SAN JOSE, Calif.—Sage-N Research Inc., the maker of the Sorcerer analysis appliance and the SEQUEST Sorcerer system marketed by Thermo Electron Corp., plans to establish a research and development center in the New Science Park in Shanghai, China.
"The field has been prolific in developing new proteomics data analysis algorithms, but the challenge is to deliver them promptly to the researchers who need them, in a form that is easy to use, even for large data sets," says David Chiang, CEO and chairman of Sage-N. "The new Sage-N Shanghai Center will extend the company's previous successes in doing this."
The Sage-N Shanghai Center will work closely with leading proteomics scientists to quickly and cost-effectively incorporate new technologies and applications into the Sorcerer appliance in the form of plug-in modules. Chiang says the new center will focus its efforts first on modules to eliminate false positive results, for multiple peptide scoring functions and for extensive post-translational modification searches.
Why China? Simple, Chiang says: Market, talent and cost— in that order of importance.
In terms of market, he says, the four biggest Asian markets for his work are Japan, Korea, China and Taiwan, and Shanghai is located centrally to all four, as well as being accessible to other secondary but important markets like Singapore and Australia.
Second, he says, his company needs "top-notch talent" and he notes that China is graduating a significant number of qualified scientists and engineers.
"Finally, cost is important," Chiang says. "As the markets mature, costs are steadily increasing, but on a net basis, they are still a quarter to a third of what operations in the United States cost us."
Chiang plans to roughly double the size of Sage-N with the expansion into China, and expects staffing to be about evenly split between Silicon Valley and Shanghai, at first. In the long run, though, Chiang thinks having close to 80 percent of staff in China and around 20 percent in the United States—with a smattering of people in Europe—is the best mix for the company.
In any case, he plans to keep the headquarters in San Jose and open up another office in Boston in a year that will serve U.S. and European needs. A European branch office is at least two years away.
Sage-N's entry to the Chinese market has been relatively easy, Chiang admits, though that is largely because many of the investors in his company have long-standing relationships with the Chinese government. As a result, Chiang has been able to secure five years of valuable financial incentives from China in return for employing engineers in that country.
"We have a leg up compared to a lot of companies that want to enter the Chinese market," Chiang admits. "But that's the thing people need to understand about doing business in much of Asia. So much is based on person-to-person contacts. We have investors we've known for 25 years, and they have known people in the Chinese government for 25 years. Contracts are much less mature over there—they might only be a handful of pages compared to 2-inch-tall stacks in the United States—but personal relationships matter a great deal. You need to have a really good partner to do business in China."
