Although Western countries fear a loss of jobs to their cheaper, more numerous Asian counterparts, China still has a ways to go before its engineering graduates can match the skills of those in the West

-------By Brian Schwarz

During a well-publicised national conference last December on science and technology in Beijing, Chinese President Hu Jintao called for "a distinctively Chinese path of innovation and hard work to build an innovation-orientated country." With the Middle Kingdom's growing economic influence in many capital-intensive industries that the West used to dominate, this proclamation led to another around of worry and hand-wringing in Western business and political circles.

In the past few years, a growing chorus of well-known experts has warned that America is at risk of losing its competitive edge in a variety of high-tech industries due to a dearth of highly skilled engineers and scientists. In their global search for engineering talent more American firms, led by IBM and Intel, are opening research centres in China and India.



Last year, two best-selling books analyzed the impact that China's economic growth is having on the global economy. Thomas Friedman's The World is Flat, and Clyde Prestowitz's Three Billion New Capitalists: The Great Shift of Wealth and Power to the East, have promoted the notion that there are millions of highly educated youngsters in the developing world ready to take jobs in the West.

In a digital age where outsourcing and global supply chains are the norm, engineering skills are at a premium in the climb up the high-tech ladder. When compared with the West, experts cite numbers that show a huge imbalance of engineering graduates coming out of Chinese and Indian schools. The most common figures estimate 600,000 engineers graduate annually from institutions of higher education in China, 350,000 from India, and only 70,000 from the US.

And it is not only Asians. Author Jeremy Rifkin notes that the European Union also leads the US in the number of science and engineering graduates and public research and development (R&D) expenditures.

Spreading propaganda

The US share of the world's science and engineering graduates has been declining for decades. Harvard University's Richard Freeman says that in 1970, for example, that American universities issued half the world's science and engineering doctorates. Now, Europe alone outpaces the US in those doctorates, and China is on track do so by 2010.

While some Americans and Europeans, mostly in labour-intensive jobs like textiles, do face a serious threat from low-cost countries, they must develop a better understanding of what is really happening in East Asian university classrooms before they get carried away with their fears. Recent research seems to indicate that the so-called "engineering gap" disappears upon closer examination.

Duke University's Dr Vivek Wadhwa suggests that China is overestimating their number of engineering students on a massive scale, and this myth is having a detrimental effect on America's current high-tech workers. As the founder of two software companies, Dr Wadhwa claims both sides in the globalisation debate are "spreading propaganda".

Dr Wadhwa's analysis touches a few a sensitive nerves. He argues that India and China are using inflated engineering numbers because they want to draw more foreign investment, while some politicians and business leaders in the West use dubious data either to support their case for protectionism, to lobby for greater government spending on higher education and research or to justify their offshore investments.

As for the debate over numbers, Wadhwa says China includes in its count a lot of graduates - including auto mechanics - who would not be included as engineers in the US or many other nations. As the total number of university graduates has dramatically increased in the past five years, most Chinese universities are now burdened with too many students and large class sizes. In fact, China's Ministry of Education figures show the proportion of 18- to 22-year-olds at universities in 2004 was 15 percent, compared to only 7 percent in 1995.

"My conclusion is that China truly is graduating more engineers than the US in raw numbers, and that those numbers are very high," Wadhwa said. "However, their focus is on quantity, not quality."

Critics of the Duke study point to the large number of science and technology graduate students at the top- and mid-tier American schools that are Asian-born. Facing dim job prospects after graduation, increasing numbers of ethnic Chinese are enticed by Beijing incentives and returning to their homeland.

On the other hand, Washington Post columnist Robert Samuelson notes the American figures excluded computer science graduates. When they added them in, the US total jumped to 222,335. Per million people, the United States graduates slightly more four-year engineers than China and three times as many as India. The US leads by even more for non-advanced degrees.

Graduate glut

Chinese graduates usually face a more difficult transition from the classroom to the workplace. An American director of education at one of Shanghai's leading joint-venture schools says China's traditional rote learning style and strict top-down educational system make it more difficult for recent graduates to adapt to an innovation-focused environment.

Requesting anonymity given the topic's sensitivity, he noted that most Chinese "university students" actually attend full-time classes for only three years, not the standard four years common in the West. In the classroom many Chinese professors use a lecture-based teaching style that puts a great emphasis on theory, at the expense of practical knowledge. When they receive their diplomas, many graduate with little applied knowledge that would be most useful in the office or on the factory floor.

There may be a graduate glut, but the majority of these young people have neither the skills nor the experience to fill senior and middle management roles at major domestic and multinational corporations.

Dr Wadhwa makes a distinction between "transactional" engineers and "dynamic" ones. The former are good at fundamentals but have a hard time applying their knowledge to broader problems. Dynamic engineers are more capable of abstract thinking, work well in teams and can lead innovation.

A few months ago, McKinsey Quarterly published a study that claimed, on the supply side, developing countries produce far fewer graduates suitable for employment by multinational companies than the raw numbers might suggest. Interviews with human resource managers indicated that, on average, only 13 percent of the university graduates from the 28 low-wage nations are suitable for jobs in these companies.

These HR managers give a variety of reasons for the problem, especially a lack of language skills, an emphasis on theory at the expense of practical knowledge, and a lack of cultural fit (meaning interpersonal skills, as well as attitudes toward teamwork and flexible work, that are at odds with the norm in multinationals).

China's human capital challenge also applies to management talent. As with India, China suffers from a serious shortage of skilled business managers and researchers with international experience. While the number of MBA programs in China has greatly increased, demand for talent greatly outstrips supply.

The right stuff

To understand the depth of this problem, consider estimates from a McKinsey Global Institute study which notes that Chinese companies trying to expand abroad will need up to 75,000 internationally experienced leaders if they want to continue to grow over the next 10 to 15 years. Currently, there are only 3,000 to 5,000 such men and women in the whole country.

While it is true that America, and to a lesser extent the European Union, faces an engineering shortage across many industries, many current engineers, it seems, do not feel appreciated. With so much negative news in today's mainstream media about offshoring and the decline of America's high-tech competitiveness, many are worried they will be replaced by a younger, and cheaper Asian counterpart.

With a majority of China's exports coming from foreign-owned enterprises, President Hu has urged for greater investment in science and technology and greater resource sharing between domestic companies, universities and defence organisations. Chinese students often work hard and can memorize facts very well, but the challenge they face is developing the right skills to excel in high-tech industries where creative thought and innovation, as President Hu says, are of paramount importance.

Training engineers in China and India

India and China's universities are turning out increasingly high numbers of engineering graduates each year, which has attracted increasing numbers of multinationals to locate their research and development centres in both countries to draw on growing human resources.

The education systems of each country train their engineers differently, with India coming off slightly ahead in terms of the quality of graduates' knowledge and practical experience. But it remains clear that both countries still have a way to go if they want to produce engineers who can compete in the global job market.

The major difference in education is India's applied, hands-on approach compared to China's more theory-based training. Engineering degrees in India require undergraduates to gain working experience, which provides them with a practical expertise absent from China's system. This works out as a severe setback to China's students, as they often find it hard to adapt to the demands of a working environment.

Teachers in China also rarely have personal experience in the commercial world of the subject they are teaching.

Dissimilar working methods due to cultural differences also put Chinese engineers at a disadvantage. Employers complain that they often lack "soft" skills such as interpersonal skills, flexibility, teamwork and creativity. Because of the relatively free flow of information and political freedom compared to China, as well as close historical and educational ties with Britain, its education system has been able to grow in such a way that it can provide such skills to students.

Despite India's apparent advantages, however, by no means does it meet all the requirements needed to compete on the global job market. A handful of elite universities provide excellent training but higher education institutions can still improve, according to a 2005 McKinsey and Company Global Institutions study.

Higher education only accounts for less than 3 percent of India's national research and development spending, compared with 10 percent of China's.

The McKinsey study states that only 10 percent of Chinese engineering graduates and 25 percent of Indian graduates were suitable for employment by international standards in 2005.

Indian engineers are further along the path to competing with their Western counterparts in terms of being able to meet international standards and work practices. But as big companies pour intellectual capital into China and graduates recognize the need for international experience, young Chinese engineers won't be far behind.