intangible property of mother

universities, especially the brand names

A unit of university (+/-?)

Key points


ndustry in China




Conclusions

Statistics of URVBs in 2005

Company No.： over 5000

Revenue: from RMB 22.9 billion (Year 1996) to

RMB 96.9 billion (Year 2005）

Nearly half of the revenue from Beijing

All large companies from top research universities

The revenue of URVBs of Peking University Founde

r Group is RMB 24.5 billion

Relationship between mother universities and URVBs

-Size & No. of URVBs

-Time/reputation

-The nature of VC

URVBS are experiencing reform

Inadequate incentive for URVBs managements

Challenges:

State Council’s guidelines to URVBs’ reform

Clarify ownership

Normalize the mechanism of injection and withdraw of university property

Remove universities’ names from that of URVBs

Define boundary between faculty members and URVBs employees

Explore MBO possibility and new incentive mechanism

Possible problems for universities

Faculty members ? time for academic advance, bias for

projects, free exchange of ideas, academic principles, etc..

Students? Focus, unacceptable behavior, etc..

University officials disturbed?

Erosion of public trust and its reputation?

Finance?

Culture?

Research projects are not the sponsor-oriented?

Academic value or market value? paper or product?

Stable supply?

Confidentiality?

Possible problems for company

Key points


ndustry in China




Conclusions

An Example:

Peking University Founder Group

Founded in 1986 by Peking University With total investment of RMB 400,000 from Peki

ng University Office space: 21 sqm; 10 full-time staff

Social environment

Founder in 1986

Intellectual’s low – income

University: insufficient fund

Jumping to the sea

Innovation Transfer

Deng: ‘Science and technology is the first

productive force’

Open door policy

Public debate

Socialized market

economy

---

“open mind”

1986-1987:

Computer selling, project/product selection;

Technology transfer : turn laser typesetting technology into product.

1988-1992

• Production of the Chinese Laser Typesetting System;

• Development of the Founder SUPER Chinese Character Board, which accounted for 50% of the market;

• Establish subsidiaries and marketing and service net works;

• The first overseas branch;

• Developed full-line products associated with radio & TV workflows;

Development of Founder

1993-1999:

• Expand biz area into system integration;

• Founder computers and monitors were released;

• the Founder (Hong Kong) Co., Ltd. was listed on the Hong Kong stock market;

• ‘Founder Tech”: listed on the Shanghai stock market;

2000-now

• Founder entered broadband areas;

• No.2 in computer production and sales in China / index company;

• the Apabi DRM copyright protection system won the Award for Major Technological Inventions by the Ministry of Information Industries;

Founder Yinjie Digital Printing System, which is the most advanced Chinese language printing system in the world;

Founder printing software system was successfully applied to 300 Japanese newspapers;

Founder Apabi eBook occupied over 80% market share in China’s provincial public libraries;

Second core business: Pharmaceutical and Healthcare;

2005: received the award of “Top 10 Chinese Innovation Brands “and “The Outstanding Enterprise in 20-year IT Industry”

2000-now (cont’d)

Founder Group Ltd.Sales RMB24.5 bil

20,000 employees

Two Core Business

Has five public listed companies and twenty

more solely-funded and joint-

ventured companies

Among the First Six State

Technology Innovation Enterprises

Among the Top 100 Large Enterprise Groups in China

No. 7 in Top 100 China Electronics

& Information Enterprises 2005

Founder in 2006

Software

Ch

inese/Jap

an-es

e P

ub

lishin

g

Dig

ital C

op

yrigh

ts P

rotectio

n T

ech

e-Go

vernm

ent

Netw

ork S

ecurity

Hardware P

C an

d

Perip

herals

PC

B

IC C

hip

s

IT Business

Core BusinessCore Business ：： ITIT

Core Business: Pharmaceutical and Healthcare

PKU International Hospital I & M Co.,Ltd. PKU International Hospital I & M Co.,Ltd.

Equip-ment leasing

Logistics Pharmaceu-tical Co.

Hospitals HIS HIS systemssystems

2

4

6

8

10

12

14

16

18

Sales Income (RMB Billion）20

22

24

0.42

1992

2.5

1995

10.1

2000

11.6

2001

14.5

2002

20

2003

22

2004 2005

24.5

7.5

1998

Support from Peking University

Founder’ effort

Right people in both sides!

Factors attributing to Founder success

Support from Peking University

Full support from university authorities

(own baby: care, initial assistance, healthy grow)

Top faculty members with business vision

Academic advanced and commercially promising technology continuously backed by universities

Initial investment

Brand name

Culture

Well-trained students

Peking University

A role model of corporate citizen

Long term return as a healthy enterprise

A platform for staff development and contribution

Continuous first class service and products

A healthy corporate culture, qualified management team

A healthy corporate culture is a guarantee to our success

CustomerCustomer EmployeeEmployee ShareholderShareholder CommunityCommunity

Innovation

Integrity, Honest, Self-discipline

Initiative, Efficient, Responsible

Cooperative, Team-work

Value and Behavior

People with right competence in both sides

People is the key

PeopleTechnology

One of the founders of Founder Group

A professor with entrepreneur’s vision and competence

As professor:

Winner of China Preeminent Top Science and Technology Award 2001 (mainly due to his phototyping technology invention)

Professor Wang Xuan (1937-2006)

customer-orientation: right sense for the market and close to customers

People manager: excellent skills in team building, employee motivation and retention

Management focus: management upgrade, internal processes, management team buildup

People with charisma: spiritual leader of Founder Group

Personal success and Founder’ success

As entrepreneur:

Mr. XYZ

Excellent scientific achievement

…..

Not open minded

Coercive leadership

Single-fighter

All results are just papers

Technology outdated

Money burned

Reputation diminished

An example:

• Mainly financed by Founder Group• Projects defined Founder or Peking University• All research results belong to Peking University an

d Founder Group• Founder has priority to use to results

Excellent achievements academicallyReliable suppler for FounderStable and qualified team!

Peking University Computer Science Research Institute

Return to Peking University (1/2)

RMB millions

An incubator of new inventions

Retention on some top scientists of Peking University (combination of Peking University and Founder)

Founder: a well-known brand name in China (only when we do well….. We must do well)

Learning opportunities for students

A company with large net asset, profitable,

growing steady, with leading business and

competitive staff

Return to Peking University (2/2)

Key points


ndustry in China




Conclusions

Prospect of URVBs in China

URVBs are still needed

With the market maturing, it’s difficult to gain sudden huge profits like before and the same opportunities will probably never come again.

In the new economy environment, the traditional management can not matched with the new situation. A professional management team is indispensable.

At the same time,freedom will continue to be offered to the scientific and technological elite.

A super smooth interface?

Different mission– To spread knowledge, scientific discovery

– Profit, shareholder value….

Different culture– scientific advance, freedom, non-authority,non-hierarchy

‘long term’, impartiality, objective

– Market value, customer, competitive, survive, fast, processes, regulation, financial results

Different development pattern– Stable, long life

– Turbulent, ‘short’ life

Contract, Communication, Compromise

Different mission, culture, development pattern:

‘Dispute’ is inevitable

Both sides are not difficult, but only different

“interdependent”

Solution?

Research

Discovery

Transfer

ApplicationProduction

Sales

UniversityIndustry

Unclear boundary

Social needs

Joint responsibility

Great potential

In Beijing, Less than 10%

scientificfinding are

commercialized

Great potential !

Thank you

[email protected]

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