Why aspiring Chinese engineers wouldn’t go home

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Sheila Li is a graduate student at the University of Southern California. After a year of job-hunting, she received an offer for a full-time job as a software engineer in Austin, Texas. The email came in at 1 p.m., but Li waited five hours– until the sun rose in Beijing– before she called her parents to announce the news. She knew they would be disappointed.

“My parents do not want me to work in the United Sates,” Li said, explaining that her parents hoped she would move to her hometown, Hangzhou, a rising tech hub that incubated both the multi-national e-commerce conglomerate Alibaba and the internet tech company NetEase.

It doesn’t help that Li, 21, like many of her generation, is an only child. Being a woman makes things even harder. “Parents never want girls to go far away,” she said, “but working as a coder in China is exhausting. Plus, I get higher salaries here.”

More than 350,000 Chinese students are currently enrolled at U.S. colleges and universities. A third of them are here to become engineers. A Chinese research firm reported this year that engineering grads received the highest-paying jobs in China, but many aspiring Chinese engineers who are studying abroad are nonetheless determined not to go back home.

Dr. Danny Friedmann is a law professor at Peking University. He explained that there is a gap between the economic growth and a dearth in skilled coders, thus Chinese tech workers receive lower payment than those in the U.S.

“The higher salaries and better working conditions for coders, the higher costs for the companies, which makes them less competitive in the short term,” he said.

A Choice of Lifestyle

Apart from the payment, the reasons may be linked to a relentless work culture. Chinese tech companies have reportedly been pushing their employees to work overtime, encouraging employees to compete to work the longest hours. The companies accommodate this approach with o do this, they offer late meals, night shuttles, and even bunk beds in the office.

Fuzhi Wang is a hardware engineer at Huawei, a Chinese telecommunication equipment company based in Shenzhen. He said that he and most of his colleagues work “9-9-6” — from 9 a.m. to 9 p.m., six days a week. “The company does not mandate long working hours,” he said. “But people simply won’t leave the office at 5 o’clock.”

In August, Huawei passed Apple to become the world’s second-largest maker of smartphones, Bloomberg reported. In 2017, the company invested approximately $13 million, which accounts for about 15 percent of its revenue, in research and product development. Forty-five percent of its workforce are involved in R&D.

This means Huawei’s demand for tech workers is enormous. “Huawei is catching up with the U.S companies, said Yiwei Song, who worked as recruiting coordinator for Huawei in 2017. “It prefers to recruit students that have studied abroad and expects them to bring back fresh ideas.” Students with overseas educations tend to benefit from high salaries and greater opportunities for advancement than those who graduated from domestic universities, she added.

Despite the preferential treatment they receive back home, new grads from China tend to choose Silicon Valley over Shenzhen.

Sheila Li believes there is a bigger backstory — China lacks proper intellectual property protection for tech companies.

“Once company A creates something, company B would steal the idea, which pushes company A to accelerate the process of innovation,” she said. “There are distorted competitions in the market. As a result, engineers have to work day and night to catch up with that speed.”

Dr. Friedmann said China does have a proper intellectual property law system in place in the books, but on the ground, this is not always manifested, for example, because of local protectionism.

“Intellectual property in general is sometimes ill-equipped to protect these fastly developing innovations,” he said, “and in the case of software the copyright protection, it seems too long as well.”

After receiving his master’s degree from the New York University, Zhi Cao went back to Wuhan, the capital city of his home province, to work for a tech start-up.

“I am considering applying for another master’s program in the U.S.,” he said. “Life here (in China) is too intense and I don’t think I could adapt to it.”

Cao had been in the U.S. for six years before he went back to China, since he went to undergrad in New York as well. “I really regret that I didn’t stay in the States,” he said.

Yi Leng just received his master’s degree in engineering from the United States and landed a job at Amazon. “Here everything is based solely on merits,” he said, adding that interpersonal relationships between colleagues were “simpler” in the U.S, while the “guanxi” culture in China, where everything is based on networking, added complexity to the working environment.

Leng has a green card, but he is not obsessed with the idea of living in the U.S. “If I get to play my role and contribute to my own country with what I’ve learned here, I will go back,” he said.

The Challenges to Stay

Unlike Leng, most of international students who intend to work in the U.S. here need an H1B visa. It is a type of non-immigrant visa for international students to work in the United States.

According to MyVisaJob, Facebook, LinkedIn, Amazon, Apple and Google filed 13,875 Labor Condition Applications (LCA) for H1B Visa in fiscal year 2017. A year before that, the number was 11,047.  The trend resulted from STEM-favored policies under the Obama administration as well as rapid expansions of tech giants in the United States. For years, Silicon Valley has been demanding skilled foreign workers, especially in the tech niche.

“I can imagine the day when a large portion of tech workers will be coming from Ohio and Michigan,” said Professor Dowell Myers, Director of the Population Dynamics Research Group at the University of Southern California. “I can imagine that day, but it’s impossible.”

Myers said the United States has a shortage of workers, shortage of all levels — blue collar, white collar and scientists’ levels. As a result, Chinese and Indian engineers become “important shares of the technology workers”, he said, and added that they can be influenced by the recent immigration policy.

President Trump’s Buy American and Hire American Executive order gives creates more barriers for H1B petitions to be approved. This disincentivizes companies to sponsor new grads. The number of petitions the immigration department received in 2018 has drastically decreased from 236,000 in 2016 to 190,098, according to its website. That means employers have shrunk their quotas for international employees.

Notably, Amazon this year earlier began a round of corporate layoffs. Back in 2016, the company sent out a huge amount of job offers. At that time, applicants were only required to complete two online assessments before they got recruited. Now, it takes multiple rounds of interviews for an applicant to proceed into the final phase of recruiting.

Amazon is also locating its second headquarters in East Coast. Myers suggested such locations, as opposed to the West Coast, is centered in an area with a higher percentage of this was to give more jobs to native-born Americans than immigrants in the job pool.

Source: Institute of International Education (Created with Infogram)

Despite the shift in political climate, the number of Chinese students coming to the United States for higher education is increasing. Engineering remains the most popular major for them. The field of math & computer science witnessed a drastic increase of 18 percent in its student population of all origins from 2016 to 2017, according to the Institute of International Education.

“Even if tech companies do not reduce the number of positions for foreigners,” Li said, “more and more international students are flowing into this industry with a hope to secure a job here, the competition of job-hunting in the States would only be fiercer year after year.”

More fashion brands are joining the acquisition game

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In September, multiple news outlets reported Michael Kors’ move to buy Italian fashion house Gianni Versace for about €2 billion ($2.35 billion). The acquisition marked one of the first attempts by an American fashion company to run a high-end European brand.

Michael Kors was known for “affordable luxury”. Despite the CEO’s working background in fashion brand, the brand is widely popular among investors and fans for its handbags that are no less than $500. Versace, on the contrary, sells clothes and bags with the price of no less than $1500. The Italian fashion brand is best known for proactive designs and its popularity among high-profile movie stars. However, the revenue of Versace stagnated at roughly €700 million in 2017.

Donatella Versace, Versace’s chief designer, said MK could help her company to develop the accessories business and provide them with the expertise in digital commerce. Michael Kors said in an announcement that they expected Versace to grow to $2 billion in annual sales, while still targeting at the luxury part of the brand.

The stock of Michael Kors, which has gained more than 45 percent in the past year, fell 8.2 percent on Sept. 24 after the publication of reports about the deal. Private equity firm Blackstone Group, which bought a 20 percent stake in the firm four years ago, announced that it would sell its holding.

Traditional fashion companies are facing the threat of rising fast fashion brand, which produce clothes, bags, accessories year around at a surprisingly cheap price. The increasing online shopping choices are also squeezing the traditional brands out. Meanwhile, they have to compete against each other.

Last year Michael Kors bought Jimmy Choo, a shoe brand, for $1.2 billion, aiming to forge a “global fashion luxury group”, as said by its chief executive John Idol.

There were a handful of precedents to form luxury conglomerates in the fashion industry. Both LVMH and Kerring, the French holding companies, own more than a dozen brands each and have been growing faster than U.S. competitors. Last year, Coach joined the acquisition game and bought Kate Spade and changed its name to Tapestry to portray itself as a holding company.

The Wall Street Journal predicted that more M&A cases in luxury brands could follow, since “deteriorating sales provide an incentive to cash out”.

 

 

 

Growing Food in the Sea — An Outlook to Aquaculture in the U.S.

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A row of old warehouses came into the view as the car went pass the green Vincent Thomas Bridge to reach the coastline of southern San Pedro. Lindsay Cruver stopped at the spacious parking lot at Berth 58, locked the car and stepped into her office — two retrofitted shipping containers, orange and blue, with the company name Catalina Sea Ranch printed on them.

Catalina Sea Ranch is an offshore mussel farm operated in federal United States waters. Cruver has been working as a researcher for the company since its foundation two years ago.  “Our country is actually lagging behind in aquaculture,” Cruver said, “what we are doing is really to catch up with other countries and try to grow more seafood by ourselves.”

Over 90 percent of seafood consumed in the United States is imported. Nearly 65 percent of aquaculture production is inland and concentrated mostly in the tropical and subtropical regions of Asia.

In recent years, the United States has slid to 17th place in world farmed seafood production, slipping behind Myanmar and almost leveled with Malaysia, according to the Food and Agriculture Organization of the United Nations (FAO).

The country is consuming very little seafood. Compared to the recommended 20 percent, seafood accounted for 5 percent of total consumption from the protein foods group in 2014, which was dominated by meat and poultry.

Culturally, the Americans are more inclined to consume terrestrial meat than seafood. Beyond that, the country does not farm fish the way it farms cows and chickens. The amount of fish and shellfish harvested from the wild annually in this country is about 7 times greater than the amount produced by domestic aquaculture farms.

Now the search is on for a more sustainable way of getting food from the sea, as 85 percent of the world’s marine stocks are either fully exploited or overfished, World Wildlife Fund says.

One of the options would be developing sea ranches and farm fish in the ocean. But they are never perfect businesses as the aquaculture farms bear the risks of spreading diseases to wild fish, harming local habitat and impacting fishing activity.

Cruver said the it had been very hard for sea ranches, both coastal and offshore farms, to get permit. “It’s not just the regulators,” she said while pointing at the other side of the terminal island, “people who live there do not want to see warehouses and fishing nets – they want to have the view of the beautiful, clean sea surface.”

Due to the concern on aquaculture pollution and transmitted disease carried by the finfish, there had not been any permit given to offshore finfish producers. The shellfish farms are easier to manage, as mussels, oysters and clams do not move around, nor do they feed on small fishes. So, the Catalina Sea Ranch started as a pilot to farm shellfish. For now it is the only offshore sea ranch in Southern California.

It takes an hour for the boat to reach the sea farm from the port behind the warehouse. On the surface of the sea one could only see the floater and the data monitors powered by solar panels.

The ranch is underwater, where thousands of mussels were tied onto the grouped ropes. “Technically, the mussels grab onto the ropes,” Cruver said, “as they had numerous ‘hands’ called mussels threads.” When a mussel is put close to something, it naturally attaches itself to it within minutes using those threads.

The sea ranch currently sees a satisfying performance as it delivers 2 million pounds of mussels year-round to the retailers all over Southern California. It has to prepared itself for challenges, though. With climate change bearing down on the tropics, the changing ocean condition makes it more difficult to predict what’s going to happen for a business under the sea.

Cruver said that anyone in the west coast aquaculture industry would be familiar with the crisis confronted Whiskey Creek Shellfish Hatchery. In 2008, the hatchery almost went out of business as the baby oysters they attempted to produce wound up dead on the bottom of the tanks month after month, causing a 75 percent decrease in its oyster production in the year.

It turned out that the “ocean acidification,” a byproduct of climate change, is to blame, as opposed to foreign bacteria, which is a more commonly seen problem in sea farms. A study in 2009 by FAO predicted that it is likely that diseases affecting aquaculture would increase both in incidence and impact.

Multiple universities and research institutions are attempting to provide solutions to the chronic threats, as the human society needs to turn to the sea for more food in order to ease the resource-intense inland farming industry.

Sarah Lester, an assistant professor at Florida State University, recently found in her study that Southern California has huge potential for offshore ocean farming, as long as it was carefully planned.

This gives more weight to the two containers at the giant warehouse in San Pedro. Cruver and her other 20 colleagues will also have to be prepared for future competitions, as what they are doing is setting a pace for more new comers in this under explored business field.

Automation Is The Medicine for Healing — AI Technologies Applied to Recycling Industry

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This is probably the most unpleasant job in the world – trash sorter. It is smelly, boring and intense. The job exists because citizens throw all types of garbage into the same bin. Trash trucks take everything in the bin and pour them onto a conveyor belt. The belt rolls with the pulley in front of the recycling workers, who spend days after days watching the belt rolling and sorting them out.

Till 2018, recycling companies still rely on manual labor to categorize materials, since the assembly lines in recycling factories neither produce identical output nor have repeatable processes. According to a study released by the University of Illinois, recycling workers are more than twice as likely to be injured at work as the average worker. Seventeen American recycling workers died on the job from 2011 to 2013.

“I was created to do this job,” said Max, a robotic sorter created by Bulk Handling System (BHS) with the artificial intelligence technology. Fundamentally, Max identifies recyclables in a similar way to a person. A process called “deep learning” runs through hundreds of thousands of images to train neural networks to “think out” the correct identification. Once built these neural networks resemble the architecture of the brain and, when paired with a camera, will correctly identify the items in our recycling stream.

Max is volunteering at just the right time. The dedicated mechanical sorter is widely welcomed, as China’s ban on plastic trash import lends urgency to upgrading the recycling industry in the exporting countries. Now that the world’s biggest trash importer only allows half percent of contamination, the recycling plants need to double or triple sort the product before the shipment. Companies are getting squeezed on a number of levels. Now they are anxiously seeking every possible way to reduce labor cost.

BHS has three sites in the U.S. and three in Europe. Two waste management companies in the U.K., Viridor and Green Recycling, have invested in Max-AI, expecting to upgrade their processing line, according to the companies’ websites.

More companies than just BHS are dedicated to developing smart machines to cater for that need. Moblieye, a vehicle manufacturer, recently designed an electronic trash truck for heavier city distribution and refuse transport operations with gross weights of up to 27 tons.

“Chinese government is allowing a window for imports, but the quality has to be there,” said Brett Johns, Director of Sales, Marketing, and Procurement at City Fibers, a family recycling company in Los Angeles. Johns said that they need robots to help improve quality. “We are looking at the elimination of probably ten to twenty percent of human jobs positions,” he said.

China’s import ban is not the only reason for Max to exist. “Automation has been a trend in the last ten to fifteen years,” Nick Morell said. He is the Recycling Coordinator from Sanitation District of Los Angeles County (LACSD).

According to Morell, the agency currently relies on both mechanical and human sorters to run its processing line. “It will be out of service in next 12 months. As we put in a new mechanical sorting line,” he said, adding that LACSD is about to sign a contract with BHS to optimize their facilities this October. This means the current employed sorters will be soon out of jobs.

Morell said they were temporary labors through contracts, so they would be either reassigned to other facilities or temporarily laid off as “they are not gonna work on the line anymore”.

While sorting trash is unpleasant, it can be worse for people to lose jobs.”This conversation should not be about jobs.”said Peter Raschio in an email. He is the marketing manager of the company. Raschio argued that automation might result in the the loss of sorting position for a future hire, but those positions were not “sustainable, long-term jobs”.

Steve Miller, CEO of BHS, believed that the impact on labors would be positive. He said in an interview that the increased efficiency in assembly line could cut recycling costs and create more jobs at paper mills, plastic recyclers, and other firms that reuse raw materials.

“I would say that green jobs are going away as automation progress,” Morell said on the contrary. He predicted that green jobs in the future would be more about quality control, engineering and processing line. “It would be almost like the mining operation — the way things are ground up and that they use magnet and optical sorters. There’s not a lot of people involved in those process until you are dealing marketing and commodities,” he said.

The newest Recycling Economic Information (REI) released by the environmental protection agency (EPA) shows that the estimated recycling jobs have declined from 2001 to 2016 national wide, including those in iron and steel mills, non-ferrous foundries and glass container manufacturing plants. The number of plastic converters dropped from 178,700 to 30,535 during the 15 years. Firms that reuse raw materials in all categories of scrap commodities, except for rubber, have seen a decreasing demand for recycling workers. Miller’s optimistic outlook might not come true in the short term.

(Professor Dowell Myers, Director of the Population Dynamics Research Group in at the University of Southern California, commenting on automation’s impact on labors)

(Labor union comments, hopefully with anecdotes)

……

 

China Has No Magic — Recycling Reality in the Global Market

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Think of the Coca Cola bottle you saw on the beach in Santa Monica: after your encounter with each other, it was collected by an old man, then sent to some Southern California recycling center. Next, it went through several rounds of examination before it was put into a container, together with a Pepsi-Cola bottle and other less famous ones, to be shipped away. Two weeks later, it arrived in a coastal village in southern China.

In 2017, the United States exported 11 million tons of scrap materials with a value of 5,613 million dollars to China. (source: U.S. Department of Commerce/U.S. International Trade Commission) That is one third of the country’s total export of scrap materials.

Starting from this year, China banned the imports of most categories of recyclable plastics. The waste, parings and scrap of plastics exported to China have dropped 92% over the first eight months of 2018. The policy shift has impacted the United States on multiple levels.

California has banned plastic straws statewide. Sacramento cut back on which plastics it will pick up for recycling, and will send items like egg cartoons, medicine bottles and some yogurt containers to landfills instead. Brett Johns is the Director of Sales, Marketing, and Procurement of City Fibers, a recycling company in Los Angeles. He said they are feeling the effect of the ban: “We are shipping a lot less to China, and what we are shipping to China has to meet new requirements and specifications. Price has been drastically reduced. We’ve been shipping to a lot of other countries to offset the loss.”

The Institute of Scrap Recycling Industry (ISRI) estimated that recycling industry creates 51,139 jobs in California. In 2017, 4,275 jobs are supported by export activities. China’s restriction on the import of plastic waste put huge pressure on employers in the local businesses. Mr. Johns said his company would have to the eliminate probably ten to twenty percent of human jobs positions and replace them with atomized machineries.

All of a sudden, the once invisible garbage became an eyesore. Recycling centers are now seeing stocks of trash packages. Containers filled with “trash” need to be either taken by another country or buried and burnt. Vietnam, India and Korea has become new destinations for the giant ships. After China’s ban, these regions and countries would only take in the recycling materials with lower price. “China is the biggest buyer before. When the biggest buyer put on the brake, the price is bound to be affected.” Said Mr. Johns.

source: U.S. Department of Commerce/U.S. International Trade Commission (created with Infogram)

Situation here is distressing enough. What makes it worse is the fact that no countries really have the capacity to digest the scrap and waste we have produced. The piles of wastes never disappeared no matter how much money people pay, or where they were shipped to. The reality of recycling industry is much less pleasant than it sounds. China had no magic to resolve the issue.

Back to the Coca Cola bottle again – what it saw in that Chinese village were smelly, dirty trash mountains populated by files. Villagers run household-recycling workshops there, right in the piles of plastic and alloy. This is recorded in the documentary Plastic China. There is a sharp contrast between these recycling centers and the ones in the U.S., which are populated by organized assembly line, tall machines and workers with masks and uniforms. Jiuliang Wang, director of the documentary Plastic China, describe the place as “a city of global wastes”.

“I was shocked the first time I was there” said Wang. “You could literally find all kinds of daily garbage from any developed countries in a corner of the village.” In the piles of plastics and mixed papers, there are Starbucks, Lay’s and any number of brands seen in on a supermarket shelf in the United States.

Wang intends to raise awareness among the domestic audience in China, particularly policymakers too: “Here what boosted the economy are industries with low added-value and high environmental as well as societal cost.” The award-winning film was banned for its criticism of local government’s chase for a good-looking balance sheet at the cost of people’s quality of life.

In 2017, China passed the National Sword policy banning plastic waste from being imported. Officials stated that this was for the protection of the environment and people’s health. Adam Minter, the author of Junkyard Planet, argued that China implemented this policy primarily to crack down on competitors against the virgin materials industry — the virgin materials industry and the big mining and steel companies are state-owned entities, and the recycling industry is largely private. This means the villages that once relied heavily on recycling business will be hit by this policy as well. It can get worse when the polluted village could not support other businesses such as tourism and farming activities.

The world is all in this together, and the issues do not go away by changing time and location. It remains to be seen how the new importers are processing recycling scrap. Environmental and societal costs of engaging in the business is not yet tracked. “This movie is really made for audience outside China.” Wang said: “People hardly realized that their daily wastes were transferred to the other side of the sea and that they were processed by another group of people in such an unexpected way.”

Pick A Pickle to Understand Urbanization in China

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We can always rely on food to tell changes in an economy.

Zhacai (榨菜) is a type of pickled mustard plant stem similar to Korean Kimchi. In China, it is popular among low-income group, particularly transient workers. By looking at the change in the sales of zhacai in different regions, one might tell where the workers were flowing into, which reflects how the cities has developed.

There has been large demand for labor forces as China embraces aggressive urbanization since its Reform and Opening-up. More and more breadwinners of rural households have attempted to opt out the life as farmers to pursue an imaginarily decent one in modern cities. In 1950, 13% of people in China lived in cities; by 2010, the urban share of the population had grown to 45%. The idea of using zhacai as an economic indicator was brought up in 2013 by Prof. Ba Shusong, Deputy Secretary General of China Society of Macroeconomics. He predicted that transient workers in east coastal areas would go back to their hometowns in west central China, as labor-intensive industries in the coastal areas had begun to migrate to the central regions since 2008 due to rising costs in land and resource.

According to the financial statements of Chongqing Fuling Zhacai, the biggest zhacai manufacturer in the country, from 2010 to 2012, the sales in Central China, Northwest China and Central Plains increased by 67.4%, 65.2% and 56.8% respectively, while the growth rate of South China was only 8.82% during the same period, which was the lowest in the nine sales regions of the country. The data then consolidate the argument of Prof. Ba.

The concept, however, is not entirely academically accurate. A migrant worker, for instance, might stop buying zhacai because of rising income levels or changing dietary preferences, while he himself was not migrating to anywhere else. Such changes would not reflect the physical move of the consumers.

Despite that, government officials in Guangdong Province might felt a huge relief seeing this number, for it suggests that their pressure on resettling the migrant population will be greatly reduced. Officials in the west central China, however, would have to feel a little bit of anxiety, because they might need to cope with tens of millions of people returning to the towns – they would then be crowded with problems of employment, health care and public services…