Are China's stultified, state-run labs ready for Zhao Bowen, the high school dropout boy-genius, and his start-up revolution?
Zhao Bowen strides across the linoleum floors of the Beijing office of QuantiHealth, a biotech start-up, one day in late June. He’s wearing an untucked, short-sleeved button-down shirt and brown leather sandals. As he walks, Zhao, the company’s CEO, gestures to paintings on a wall—cartoons illustrating the origins of gut bacteria, QuantiHealth’s primary focus. The business, which is just a year old, is using genomics to map these microbes and hopefully unlock the secrets of how they help regulate human health. The air in the office, which QuantiHealth has only occupied for a month, smells of new furniture—and of sweat. Zhao says he works about 14 hours each day, supervising a team of researchers, talking to potential investors, headhunting, reviewing budgets, and, in his spare time, reading books about management.
But all that hard work isn't what exhausts him. Rather, he's tired of talking about his age: Zhao is just 23. The international media have dubbed him a "boy genius" and "wunderkind." Zhao complains in English, "When you're running a company, nobody gives a fucking care about your age. If you're 18 or 80, you're equal parts in the market. It actually does not matter."
Whether Zhao likes it or not, however, in China's storied science system, age does matter. Seniority has been perhaps the most significant factor for promotion and professional success in the sector over the past 50 years. Zhao is defying the odds: In 2009, he was a high school dropout. Six years later, after stints with groundbreaking genome research projects, he's running his own company.
QuantiHealth's office, in a nondescript office park in southern Beijing, has an interior layout that at once reveals Zhao's obsessive attention to creative detail and his youthfulness. An area behind the main rows of desks for staffers, of which there are 10, contains small tables with seating sunken into the floor; they exist to encourage people to gather for brainstorming. A large bookshelf against one wall holds a smattering of computer and science books. Zhao has begun to stock it with his own collection, but he also urges colleagues to bring in their favorites, giving it the feel of an eclectic lending library. Meanwhile, QuantiHealth's labs sit behind large windows that allow people to peer inside, like at restaurants where diners can watch chefs at work.
Much as Zhao is eager to revamp China's traditional work culture, he hopes his company can shift the country's approach to medicine. As its name suggests, Quanti-Health is interested in finding clear measures of what makes people healthy and what doesn't—for instance, too much or too little of certain types of gut bacteria—and then applying that knowledge to real-life solutions. "You simply cannot do yoga, tai chi, and Chinese medicine," Zhao says, "trying to cure something you don't really understand."
Zhao's vision and ambition are nothing short of vast. And it seems he's coming of age at just the right moment.
Despite such high-profile successes as achieving manned spaceflight and building the world’s fastest supercomputer, China’s science sector has for the past two decades been burdened by fraud, theft, and top-down priorities set by bureaucrats in Beijing, as well as by the demands of its strict system of rank and hierarchy. These problems recently exploded into public view: In 2013, the Chinese Communist Party launched an anti-corruption campaign that has since toppled dozens of prominent scientists, academics, and officials for stealing government funds, and international investigations have exposed hundreds of instances of fraudulent data and plagiarism in research journals, as well as a cottage industry of publication rights for sale.
Slowly but surely, China’s young scientists are finding ways to prove that the old way of doing things might no longer be the only way.
The result is a new space that’s opening in Chinese science, one in which some of the best and the brightest are moving out of the traditional system in favor of private or semiprivate research. There, success is driven more by merit, not state approval. It’s reminiscent, in some ways, of the idealism that built Silicon Valley, and it reflects the energy already propelling tech start-ups that are changing how Chinese society conducts business, entertains, and interacts— including with the rest of the world. For instance, WeChat, created by private Internet giant Tencent, today has more than 100 million users outside China, and in 2014, e-commerce company Alibaba had one of the largest initial public offerings in history, at $21.8 billion on the New York Stock Exchange. These companies haven’t just flourished; they’ve also inspired other Chinese entrepreneurs and investors looking to park their aspirations and money somewhere other than the Chinese stock market or real estate. In 2014, China’s private- equity market for new investments reached $73 billion, nearly doubling from its 2013 size, according to PricewaterhouseCoopers.
New streams of capital are helping to create novel avenues for scientists to try out their ideas. No longer is chasing government-sanctioned research goals inevitable. Slowly but surely, China’s young scientists are finding ways to prove that the old way of doing things might no longer be the only way.
If innovators like Zhao are successful, their stories could entice foreign talent to China—and keep domestic talent at home, curbing what even the Communist mouthpiece People’s Daily in 2013 called “the world’s worst brain drain.” (According to the U.S. Energy Department, 85 percent of Chinese people who earned their science or engineering doctorates in the United States in 2006 were still there in 2011.) The more freedom and success Chinese scientists have, the more likely it is that committed young geniuses will follow their lead.
Zhao knows the obstacles he faces, but seeing an opportunity, he’s inclined to jump. “It’s possible that we will fail,” he says, “but it’s worth a try.”
Zhao began studying at the High School Affiliated to Renmin University of China, located in the heart of Beijing’s Zhongguancun Science Park, in 2004. The school regularly places near or at the top in national science rankings and funnels 85 percent of students to the prestigious Peking, Renmin, and Tsinghua universities. Zhao was already at the top of his class when, in 2007, he and his parents attended a dinner in Beijing for migrants from Hunan, the family’s home province. There, they met Huang Sanwen, a scientist from the Chinese Academy of Agricultural Sciences (CAAS), who would become Zhao’s mentor. Huang set up an internship for Zhao, then 15, on his team, which was sequencing the DNA of a cucumber—a project that earned Zhao a co-author slot on a 2009 paper in Nature Genetics. During his two years at CAAS he learned “the lab skills and the theoretical knowledge about genomics and life sciences,” Zhao says. “I would skip some classes, especially those like politics, and ride on my bicycle to the institute. I wouldn’t go back home until 10 p.m.”
The experience also exposed Zhao to the expansive landscape of state-run science organizations across China. Under the CAAS umbrella alone there are 42 research institutes, a graduate school, and a publishing house. And that’s just a fraction of the state-sponsored science enterprise: The much larger Chinese Academy of Sciences (CAS) oversees more than 100 institutes, two universities, and 60,000 employees.
This ecosystem has been lavished for decades with generous funding from the government in order to help China compete on a global level. In March 1978, at a national conference in Beijing, leader Deng Xiaoping celebrated science as the key to China’s future growth and prosperity: “Without modern science and technology, it is impossible to build modern agriculture, modern industry, or modern national defense,” he said. Deng’s comments were followed over the years by a series of increasingly ambitious government plans to raise funding and set national research priorities. In January 2006, President Hu Jintao introduced the Medium- to Long-Term Plan (MLP), a document that mapped the country’s 15-year strategy for science and technology. According to the proposal, by 2020 China’s R&D spending should grow to 2.5 percent of GDP, and 60 percent of the country’s economic development should come from scientific and technological achievements. By 2012, R&D spending had quickly approached those expectations, hitting $163 billion, or 1.98 percent of GDP.
Measured in purchasing power parity—as Cong Cao, an expert on Chinese science policy at the University of Nottingham in the United Kingdom, and Yutao Sun of Dalian University of Technology in China have calculated—the United States is still the top science spender globally, at $454 billion in 2012. But China comes in second, and according to a 2014 report from the Organisation for Economic Co-operation and Development, it may surpass the United States in research spending as early as 2019.
Yet “money alone doesn’t buy innovation,” says Denis Simon, an American expert on Chinese science policy and one of the few foreigners whom Beijing has invited to give input on high-level planning, including the MLP. Consider patents and intellectual property (IP): In 2013, China paid $21 billion for use of foreign IP, according to World Bank data, but collected just $887 million for use of its own, meaning its IP has limited value on the global market. In contrast, China’s smaller neighbors reaped far more from their inventions: Singapore earned $3 billion; South Korea, $4 billion; and Japan, $32 billion. And the United States took in $129 billion. According to Cao, “China is spending huge amounts of money on science but not yet getting great returns on its investment.”
China’s leaders now want to “encourage mass entrepreneurship and innovation,” as Premier Li Keqiang told world leaders gathered at the World Economic Forum meeting in Davos, Switzerland, in January. But doing so requires more than expanding budgets. It necessitates shifting the norms of Chinese research culture.
The government’s obsession with science as a means of catapulting the economy forward is actually often counterproductive. “The tension is always that Chinese science from the beginning has been an incredibly nationalist and patriotic process, a mission to strengthen the motherland,” says Adam Segal, a Council on Foreign Relations (CFR) senior fellow who studies global innovation. Creativity is hard to nurture when the government is fixated on certain priorities—for instance, defense, space, lasers, and supercomputers—and maintaining chains of authority. “This top-down approach stifles innovation and makes clear to everyone that the connections with bureaucrats and a few powerful scientists are paramount,” a pair of respected professors at Tsinghua and Peking universities, both of whom studied in the United States, wrote in a 2010 editorial in Science. “To obtain major grants in China, it is an open secret that doing good research is not as important as schmoozing with powerful bureaucrats and their favorite experts.”
To be sure, some state backing is important. “To create conditions for real innovation, there’s a general sense that you want government support and investment in research and training,” says Segal. “But you don’t want the government involved in choosing between projects and creating incentives for specific projects without a lot of independent input from the research community itself.”
Today, China’s official science system is especially unwelcoming for young researchers, who struggle to scramble up the career ladder and secure adequate funding for projects. “The only way you could achieve … something that really matters would be to spend a lot of time climbing from the bottom to top of that hierarchy,” Zhao says.
That’s why he decided to forge his own path. And he was able to do so thanks to a few pioneers who came before him.
In 2007, well-respected geneticists Wang Jian and Yang Huanming, then in their 50s, began packing up their offices in China’s capital. They were embarking on a new experiment: turning Beijing Genomics Institute (BGI), an entity they had co-founded, into an independent research institute. Impossible to know at the time, this move would redefine the relationship between Chinese scientists and their government.
Since BGI’s founding in 1999, it had worked closely with the state: According to Nature, CAS secured financing for BGI’s contribution to the Human Genome Project and offered grants for subsequent work. In 2003, BGI became a part of the CAS structure, which was a “reward” for creating a SARS diagnostic kit that impressed President Hu.
The arrangement with CAS, however, proved limiting. BGI lacked the freedom to set its own research agenda, internal hiring policies—including the ability to recruit budding scientists without advanced degrees—and external collaborations. CAS limits the size of its institutes, which didn’t coincide with BGI’s ambitious plans. (It has since grown to about 5,000 employees.)
Then, in 2007, the city government in Shenzhen, a special economic zone, offered BGI $12.8 million to move there. If BGI became successful, the city would more than recoup the money in tax revenue over time. Eager for independence, Wang and Yang agreed.
They were embarking on a new experiment: turning BGI into an independent research institute. Impossible to know at the time, this move would redefine the relationship between Chinese scientists and their government.
Thanks in part to a $1.58 billion credit line from the China Development Bank, BGI went on a shopping spree in 2010 for state-of-the-art genome sequencers, which run about half a million dollars a pop and allow scientists to turn DNA samples into detailed genetic blueprints for analysis. With this vast technological brigade and BGI’s large staff, most of whom were young, the institute could undertake research projects of enormous scale that other institutes and universities simply didn’t have the firepower to achieve.
That’s why CAAS turned to BGI for help with its 2009 cucumber DNA project. The private company quickly acquired a mystique for Zhao, still a CAAS intern at the time. He recalls that his team would gather a vegetable’s genetic information and ship it “to a thing called BGI,” where “magically it became data.”
Before long, that mystique turned into a career opportunity. During the summer before the teen’s senior year of high school, Zhao’s mentor, Huang, fatefully suggested that his protégé take an internship at BGI. Just two weeks into the gig, Zhao was sold: “I personally believed that preparing for tests [like gaokao, China’s university entrance exam] was a waste of time. After just a few weeks, I had already learned a lot and solved some problems”—such as creating an algorithm for counting gene variations.
Zhao decided to drop out of school and take a full-time job at BGI. To convince his father that dropping out of school and taking a full-time job at BGI was the right choice, Zhao said, “Five years from now, I will be leading my own group or lab. If I continue with my studies, maybe I could go to the best university in China or the U.S.—and then I could go to BGI and work under a high school dropout.” Wang, who once led genome-sequencing projects at the University of Washington, had long idolized Microsoft co-founder Bill Gates and had a soft spot for dropouts. This pushed BGI to the forefront of a global conversation about the norms associated with higher-education degrees. In March 2010, Nature published a provocative editorial—“Do scientists really need a PhD?”—that discussed whether BGI’s approach might hold lessons for other countries. “If the BGI can pull it off,” the editorial concluded, “it might find itself a model not only for creative approaches to genomics but also for education and training.”
Within two years of arriving at BGI, Zhao founded its Cognitive Genomics Lab and began managing a mind-bogglingly complex enterprise: searching for patterns among thousands of discreet gene variations that might shed light on the biological basis of human intelligence. It was the largest research project of its kind in the world. “We all believe that intelligence is what makes us human, but it was not studied very well at that time.… So we thought, why shouldn’t we do that?” Zhao says.
Indeed, the program’s conception was essentially based on a whim, one that BGI gave Zhao the space and resources to follow. This was in stark contrast to the usual course of research at the state-run science institutes. “In any authoritarian system, you have a lot of resources and funding,” Zhao explains, “but that funding gets split and split, so that each person only gets a small amount of small resources…. BGI’s way was to channel resources to achieve something big.”
This particular big thing didn’t go unnoticed: Wired, the Wall Street Journal, the Washington Post, MIT Technology Review, and CBS News, among other outlets, profiled the intelligence project—sparking an international debate about the possibility of “designer babies.” A writer at Vice quipped in 2013, “Within a couple of generations, competing with the Chinese on an intellectual level will be like challenging Lena Dunham to a getting-naked-on-TV contest.” Arguably, no state-sponsored science experiment in China had ever attracted the global media attention that the one at BGI’s Cognitive Genomics Lab did.
That said, it would be wrong to view BGI as in competition with, or in direct opposition to, Beijing. It receives money from local governments and credit from state-owned banks, and it has collaborated with CAS and CAAS scientists. “Given the gravity and shadow of the Chinese system,” Segal of CFR says, “one can never be totally independent from it.” Any company that has data servers located on the Chinese mainland will find it difficult, if asked, to withhold information from the government. Moreover, as detailed in the March 2014 issue of Harvard Business Review, “The Communist Party requires a representative to be present in every company with more than 50 employees. Every firm with more than 100 employees must have a party cell, whose leader reports directly to the party in the municipality or province.” (These people are present, among other reasons, to ensure that China’s rules on censorship are upheld. Even private tech titans, such as Baidu and Tencent, have to comply.)
BGI, it seems, has so far avoided major clashes with Beijing. In doing so, it has been able to rethink what it takes to be a scientist in China—and Zhao is the poster child of that new precedent.
After five years at BGI, Zhao was ready to “graduate,” as he puts it. But he didn’t want to stray too far. He sought to emulate the type of research and business model that he’d come to know so well. “[BGI’s leaders] can do whatever they want, not only about science, but about human resources,” he says. “That makes all the difference.”
So in 2014, Zhao founded QuantiHealth, with the mission of moving past glamour genomics—designer babies, he now argues, are unrealistic—and finding “real applications” for science “that are useful in our daily lives.” Zhao decided to focus on sequencing the DNA of the human gut microbiome, the constellation of tiny organisms that reside inside the stomach. Mapping the microbiome could offer a vault of information about an individual’s susceptibility to a range of diseases, including diabetes, rheumatoid arthritis, muscular dystrophy, and even schizophrenia. People are continuously exchanging bacterial matter with the outside world through diets and breathing, Zhao says. “How this process really takes place, it fascinates me.”
"Young people in China are more ambitious now. We have heroes to follow."
Currently, the QuantiHealth team is analyzing bacteria in one of its labs using a genome sequencer. The company’s profits will depend on whether it can successfully create a service for hire: collecting stool samples and providing “snapshots” of health over a person’s lifetime or over the treatment period for a specific medical condition. Zhao says the company is in talks with several health-care providers and that it can currently analyze “several thousand” orders a month; when cheaper and more portable sequencers hit the market—expected this fall—capacity should increase. “I believe a microbiome analysis could be part of a future doctor visit in 2050,” Zhao says. “It will be just like a regular blood test one day.”
His venture has garnered plenty of media attention in China, in part thanks to the fame he earned at BGI. Zhao will “bridge the gap between research and industry,” announced a June headline on China Economic Net. And China Entrepreneur has chronicled in detail his journey “from young scientist into a young businessman.”
BGI’s lingering influence on Zhao’s life is also apparent in QuantiHealth’s day-to-day operations. In contrast to China’s traditional science institutions, the office has an informal atmosphere: Staffers wear shorts, sneakers, and hoodies and trade ideas over WeChat, rather than in lengthy memos. There’s no emphasis on publications or patents—nor is there a clear career path. And Zhao, like BGI’s Wang, has affection for dropouts: The company’s chief information officer is only 25 and never finished high school.
Zhao finds himself in good company on China’s science frontier. In July, Wang Jun, the highly regarded 39-year-old CEO of BGI, stepped down to launch an artificial intelligence (AI) start-up. Wang told ScienceInsider that the new company grew out of his insight that “both life science and genomics have now run into a bottleneck in handling data from tens of thousands of samples.… AI and machine learning could do something with big data and for people’s health.”
Start-up fever, however, isn’t limited to BGI alums. In fact, it’s even catching on among some senior researchers. Biologist Ji Weizhi, for instance, left the state-run system after three decades to lead Kunming Biomed International (KBI)—a cutting-edge clinical research organization that, in 2014, published a paper in the journal Cell documenting an experiment to genetically alter monkeys in order to study complex brain diseases. KBI also hopes to become a top supplier of nonhuman primates for U.S. researchers and drug-development companies.
The trajectories of Zhao and his fellow entrepreneurs are undoubtedly being watched closely by young Chinese scientists who may eventually follow suit. Among them is Chen Yunji, a 32-year-old professor at CAS’s Institute of Computing Technology in Beijing. Chen has invented an improved microprocessing chip that can help computers “learn” to recognize objects, convert text into speech, and translate languages with significantly greater energy efficiency. He believes the only way his research will have a widespread, practical impact is if he starts his own company—and he’s investigating possible models.
“Young people in China are more ambitious now," Chen says. "We have heroes to follow.”
Going independent, however, requires more than desire and gumption. Scientists need private funding. Finding this money would’ve been nearly impossible just 10 or even five years ago, before a recent surge in China’s private-equity market, in the interest of overseas venture capitalists, and in the willingness of local governments to invest in promising businesses. Part of the growth is due to a generational progression: The first wave of China’s mega-entrepreneurs, who largely made money in tech over the past 15 years—smartphone producer Xiaomi’s Lei Jun is a prime example—take their fortunes, found venture-capital firms, and hunt for the next big thing.
Since 2008, according to PricewaterhouseCoopers, China has been the top destination for private equity (PE) in Asia, accounting for 41 percent of PE regional investment in 2014. (After retail, high-tech was the most popular sector for investment.) In just the first quarter of 2015, investors pumped $6.53 billion into venture-backed Chinese firms, an increase of 173 percent from the same period in 2014.
BGI has secured funding from large venture-capital firms, including the China- based affiliate of Silicon Valley stalwart Sequoia Capital, which has invested $50 million. Sequoia is famous as one of the early investors in Google, Apple, and PayPal; today Sequoia Capital China controls a fast-growing portfolio of investments in domestic technology, health care, and genetics companies. Foreign actors are getting into the game too: Arch Venture Partners, based in the United States, participated in the $50 million investment needed to get Hua Medicine, a Chinese biotech company, off the ground in 2011. This year, Hua received $25 million in Series B funding to develop new treatments for diabetes.
Meanwhile, many regional and municipal governments want to attract new businesses, with the goal of replacing heavily polluting industries and low-wage work with higher-tech services. So they’re handing out grants and other business-friendly benefits. Shenzhen is one such city: It is home to BGI, Tencent, and, more recently, budget mobile-phone maker OnePlus. Another is the fast-growing city of Chengdu, which is attempting to become the center of cloud computing for central and western China; it is offering financial incentives to lure software and related companies to its Tianfu New Area and Chengdu High-Tech Industrial Development Zone.
For its part, QuantiHealth got started with Zhao’s personal funds, a common founding story in the tech world. But its current operations, including construction of the Beijing office, are supported by an “angel customer”—a large health- management company focused on lifetime diabetes treatment that paid upfront approximately $1.6 million for Quanti- Health’s services. (The company has requested anonymity.) A natural networker, Zhao says he met the CEO by chance at a social dinner about a year and a half ago in Beijing. But Zhao knows this initial contract won’t be enough to sustain QuantiHealth forever, so he’s now in discussions with 10 or so other potential investors, including venture capitalists. (Zhao says one challenge in persuading people to back his company is explaining what a microbiome is.)
Ultimately, start-ups must rely on their profits to fund future operations, and that requires balancing research with commerce. BGI has financed its published studies, in part, by hawking its sequencing services. QuantiHealth is following a similar model by offering microbiome analysis. But Cao, the Chinese science expert at the University of Nottingham, sees the “half-company, half-research institute” approach as inherently risky. “It’s difficult to integrate both roles. These people who play the role of scientists and executives at the same time could potentially compromise both roles,” he says. It’s a tension that extends to the very top of the tech world: Google apparently bowed to stockholders’ concerns and separated its primary revenue generators from its research forays into such projects as human longevity and autonomous vehicles, recently placing the latter ventures under a new holding company, Alphabet. As for Zhao, he never doubts his ability as a scientist, but the business side is still a work in progress: "I thought I was a good boss when I started, but a year later, I don't know what a good boss is."
For the time being, Zhao has no plans to change QuantiHealth’s management structure. After all, it’s brand new. But he also realizes he’ll have to roll with the punches as his business grows. “Everything is challenging: the money, the people, the business model, unpredicted policy changes—any of them could kill my company,” Zhao says. (There’s also China’s infamous problem of IP theft and proliferating worries about data hacking.) “But those challenges are also what make all the fun.”
Zhao and his rebellious ilk may never eclipse China’s torpid science system, but their work illuminating a more meritocratic path to success very well may change it. Zhao’s old mentor, Huang, recently founded a branch of CAAS in Shenzhen with the aim of creating a research culture in some ways modeled on BGI’s and Zhao’s work. During visits to Huang’s new office, Zhao says he noticed “a lot of people [with] ambition to do big science”—in both scale and meaning— as well as the passion that initially attracted him to BGI. “People working there are there for what they do,” he notes, “not for the position, title, or benefits.”
Meanwhile, ambitious start-ups are helping to create opportunities for Chinese science to achieve a new global reach. BGI, for instance, has already opened satellite genome-sequencing branches in the United States. Zhao, too, hopes that Quanti- Health and companies like it will encourage Chinese scientists working abroad to return home; he has already hired staffers who’ve studied or worked in the United States and Germany.
Zhao’s gung-ho attitude, and perhaps that of his peers, about shaking up China’s science culture can be summarized by his simple philosophy of business management. “When you see two options, you actually have three,” he says, sitting on a cozy red sofa in his gleaming office. “The third is to wait and see what happens—and that is almost always a bad decision.”