# U.S. defense contractors sending classified work to China?



## CJIS (Mar 12, 2005)

*U.S. defense contractors sending classified work to China?*

July 27, 2006 12:13 PM PDT
First, China began to assemble household products for the U.S. market. Then the country graduated to notebooks. Now Chinese companies are performing research for classified systems bound for the Defense Department.

So says David Lewis, CEO of StarTech. StarTech is a high-end outsourcing firm. It has retained students and professors at Tsinghua University, China's most prestigious technical university, and contracts them out to independent companies in the West. StarTech can also retain scientists from the Chinese Academy of Sciences. (One of the chief scientists at the CAS, Jian Mian Heng is a former HP scientist and a close relative of China's former president Jiang Zemin).

"Our largest customer is a U.S. defense contractor working on black projects for the U.S.," he said at the AlwaysOn Stanford Summit.

Lewis told me the same thing at a cocktail party the night before, but today he said it in front of an audience of about 100 investors. So it's not party chatter. Lewis, however, can't provide the name of the contractor. Outsourcing companies as a rule do not disclose most of the projects they work on. As a result, there may not be any way to definitively confirm it. However, it would be a strange exaggeration for an exec whose main goal in speaking to the audience is to raise money. Exaggeration would hurt his credibility.

A huge draw is the quality of science. Academics are increasingly citing Chinese research projects in their paper and the sheer number of Chinese scientific papers is on the rise.

It's cheap in China too. "How about $20,000, full labor costs, a year for a PhD from (an equivalent university to) MIT," he said. "Compare that to a quarter of a million in the U.S." 
If you don't need a PhD, you can still hire programmers for $14 an hour in China, he added.


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